Pre-Deposit for Appeal Facilitated :If Bank Accounts are Attached then Bank is directed to transfer 10% of tax demand to the respondent as pre-deposit for filing appeal.

Summary in Key Points:

Issue: Should the assessee be allowed to make the pre-deposit required for filing an appeal, even though their bank account is subject to a lien?
Facts: The respondent authorities had attached and appropriated funds from the assessee’s bank account for tax dues. A court order led to the re-crediting of those funds. Subsequently, an Order-in-Original was passed, placing a lien on the assessee’s bank account for the demanded tax dues. This prevented the assessee from making the 10% pre-deposit required for filing an appeal. The respondent argued that the assessee was involved in issuing fake invoices.
Decision: The court acknowledged the need to protect the revenue’s interests but emphasized that it should not deprive the assessee of their right to appeal. The court directed the bank to transfer the entire amount in the assessee’s account to the Registrar of the Court. The Registrar was then instructed to transfer 10% of the tax demand to the respondent as a pre-deposit for the appeal.

Important Note: This decision demonstrates a balanced approach that protects both the revenue’s interests and the assessee’s right to appeal. By facilitating the pre-deposit despite the lien, the court ensures that the assessee can exercise their right to appeal without undue hindrance. This ruling highlights the importance of proportionality in applying legal provisions and safeguards taxpayers’ rights while acknowledging the need to secure revenue collection.

HIGH COURT OF BOMBAY

Pradeep Kumar Siddha

Union of India

M.S. Sonak and Jitendra Jain, JJ.

WRIT PETITION NO.7611 OF 2023

DECEMBER 18, 2024

Brijesh Pathak, for the Petitioner. Jitendra B. Mishra, Ashutosh Mishra, Rupesh Dube and S.N. Deshpande for the Respondent.

ORDER

M.S. Sonak, J.- Heard learned counsel for the parties.

2. Rule. The rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties.

3. The records in this matter show that the respondents attached and appropriated the amount of Rs.62,32,400/- from the petitioner’s Axis Bank, Bhayander Branch Account No.918020073067221, towards tax dues. This was done without minimum compliance with the principles of natural justice and fair play.

4. Therefore, by its order dated 18 July 2022 in Writ Petition No.8298 of 2022, this Court directed the respondents to deposit this amount in this Court. Upon deposit, this amount was directed to be recredited to the petitioner’s bank account above. After that, an Order-in-Original dated 25 May 2023 was passed, under which a lien was ordered on the petitioner’s bank account above against the demanded dues of Rs.1,49,87,924/-.

5. The petitioner instituted this petition on 12 June 2023, within the limitation period prescribed for filing an appeal against the Order-in-Original dated 25 May 2023. Mr. Pathak argues that because the Orderin-Original marks a lien, the petitioner is precluded from depositing 10% of the tax demand of Rs.87,65,646/-, a prerequisite for instituting an appeal. He also contends that the marking of the lien is illegal and warrants interference.

6. Mr. Mishra submits that this petition is frivolous, and since the petitioner has an alternate remedy of an appeal against the order dated 25 May 2023, the same should not be entertained. Regarding marking lien, Mr. Mishra refers to several circumstances, including those reported in Order-in-Original. He points out that there are serious issues about the petitioner’s status, and there is material to show that the petitioner was issuing fake invoices to facilitate bogus ITC credit under GST laws.

7. We have considered the rival contentions and think that a workable order would be in the interests of justice so that neither party is unduly prejudiced.

8. Having regard to the respondent’s allegations and findings given in the Order-in-Original dated 25 May 2023, we are satisfied that this is not a case where the petitioner should be allowed to deal with any of the amounts in the petitioner’s Axis Bank Account No.918020073067221 at Bhayander Branch. At the same time, since the petitioner has a right to question the Order-in-Original dated 25 May 2023, it will not be proper if the petitioner is deprived of this valuable right on account of his not being able to arrange the pre-deposit amount of Rs.8,76,564/-. Without depositing this amount, the petitioner’s appeal against the order dated 25 May 2023 would not be entertained.

9. Given the findings in the order dated 25 May 2023 and the statements in the affidavit-in-reply filed on behalf of the respondents, the interests of the respondent revenue must be protected. However, such protection must be proportionate and cannot result in the petitioner being deprived of the valuable right to appeal the order.

10. Therefore, by balancing the competing interests, we direct the Axis Bank, Bhayander Branch, to transfer the entire amount in the petitioner’s bank account to the Registrar of this Court within two weeks of the parties producing an authenticated copy of this order. In fact we had adjourned the matter at Mr Pathak’s request to enable him to obtain instructions. Mr Pathak, on instructions, submitted that it would be better if the Court made an equitable order.

Once the Bank deposits this amount in the Court, the Registrar of this Court must transfer an amount of Rs.8,76,564/- to the 2^nd respondent within two weeks of such deposit being made. This transferred amount will then serve as a pre-deposit based, upon which the petitioner would be entitled to appeal against the order dated 25 May 2023. The appeal must be filed within four weeks of this Court’s transfer of the above amount to the 2^nd respondent. In the peculiar facts of this case, if online filing of the appeal is not possible, then the appellate authority must accept the appeal in physical format. Should an appeal be instituted, the appellate authority will consider all parties’ contentions. The observations in this order are only prima facie, and they need not influence the appellate authority in deciding the appeal on merits and following the law.

11. The Registrar must invest the balance in a suitable fixed deposit with a nationalised bank. This amount will be subject to the Orders-in-Appeal against the order dated 25 May 2023.

12. Suppose the appeal is instituted within the period indicated above. In that case, the appellate authority must dispose of the appeal on merits without adverting to the limitation issue because, as pointed out earlier, the petitioner instituted this petition within the limitation period or instituting the appeals.

13. The rule is disposed of in the above terms without any cost orders.

14. All concerned to act on the authenticated copy of this order.