SEPTEMBER 17, 2025

What should I do?

By Vijay Kumar

A taxpayer's cry in the wilderness of GST

I received a message from a taxpayer-not a tycoon, apparently not a schemer, just a regular citizen with a frozen bank account and a boiling sense of injustice.

Out of desperation with this GST department and out of frustration as to what to do, I am bemoaning my sad state with the GST department. Our Commissionerate is xxx and the issue is a queer one. Our account was frozen on the ground that there are tax arrears. When we met the officer, we were shown a copy of the Order. We sought copy of the order and noticed that it had been marked to an address which we had vacated five years before. We had amended our registration and department had visited our new premises for Audit.

When we approached local consultants (who are mostly retired from the department), one of them told this is quite "normal". Other such people also said that they had handled many such cases. That the department merely mark the Order and show cause notice as despatched and never send them. And he was very confident of getting it "Quashed" for a hefty fee.

As told by them we applied under RTI to seek details of "service of Order and Notice". For which the department replied such documents are not available.

What nonsense is this I don't know. Now I have to shell a huge money for pre-deposit and Fees to prefer appeal for an order which is not valid under law as per the legal experts. For no fault of mine, why I should pay such huge money and go through all the pain.

And alternately what if a genuine real tax demand is not served as per law? Is there a collusion. Is it not a 'lose lose' situation for the government and taxpayer.

What to do now? How to I face this.?

Is there a way to appeal to ombudsman or finance ministry etc?

I am not in a position to spend money for appeal but want the account open for transactions

As a disclaimer, I should state that I am not sure of the facts – all that I have is his message.

He tried the usual route: consultants, most of them retired officers who are now interpreters of departmental chaos. One said, "This is normal." Another said, "We'll get it quashed-for a fee that could fund a small wedding."

RTI was filed. The reply? "Documents not available."

So now, he must pay a hefty pre-deposit and legal fees to appeal against an order he never received, for a tax he may not owe, under a law that insists on service but forgets to serve.

And he asks:

"Where do I go? Finance Ministry? Ombudsman? Temple? Twitter? I don't have money to appeal. I just want my account back so I can survive."

Is this GST 2.0-where your fate depends not on facts, but on whether a notice was "marked," not "served."

Where consultants speak in riddles and fees; Where justice is a luxury, and clarity is a myth; Where "normal" means your account is frozen, your documents are missing, and your appeal costs more than your alleged arrears.

The taxpayer's money is frozen. His options are frozen. His hope is thawing fast.

I really don't know, but as the consultants skilfully advised him, "it's normal" I remember a story I wrote some sixteen years ago.

I wrote this in DDT 1125 04 06 2009

There used to be a small-time enterprising businessman in a small town. He purchased a second-hand sachet making machine for about Rs. 10,000/-. He used to buy some coconut oil from a mill and pack it in 10 ml sachets and sell them near the Railway Station. Central Excise Intelligence caught up with him and they booked a case against him for manufacturing and clearing hair oil without payment of duty. His factory was a small room in a small house! Lakhs of rupees of duty with equal penalty got confirmed and the poor fellow simply did not know what hit him. What he could not understand was that the coconut oil in factories where thousands of kilolitres were 'manufactured' and sold, was not taxable, but his few millilitres when packed in a sachet became taxable.

In 2009, Department's view was that coconut oil packed in small container of sizes up to 200 ml would be classified as hair oil. What if the manufacturers put 201 ml in the packets and will that 1 ml take it out of the classification of hair oil?

Will coconut oil be dutiable depending on where you use it - food or head?

coconut oil is an interesting subject in indirect taxation. Some years ago, a Commissioner found that coconut oil of a manufacturer was hair oil because it was advertised with a picture of actress Sreedevi prominently displaying her flowing hair. But last year, the Supreme Court in a notable judgement in COMMISSIONER OF CENTRAL EXCISE, SALEM Vs MADHAN AGRO INDUSTRIES INDIA PVT LTD - 2024-TIOL-123-SC-CX-LB, observed,

Stress was also laid by the Revenue on the fact that Shanti Coconut Oil was marketed in containers depicting a popular film actress with flowing tresses and it was contended that in the light of such marketing, the oil sold was obviously meant for use as 'hair oil' and not as 'edible oil'. However, such an advertisement is not conclusive, in itself, to classify the oil as 'hair oil'.

The Supreme Court also observed:

A well settled principle of interpretation of taxing statutes is that words therein must be construed in consonance with their commonly accepted meaning in the trade and their popular meaning. When a word is not explicitly defined or there is ambiguity as to its meaning, it must be interpreted for the purpose of classification in the popular sense, which is the sense attributed to it by those who are conversant with the subject matter that the statute is dealing with. This principle, known as the 'common parlance test', serves as good fiscal policy so as to not put people in doubt or quandary about their tax liability.

The mere fact that coconut oil is also capable of being put to use as a cosmetic or toilet preparation, by itself, would not be sufficient to exclude such oil from the ambit of 'coconut oil' and subject it to classification as 'hair oil' as 'coconut oil' is name specific.

One may choose to buy one's cooking oil in small quantities, be it for economic or for health reasons or due to the inclination to use fresh oil in one's food preparation, and the smaller size of the packaging of such oil cannot be taken to mean that it is to be used as 'hair oil'.

Further, registration of the trademark 'Parachute' by M/s. Marico Ltd. for 'hair oil' is not sufficient to classify the coconut oil sold by it, in its entirety, as hair oil.

Whether you're cooking or styling, there's no substitute for clarity-especially when money and coconut oil are on the line!

In GST land, even coconut oil needs a lawyer-and a measuring cup.

When coconut oil gets more clarity than your tax notice, you know the system needs a shampoo.

Coming back to our agitated taxpayer with a frozen bank account, Where Does he Go?

To the Appellate Authority?

Only if he can afford the pre-deposit.

To the High Court?

Only if he has time, money, and nerves of steel.

To the Ministry?

Only if he believes in miracles.

To the consultant?

Only if he's okay with paying for "normal."

To the media?

Only if he wants to be tomorrow's meme.

Possible Solutions (Or Aspirations)

Appeal without Pre-deposit if the order is found to be unserved or invalid.

Mandatory Digital Service Confirmation-if you can track a pizza, you should be able to track a tax notice.

Fast-track Tribunal for Frozen Accounts-because survival shouldn't wait for adjournments.

GST Grievance Redressal Portal with Real-Time Status and real time senior officers empowered and ready to solve problems-not just a black hole with a captcha.

AI-powered Notice Validator-to flag orders sent to outdated addresses before freezing accounts.

Of course, these are dreams. But satire thrives on dreams deferred.

In GST 2.0, is justice prepaid, postpaid, and often undelivered?