Madras High Court | GST Order Quashed Over Ill-Advice by Unqualified Consultant | Fresh Hearing Allowed on 25% Deposit | Bank Attachment Lifted
Safiya Malik
The High Court of Madras Single Bench of Justice Krishnan Ramasamy set aside the impugned order dated 21.08.2024 passed by the Assistant Commissioner (ST), Kodumudi Assessment Circle. The Court directed that the matter be remanded to the first respondent for fresh consideration, conditional upon the petitioner paying 25% of the disputed tax amount within four weeks. The Court further held that the attachment of the petitioner’s bank account, carried out pursuant to the impugned order, cannot survive in view of its quashing. Accordingly, the Court ordered the de-freezing of the account by instructing the concerned bank to release the attachment immediately upon production of the order. The writ petition was disposed of with no costs, and the connected miscellaneous petitions were also closed.
The matter before the High Court arose from proceedings initiated by the Assistant Commissioner (ST), Kodumudi Assessment Circle, relating to the assessment of Goods and Services Tax (GST) for the financial year 2019–2020 under GSTIN/ID: 33AOVPC3889G2Z1. A show cause notice dated 22.05.2024 was issued to the petitioner. The notice required a reply supported by proper documentation. However, an irrelevant reply dated 18.07.2024 was filed by the petitioner’s consultant, which was unrelated to the issues raised in the notice.
Subsequently, on 21.08.2024, the first respondent passed an order against the petitioner, forming the basis of the present challenge. The effect of this order led to the freezing of the petitioner’s bank account bearing Account No. 918020100638352 by the second respondent, Axis Bank, Mullipuram Branch. This freezing of the account brought the operations of the petitioner’s business to a complete standstill, also impacting the livelihood of workers employed under the petitioner.
The petitioner’s counsel submitted that the error in filing the reply was entirely attributable to the consultant’s mistake. It was asserted that the consultant, while responding to the notice, filed an unrelated response, thereby causing the petitioner’s position to be prejudiced. It was argued that such an error should not deprive the petitioner of an opportunity to present the case on its merits.
It was also submitted that the freezing of the petitioner’s account severely affected the business revenue and left several employees without work. The petitioner expressed willingness before the Court to pay 25% of the disputed tax amount to the first respondent, as a condition for reconsideration of the case. The counsel sought an opportunity for the petitioner to file a proper reply along with supporting documents before the assessing authority.
On the other hand, the Government Advocate appearing for the first respondent fairly submitted that, subject to the petitioner paying 25% of the disputed tax amount, the matter could be remitted back for fresh consideration. This submission was made in acknowledgment of the fact that the petitioner had been placed at a disadvantage due to the error committed by the consultant in filing the reply.
The Court recorded that the impugned order was the result of an irrelevant reply filed in response to the show cause notice. The Court further noted that consultants, many of whom are unqualified, often misguide clients, leading to adverse orders. Such instances were described as recurring before the Court in several matters. The Judge observed that the reliance placed on consultants lacking proper qualifications or experience results in replies that fail to address the issues raised by the tax authorities, thereby prejudicing the assessees.
The Court was of the view that the Department must issue a circular to caution assessees to engage only qualified consultants. In the absence of qualified guidance, many assessees end up submitting replies either drafted by unqualified consultants or filed directly through employees or relatives, which often do not meet statutory requirements. This, in turn, leads to orders being passed on technical grounds, as in the present case.
In the present matter, the Court took into account that the petitioner’s business had come to a standstill and that workers had been rendered jobless owing to the freezing of the account. Balancing the interests of justice, the Court allowed one more opportunity to the petitioner by setting aside the impugned order on the condition that 25% of the disputed tax amount is deposited. The matter was accordingly remitted to the first respondent for fresh consideration, with directions to grant the petitioner a personal hearing and to pass orders in accordance with law.
The Court recorded: “In the case on hand, a show cause notice was issued to the petitioner on 22.05.2024, for which an irrelevant reply was filed. Hence, impugned order was passed by the first respondent on 21.08.2024. Due to the ill advise of the consultant, the petitioner has filed an irrelevant reply.”
It further stated: “It is pertinent to mention here that this Court comes across similar instances in several cases, extending ill advice to the clients by the consultants, who are all not qualified persons. Such kind of ill-advice leads to the fact that the clients are not in a position to appear before the Officers concerned with suitable reply supported by documents, which is purely on the negligence on the part of the consultant.”
The Court observed: “This Court feels that this type of wrong advice given by an unqualified person cannot be accepted. The respondent department is directed to issue note/circular to the assessees to engage consultants and get advice from qualified consultants. Otherwise, the assessees file petitions directly through employees or relatives.”
It recorded further: “The ill advice given by the unqualified consultant would generally be on account of the work burden in which they are used to advise very many clients. As and when the assessee approaches these type of consultants, in order to ensure that the assessee does not go out of their hands, the unqualified consultants violate Acts. These are all aspects that would come across before the notice of this Court, while handling various cases.”
Addressing the specific prejudice suffered by the petitioner, the Court stated: “Further, taking into consideration the fact that the operation of petitioner’s business comes to standstill and half a dozen of workers are jobless, this Court is inclined to grant one more opportunity to the petitioner by setting aside the impugned order, subject to the payment of 25% of the disputed tax, as agreed by the petitioner.”
The Court directed that the impugned order dated 21.08.2024 be set aside. It ordered that the matter be remanded to the Assistant Commissioner (ST), Kodumudi Assessment Circle, for fresh consideration, on the condition that the petitioner pays 25% of the disputed tax amount within four weeks from the date of receipt of the order. It was made clear that the setting aside of the impugned order would take effect from the date of such payment.
The Court further directed that the petitioner must file a proper reply or objection, along with supporting documents, within three weeks of making the payment. Upon such filing, the respondent was instructed to issue a 14-day clear notice fixing the date for a personal hearing. The respondent was further directed to pass appropriate orders on merits and in accordance with law, after hearing the petitioner, as expeditiously as possible.
Regarding the bank account, the Court held that since the impugned order itself had been set aside, the attachment on the petitioner’s account could not continue. The Court, therefore, directed that the bank account be de-frozen. The Assistant Commissioner (ST) was instructed to immediately issue directions to the concerned bank to release the attachment upon production of a copy of the order by the petitioner.
With these directives, the writ petition was disposed of, and the miscellaneous petitions connected to it were also closed without costs.
Advocates Representing the Parties
For the Petitioners: M/s. R. Ananthi
For the Respondents: Ms. P. Selvi, Government Advocate (T)
Case Title: Chandrasekaran v. Assistant Commissioner (ST), Kodumudi Assessment Circle & Anr.
Case Number: W.P.No.30638 of 2025 and W.M.P.Nos.34336, 34338 & 34339 of 2025
Bench: Justice Krishnan Ramasamy
