Hyderabad: The Telangana High Court has recently come down strongly on GST authorities for issuing a tax recovery notice based on an outdated address, even though the trader had consistently submitted returns and updated the business address online.
This dispute arose when M Subbayya, a partner in Sree Akshaya Oil Refineries, received notices at his firm’s old address.
The GST department subsequently cancelled the company’s GST registration and issued a garnishee order on its bank account to recover dues of approximately Rs 3 crore.
Petitioner’s arguments
Subbayya challenged this in the High Court, arguing that all legal communications should have been addressed to the firm’s updated location on file a requirement the department ignored.
During the hearing, the bench comprising Chief Justice Aparesh Kumar Singh and Justice GM Mohiuddin questioned the GST officials about their lapses.
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The Assistant Commissioner from Somajiguda Circle appeared in person and admitted the error, noting it had arisen from a failure in updating departmental records. Despite issuing an apology, the court made it clear that simply expressing regret did not absolve the responsibility of following lawful procedures.
The judges emphasised that an administrative apology was insufficient when legal safeguards for proper service of notices had been neglected. They pointed out that such lapses undermine natural justice and due process, particularly when punitive actions like freezing a business’s bank account are initiated.
HC quashes notice by GST dy commissioner
Consequently, the High Court quashed the notice sent by the GST deputy commissioner and instructed the Commissioner of Commercial Taxes to investigate the conduct of the responsible Assistant Commissioner.
The court stressed the importance of accountability and directed that suitable disciplinary measures be undertaken if official negligence was confirmed.
The bench also clarified that, should there be genuine non-compliance by the taxpayer, the GST department retains every right to proceed under the law, but must ensure that each step adheres strictly to statutory requirements, especially regarding the addresses used for service of legal notices.
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