In W.P. No.3636 of 2023-MAD HC- Madras HC comes to aid of assessee facing technical glitches in GST Portal, asks assessee to give fresh representation to Assistant Commissioner of GST & Central Excise seeking release of blocked funds
Justice Abdul Quddhose [10-02-2023]

Read Order: M/s.Lucas TVS Limited vs. Superintendent of GST and Central Excise

LE Correspondent

Chennai, February 15, 2023:  In a case where petitioners faced technical glitches in the GST Portal while filing the GSTR-3B for the month of July 2017 and summons was issued for alleged short payment of tax, the Madras High Court has held that since a specific request has not been made by the assessee for release of the blocked funds in the Bank Account, the petitioner will have to give a fresh representation to the Assistant Commissioner of GST and Central Excise seeking for release of the blocked funds in the petitioner's bank account, maintained with the Bank.

The Writ Petition had been filed before the Single-Judge Bench of Justice Abdul Quddhose for a Mandamus seeking for a direction to the Assistant Commissioner of GST and Central Excise (second respondent) to release the blocked funds in the petitioner's Bank Account, opened with the State Bank of India (fourth respondent) and further direct the second respondent not to block funds in any other Bank Account of the petitioner without following the due process of law. 

The petitioner had filed the GSTR-3B for the month of July 2017 but due to technical glitches in the GST Portal, they were unable to capture the ITC eligibility, availed for the month of July 2017 in the GSTR-3B. According to the petitioner, they manually deducted the ITC duly eligible, availed by them to the tune of Rs 9,40,30,477 from the gross amount of output GST payable to the tune of Rs 17,69,65,214.61 and provided the final net amount of output tax liability of the petitioner to the tune of Rs 8,29,34,603. 

Thereafter, while filing the annual GST return for the financial year 2017-18 in GSTR-9, the petitioner duly reflected the actual availed ITC and output GST liability. According to the petitioner, the reconciliation statement filed in GSTR-9C, reflected the said difference in the ITC, availed between GSTR-3B and GSTR-9. 

The Superintendent of GST and Central Excise (first respondent) issued summons to the petitioner for the alleged short payment of tax in July 2017. The petitioner claimed to have attended the enquiry but a copy of the statement was not provided to them. Thereafter, summons was issued to the petitioner for the alleged non-payment of GST in respect of certain transactions in July 2017. Notice was also issued requesting them to reconcile the GSTR-1, GSTR-3B, GSTR-2A and GSTR-9 returns, already filed by the petitioner for the month of July 2017 to which the petitioner replied.

According to the petitioner, when they were unable to use their account with the fourth respondent, they realised that the funds in their bank account was blocked for withdrawal. The petitioner had given a representation to the respondents to provide a copy of the notice through which the funds of the petitioner were blocked and the fourth respondent replied stating that the second respondent had issued notice to the Bank asking them to block funds in the petitioner's account under Section 79(1)(c)(i) of the CGST Act, 2017. Later, the petitioner requested the first respondent once again to provide a copy of the notice through which the funds of the petitioner amounting to Rs18,44,82,307 had been blocked. 

According to the petitioner, till date, the respondents had not provided the copy of the said notice and another notice was served on the petitioner seeking details of the excess availment of ITC in GSTR-3B as compared to GSTR-2A for the period 2017-18, 2018-19, 2019-20 and 2020-21 without any reference of sorts to the action already taken in this regard. The petitioner had replied to the said notice seeking three weeks time to collate all the details.

The petitioner apprehended that if the amounts are blocked, their business will come to a standstill. It was the case of the petitioners that they would be satisfied if the petitioner's representation seeking for release of the blocked funds in the petitioner's Bank Account, held with the fourth respondent was considered, on merits and in accordance with law.

“Since a specific request has not been made by the petitioner for release of the blocked funds in the petitioner Bank Account, maintained with the fourth respondent, the petitioner will have to give a fresh representation to the second respondent seeking for release of the blocked funds in the petitioner's bank account, maintained with the

fourth respondent Bank”, the Bench held.

Considering such factual aspects, the Bench directed the petitioner to submit a fresh representation to the second respondent stating their grievance that have been raised in the affidavit filed in support of this writ petition, within a period of one week. 

On receipt of the said representation, the second respondent has been directed to pass final orders, on merits and in accordance with law, after giving due consideration to the grievances raised by the petitioner in their representation, within a period of four weeks. Till final orders are passed on the petitioner's representation, the Bench ordered the respondents to not attach funds lying in any other bank account of the petitioner, pertaining to the subject demand.