Facts of the Case

The petitioner, Junaid Khan Hameed Khan, proprietor of M/s H.K. Oil and Al-Fresh Bakery Products, sought a writ of mandamus directing a private co-operative bank (respondent No.3) — which was operating under Reserve Bank of India restrictions permitting depositors to withdraw their deposits only in a particular proportion — to transfer Rs.31,00,000 from the petitioner's account directly to the Assistant Sales Tax Commissioner, Aurangabad. The Court noted that the petitioner was in arrears of payment of Goods and Services Tax (GST) to the tune of Rs.1,72,11,478.

Issues Involved

  1. Whether the writ court could issue a mandamus compelling a private co-operative bank, operating under RBI-imposed withdrawal restrictions, to transfer a depositor's own funds directly to the GST department towards the depositor's outstanding tax arrears.
  2. Whether writ jurisdiction was an appropriate remedy for facilitating recovery of GST arrears in these circumstances.

Petitioner's Arguments

  • The petitioner, being in arrears of GST of over Rs.1.72 crore, sought to have Rs.31,00,000 lying in his account with the restricted co-operative bank transferred directly to the Assistant Sales Tax Commissioner, Aurangabad, so as to enable part-payment of the outstanding dues notwithstanding the RBI's withdrawal restrictions on the bank.

Respondent's Arguments

  • No substantive opposition or submissions from the respondents are recorded in the order; the Bench disposed of the matter on its own assessment that writ jurisdiction was not the appropriate remedy for the relief sought.

Court Order/Findings

  • The Court noted that respondent No.3, a private co-operative bank, was under RBI restrictions permitting depositors to withdraw only a limited proportion of their deposits.
  • The Court declined to invoke its writ jurisdiction to direct a bank operating under RBI restrictions to transfer a depositor's funds to the tax department, holding that the petitioner may avail of the remedies permissible in law instead.
  • The writ petition was disposed of without granting the mandamus sought, leaving the petitioner to pursue other available remedies for settling the GST arrears.

Important Clarification

  • A writ of mandamus will not ordinarily be issued to compel a bank operating under RBI-imposed withdrawal restrictions to transfer a depositor's funds directly to a tax department, even where the depositor is willing.
  • Recovery or part-payment of GST arrears through a restricted bank account is not a matter the High Court will resolve through writ jurisdiction; the taxpayer must pursue the ordinary remedies available under GST law and applicable banking regulations.
  • The existence of large outstanding GST arrears does not, by itself, justify writ interference with third-party banking restrictions imposed by the RBI.

Sections Involved

  • Article 226 of the Constitution of India – writ jurisdiction invoked seeking a mandamus.
  • Central Goods and Services Tax Act, 2017 – governing the petitioner's outstanding GST liability of over Rs.1.72 crore.
  • Banking Regulation Act, 1949 (RBI directions) – the underlying restriction on withdrawal from the co-operative bank, cited as the reason the mandamus could not be granted.

Decision – In Favour of

The writ petition was disposed of without relief; the Court declined to exercise writ jurisdiction to direct the co-operative bank to transfer funds to the Sales Tax Department, and left the petitioner to avail of the remedies permissible in law for addressing the GST arrears. The Decision is, in substance, in favour of the Department, insofar as the extraordinary relief sought by the Assessee was refused.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Bombay, Bench at Aurangabad
  • Case No.: Writ Petition No.14756 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Mr. Justice Ravindra V. Ghuge and Hon'ble Mr. Justice Y.G. Khobragade
  • Decision Date: 19.12.2023
  • Disposal Nature: Disposed of; writ jurisdiction declined, petitioner relegated to other remedies

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