M/S. Hi Tech Pipes Limited vs. Govt Of Nct Of Delhi And Others

Facts

The Petitioner, M/s. Hi Tech Pipes Limited, filed a writ petition challenging a letter dated May 2, 2025, issued by the Goods and Service Tax Officer, Ward No. 23, to the State Bank of India. This letter sought to freeze the Petitioner's bank account due to a demand of tax and penalty amounting to Rs. 3,81,71,415/-. The Petitioner contended that they had not received any Show Cause Notice or Order in Original. The Court, on May 21, 2025, directed the Petitioner to deposit 10% of the demanded amount by July 15, 2025, and stayed the freezing of the bank account and the communication from the bank. Subsequently, the Respondents produced a chart indicating that the Petitioner had paid their dues, except for a penalty of Rs. 10,000/-.

Held

The Court noted that the Petitioner had paid their dues as reflected in the chart produced by the Respondents, with only a penalty amount of Rs. 10,000/- remaining. The Petitioner's counsel stated that this amount would be paid within one week. The Court bound the Petitioner to this statement. Consequently, the Court found no further order to be required in the writ petition. The Court also directed the release of the amount of Rs. 38,17,142/- deposited by the Petitioner with the Registry, along with accrued interest, within one week. The Court did not explicitly decide on the legality of the freezing notice or the violation of constitutional rights, as the matter was resolved by the Petitioner's undertaking to pay the remaining dues and the subsequent release of the deposited amount.

Key Issues

1. Whether the letter dated May 2, 2025, issued by the Goods and Service Tax Officer to the State Bank of India, seeking to freeze the Petitioner's bank account, is arbitrary, unreasonable, unfair, and violative of Articles 14 and 21 of the Constitution of India? Petitioner's Arguments: The Petitioner argued that the impugned letter was illegal as they had not received a Show Cause Notice or any Order in Original prior to the demand and the freezing of their bank account. They sought quashing of the letter and a direction to prevent their bank account from being operated in a manner that hinders their business. Respondents' Arguments: The Respondents, represented by the Government of NCT of Delhi and the GST Department, contended that a demand of tax and penalty existed against the Petitioner and that recovery proceedings were initiated under Section 139 of the Land Reforms Act, 1954, to recover the amount like land revenue. They later submitted a chart indicating that most dues were paid, with only a small penalty remaining.