Assessee directed to file representation for release of blocked funds w.r.t. alleged non-payment of GST and excess availment of ITC

The Hon'ble Madras High Court in M/s Lucas TVS Limited v. Superintendent of GST and Central Excise and Ors. [W.P. No. 3636 of 2023 and W.M.P. No. 3720 of 2023 dated February 10, 2023] has directed theassessee to file a fresh representation before the Revenue Department stating grievances pertaining to technical glitches in the GST portal. Held that, no prejudice will be caused to the Revenue Department, if the assessee's representation seeking for release of the blocked funds in the Petitioner's Bank account is considered, on merits and in accordance with law.

Facts

M/s Lucas TVS Limited ("the Petitioner") filed their GSTR-3B for the month of July 2017 on August 19, 2017 and due to some technical glitches in the GST portal, they were unable to capture the Input Tax Credit ("ITC") eligibility, availed for the month of July, 2017 in the GSTR-3B. Therefore, the Petitioner manually deducted the ITC duly eligible from the gross amount of output GST payable and provided the final net amount of output tax liability to the tune of INR 8,29,34,603/-.

Thereafter, while filing the annual GST return for the Financial Year ("F.Y.") 2017-18 in GSTR-9 on January 30, 2020, the Petitioner duly reflected the actual availed ITC and output GST liability. According to the Petitioner, the reconciliation statement filed in Form GSTR-9C, reflected the said difference in the ITC, availed between Form GSTR-3B and Form GSTR-9. Therefore, the Revenue Department ("the Respondent") issued summons to the Petitioner on October 28, 2022 and December 5, 2022 for the alleged short payment of tax in July 2017 and issued a notice to the Petitioner dated December 12, 2022 ("the Impugned Notice") requesting the Petitioner to reconcile the Form GSTR-1, Form GSTR-3B, Form GSTR-2A and Form GSTR-9, already filed by the Petitioner for the month of July 2017.

The Petitioner replied to the same on December 15, 2022 requesting an extension of two weeks time and subsequently, on December 30, 2022 and January 19, 2023, the Petitioner submitted the details to the Respondent. However, the Petitioner was unable to use their account and realised that the funds in their bank account is blocked for withdrawal under Section 79(1)(c)(i) of the Central Goods and Services Tax Act, 2017 ("the CGST Act") and no notice for such blocking of funds is given to the Petitioner despite asking.

Further, the Respondent served another notice dated January 27, 2023 on the Petitioner seeking details of the excess availment of ITC in Form GSTR-3B as compared to Form GSTR-2A for the period 2017-18, 2018-19, 2019-20 and 2020-21, to which the Petitioner has replied seeking three weeks time to collate all the details.

Being aggrieved this petition has been filed, on the ground that the Petitioner's representation seeking for release of the blocked funds in the Petitioner's Bank Account with the Respondent be considered.

Issue

Whether the blocked funds of Petitioner are liable to be released?

Held

The Hon'ble Madras High Court in W.P. No. 3636 of 2023 and W.M.P. No. 3720 of 2023 held as under:

• Observed that, since a specific request has not been made, the Petitioner will have to give a fresh representation to the Respondent seeking for release of the blocked funds in the Petitioner's bank account.
• Held that, no prejudice would be caused to the Respondent if the Petitioner's representation seeking for release of the blocked funds in the Petitioner's Bank account is considered, on merits and in accordance with law, after giving due consideration to the submissions made by the Petitioner.
• Directed the Petitioner to submit a fresh representation to the Respondent stating grievances within one week.
• Further directed the Respondent to pass fresh order 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.
• Held that, till final orders are passed, the Respondent is directed not to attach funds lying in any other bank account of the Petitioner.

Relevant Provisions

Section 79(1)(c)(i) of the CGST Act

"(i) the proper officer may, by a notice in writing, require any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the Government either forthwith upon the money becoming due or being held, or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount;"