2024 (6) TMI 1033 - HC - GST

Attachment of Bank Accounts for recovery of GST dues - Rejection of request for payment of tax due in installments - in-action on the part of the Government in releasing the bills payable - HELD THAT - There is force in the contention of the petitioner that a blanket attachment of the bank account of the petitioner company would bring the operations of the company to a grinding halt. The company would default in paying the salaries and other operational dues. As per Section 80 of GST Act, the Commissioner may, for reasons to be recorded in writing, extend the time for payment or allow payment of any amount due under this Act in monthly instalments not exceeding twenty four. The ends of justice would be met if the petitioner is permitted to pay the tax arrears in six monthly installments starting from 15th April, 2024 and ending 15th September, 2024. The impugned proceedings dated 11.03.2024 are hereby set aside, further the Form GST DRC-13 dated 25.01.2024 issued by the 1st respondent to the petitioner s banker Canara Bank SME, Kukatpally Branch, Hyderabad is also set aside. It is made clear that the petitioner shall repay the tax arrears in terms of the above observations of this Court - the writ petition is disposed off.

Issues:
1. Rejection of request for payment of tax in installments by the 1st respondent.
2. Dispute regarding non-payment by principal contractor leading to tax arrears for the petitioner.
3. Issuance of garnishee notices by the 1st respondent for tax recovery.
4. Freezing of petitioner's bank account by the 1st respondent.
5. Petitioner seeking extension of time for tax payment in installments.

Analysis:
1. The petitioner, a private company executing works contracts, faced rejection of their request for tax payment in installments by the 1st respondent, leading to the filing of a writ petition challenging this action.
2. Due to non-payment by the principal contractor, the petitioner accumulated tax arrears of Rs. 1,77,12,294, as payments were withheld by the State Government, prompting the petitioner's inability to settle tax dues.
3. The 1st respondent issued garnishee notices to the principal contractor for tax recovery, with the court later modifying the order to allow payment upon receipt of dues from any contractor, specifying a timeline for tax deposit.
4. The freezing of the petitioner's bank account by the 1st respondent hindered operations, prompting the petitioner to file a writ petition seeking relief from the attachment.
5. The petitioner sought an extension of six months to repay tax arrears in installments, which was contested by the Government Pleader for Taxes, emphasizing the department's focus on arrears recovery.

Court's Decision:
1. The court set aside the rejection of the petitioner's request for installment payment, allowing the petitioner to repay tax arrears in six monthly installments from April to September 2024.
2. The court also annulled the garnishee notices and the bank account attachment, emphasizing the need for a pragmatic approach in considering the petitioner's circumstances and ensuring tax repayment as per the specified timeline.
3. The judgment highlighted the importance of balancing tax recovery with the petitioner's operational needs, citing relevant provisions of the GST Act to support the decision for installment payment.
4. Ultimately, the writ petition was disposed of without costs, with pending petitions closed, providing a comprehensive resolution to the issues raised by the petitioner regarding tax payment challenges and the actions of the 1st respondent.

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