GST Recovery Without Show Cause Notice: Karnataka High Court Directs Assessee to Participate in Statutory Process
Case Overview
Case Name: SJR Prime Corporation Private Limited Vs Superintendent of Central Tax
Court: Karnataka High Court
Subject Matter: Challenge to GST recovery proceedings, garnishee notice under Section 79(1)(c) of the CGST Act, and bank account attachment
The Karnataka High Court recently dealt with a writ petition filed by SJR Prime Corporation Private Limited, wherein the assessee challenged a series of communications and coercive recovery measures initiated by the Central Tax authorities under the Central Goods and Services Tax framework. The matter raised significant questions about procedural compliance in GST recovery proceedings and the obligation of an assessee to engage with statutory processes before approaching courts for relief.
Background of the Dispute
Nature of Reliefs Sought
The assessee approached the Karnataka High Court seeking the following reliefs:
Quashing of multiple communications and notices, including:
- A communication dated 05.12.2023 issued by Respondent No. 2 bearing reference
GEXCOM/ADT/CAG/21/2023-CGST-RANGE-E-DIV-8-COMMRTE-Bengaluru(E)— marked as Annexure-C - A garnishee notice dated 30.07.2024 issued to the assessee's bank under
Section 79(1)(c)of the CGST Act in GST DRC-13, bearing Notice No. 02/2023-24 (DRC-13) and DIN: 20240757000000000D2A — marked as Annexure-E - An order/communication dated 08.11.2024 bearing DIN: 20241157000000666CA4, pertaining to the period July 2017 to March 2018 — marked as Annexure-H
- A communication dated 05.12.2023 issued by Respondent No. 2 bearing reference
Lifting of bank account attachment placed on Account No. 32445027247 maintained with State Bank of India, No. 117, 7th Block, Industrial Layout, Koramangala, Bengaluru – 560034, which had been frozen in connection with recovery of outstanding interest pursuant to the garnishee notice at Annexure-E.
Any other appropriate writ, order, or direction as the Court may deem fit in the interest of justice.
Prior Writ Petition and Earlier Court Directions
Earlier Proceedings in W.P. No. 26351/2024
A critical aspect of the present matter is that certain reliefs sought by the assessee — specifically those relating to Annexure-E and the bank account attachment — were not being raised for the first time. The Court noted that identical reliefs had already been pursued by the assessee in Writ Petition No. 26351/2024, which was disposed of by the Karnataka High Court vide order dated 01.10.2024.
In that earlier writ petition, the assessee had challenged the DRC-13 notice dated 30.07.2024 issued under Section 79(1)(c) of the CGST Act to the State Bank of India, through which the bank account had been blocked/frozen for an alleged demand of Rs. 64,49,778/-. The assessee contended that the notice was illegal, arbitrary, contrary to principles of natural justice, and had been issued without following the mandatory procedural prerequisites prescribed under the CGST Act before invoking Section 79.
The department, on the other hand, maintained that all prescribed procedures had been duly followed prior to issuance of the notice, and that no interference was warranted.
Terms of the Earlier Order Dated 01.10.2024
Without expressing any view on the merits or demerits of either side's contentions, the Court, in its order dated 01.10.2024, disposed of the earlier writ petition with the following directions: