Garnishee Order Set Aside Due to Lack of Prior Notice to the Assessee and Payment of Tax
Issue: Whether a garnishee order issued to an assessee’s bank is valid when it is issued without prior notice to the assessee and the tax demand has been duly paid.
Facts:
- A garnishee order was issued to the assessee’s bank without any prior notice to the assessee.
- The assessee submitted evidence of a CBEC challan, demonstrating that the tax demand had been duly paid.
Decision:
- The court held that the garnishee order should be set aside.
- The court directed the restoration of the proceedings.
Key Takeaways:
- Prior Notice Requirement: Issuing a garnishee order without prior notice to the assessee is a procedural irregularity.
- Payment of Tax: If the tax demand has been duly paid, there is no justification for issuing a garnishee order.
- Violation of Due Process: Issuing a garnishee order without prior notice violates the principles of due process and natural justice.
- Protection of Assessee’s Rights: This decision protects the assessee’s rights and prevents the arbitrary recovery of taxes.
- The court is reinforcing the need to follow proper procedure, and not to issue garnishee orders without any notice.
HIGH COURT OF ORISSA
Iron Cementics India (P.) Ltd.
v.
Assistant Commissioner Central Tax
Arindam Sinha, and M.S. SahooJJ.
W.P.(C) No.1090 of 2025
JANUARY 15, 2025
A. Agarwal, Adv. for the Petitioner. M. Agrawal, Adv. Addl. Standing Counsel for the Respondent.
ORDER
1. Mr. A. Agarwal, learned advocate appears on behalf of petitioner and submits, impugned is order in original dated 7th April, 2022. He submits, his client came to know about the order upon intimation from the bank, who had received garnishee order.
2. On query he draws attention to paragraph 1 and subparagraph (F) in paragraph 3 to submit, no notice was had in the proceeding, culminating in the impugned order. He submits further, the demand of tax was duly paid as evident from CBEC challan dated 19th October, 2016, disclosed at annexure-7.
3. Mr. Agrawal, learned advocate, Junior Standing Counsel appears on behalf of revenue and submits, in view of disclosure annexure-7, there be direction for restoration of the proceeding.
4. Impugned order is set aside and quashed. The garnishee order dated 27th September, 2024 at annexure-6 is also set aside. The proceeding is restored. Petitioner will communicate certified copy of this order to opposite party no.1 by 27th January, 2025 and obtain date of hearing. Omission to communicate will automatically restore impugned order.
5. The writ petition is disposed of.