Madras High Court Clarifies Recovery of GST Dues from Partners’ Personal Assets

The Madras High Court in M/s. VRAA and Co. v. Assistant Commissioner of GST and Central Excise, Guindy Division has reiterated that partners of a partnership firm can be proceeded against personally for recovery of the firm’s crystallised GST dues. The Court sustained attachment of the individual bank account of a former partner through a garnishee notice issued under Section 79(1)(c)(i) of the CGST Act, even though the partner had resigned from the firm after the relevant tax period.

This decision draws a clear line between recovery actions under Section 79 and provisional attachment under Section 83, and reinforces the principle of joint and several liability of partners as set out in Section 90 of the CGST Act and Section 25 of the Indian Partnership Act, 1932.

Factual Background

Partnership firm and GST demand

• M/s. VRAA and Co. (the assessee) is a partnership firm against which recovery proceedings were initiated by the Assistant Commissioner of GST and Central Excise, Guindy Division (the Respondent).
• The recovery pertained to a crystallised GST liability for Financial Year 2019-20.
• An Order-in-Original had already been passed creating the tax demand against the firm. The assessee did not contest that adjudication order in the present writ petition.

Attachment of former partner’s bank account

• On November 21, 2025, the Respondent issued a communication in Form GST DRC-13 to ICICI Bank Limited.
• The notice was issued under Section 79(1)(c) of the applicable GST enactments and required the bank to remit amounts from the personal bank account of an erstwhile partner of the firm towards the firm’s outstanding GST dues.
• The partner whose account was attached had resigned from the firm on June 4, 2020.
• The recovery related to the period prior to or covering FY 2019-20, during which the concerned individual had admittedly been a partner.

Challenge before the Madras High Court

The partnership firm filed a writ petition under Article 226 of the Constitution of India seeking a writ of certiorari to quash the DRC-13 communication, contending that the attachment of the erstwhile partner’s bank account was invalid. The retired partner himself did not come before the Court as the petitioner.

The challenge was essentially directed against:

1. The validity of the garnishee notice issued to the bank in respect of the ex-partner’s personal account; and
2. The authority of the Assistant Commissioner to initiate such attachment proceedings.

Core Issue Before the Court

The central legal question examined by the Madras High Court was:

Whether the Assistant Commissioner could attach the bank account of an erstwhile partner of a partnership firm, by issuing a garnishee notice under Section 79(1)(c)(i) of the CGST Act, for recovery of the firm’s crystallised GST dues?

Arguments Advanced

Contentions of the Petitioner (Partnership Firm)

The assessee raised the following principal arguments:

1. Absence of prior notice to the erstwhile partner

   • It was claimed that the GST authorities attached the bank account of the former partner without issuing any prior show cause notice or intimation specifically in his name before proceeding under Section 79(1)(c)(i).

2. Reliance on Section 83 of the CGST Act

   • The assessee contended that the attachment of the bank account was in the nature of a provisional attachment, falling under Section 83 of the CGST Act.
   • On this footing, the assessee argued that only the Commissioner is empowered to order provisional attachment under Section 83, and not the Assistant Commissioner.
   • Therefore, according to the assessee, the impugned action was without jurisdiction.

Submissions of the Revenue

The Revenue defended the action of the Assistant Commissioner on the following basis:

1. Proceedings under Section 79(1)(c)(i), not Section 83

   • The Department maintained that the communication in Form GST DRC-13 was issued strictly under Section 79(1)(c)(i) following crystallisation of the firm’s tax liability, and was therefore a recovery action, not a provisional attachment.

2. Proper officer’s authority under Section 79 read with Section 5(3)

   • It was argued that, in terms of Section 79 read with Section 5(3) of the CGST Act, the Assistant Commissioner, as a “proper officer”, was fully competent to issue a garnishee notice to any person holding money on account of the defaulter.
   • The writ petition was characterised as misconceived, as it failed to appreciate the nature of the proceedings and the scope of the statutory provisions.

Findings and Reasoning of the Madras High Court

The High Court, in W.P. No. 22458 of 2026, upheld the attachment and dismissed the writ petition. The key elements of the Court’s reasoning are summarised below.

1. Petition filed by firm, not the affected partner