M/S Blue International vs. Union Of INDIA And Ors

Facts

The petitioner, M/s. Blue Hill International, filed a writ petition challenging an intimation from SBI, Sagardighi Branch, dated September 22, 2020. This intimation indicated a debit stop placed on the petitioner's bank account due to a letter from the GST authority, Berhampore, Murshidabad, dated September 22, 2020, raising a demand for outstanding dues. The GST authority stated that the action was taken because the petitioner failed to comply with several demands arising from an audit objection dated May 28, 2019. Specifically, paragraph 4 of the audit objection remained unaddressed by the petitioner, although paragraphs 1, 2, and 5 were complied with, as evidenced by the petitioner's correspondence dated May 28, 2019. The petitioner was silent regarding the audit objection related to paragraph 4.

Held

The Court held that the petitioner should be granted liberty to make a suitable objection or representation against paragraph 4 of the audit objection dated May 28, 2019, before the concerned respondent authority within two weeks from the date of the order. If such a representation is filed, the authority must consider it in accordance with the law, passing a reasoned and speaking order after providing an opportunity of hearing to the petitioner or their authorized representative within six weeks thereafter. The decision must be communicated to the petitioner within one week of its passing. The petitioner is at liberty to raise all points during this hearing. The Court did not explicitly decide on the legality of the debit stop itself but provided a procedural remedy. The ratio is that demands leading to coercive action like bank account freezes must be preceded by adequate opportunity for the assessee to respond to specific objections.

Key Issues

1. Whether the GST authority's action of placing a debit stop on the petitioner's bank account, based on an unaddressed audit objection, is legally sustainable without providing the petitioner an opportunity to object or represent against the specific objection? (Mixed question of law and fact, concerning principles of natural justice and the procedure for raising demands under GST law). Petitioner's Contention: The petitioner implicitly argued that the debit stop was premature and illegal as they were not given a proper opportunity to respond to the specific audit objection that led to the demand. Revenue's Contention: The respondent GST authority argued that the action was justified due to the petitioner's non-compliance with the audit objection, particularly paragraph 4, and the petitioner's silence on the matter. They relied on the audit report dated May 28, 2019, and the subsequent demand raised.