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2025 (5) TMI 1431 - HC - GSTSeeking adequate remedy by way of appeal before the appellate authority - Validity and legality of the impugned notice in Form GST DRC-13 - HELD THAT - Accordingly the petition is disposed of reserving liberty in favour of the petitioner to file an appropriate appeal before the appellate authority within a period of six weeks from today. It is further directed that the interim orders passed by this Court in the present petition shall continue for a period of six weeks from today. The amounts already recovered by the respondents shall be subject to the final outcome of the appeals to be filed by the petitioner.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter include:
2. ISSUE-WISE DETAILED ANALYSIS Validity and legality of the impugned notice in Form GST DRC-13 The petition challenges the issuance of the impugned notice dated 27.03.2025 under Form GST DRC-13, which demands payment of a substantial sum under the CGST Act. The petitioner contends that the notice is bad in law and seeks its quashing via writ of certiorari. The legal framework applicable includes the provisions of the Central Goods and Services Tax Act, 2017, particularly Section 83(1) which deals with recovery of tax dues from third parties such as banks. Precedents emphasize that such notices must comply with procedural fairness and statutory mandates. The Court considered the submissions and the documents filed by the petitioner and respondents. The petitioner argued that the notice was issued without proper communication of the underlying Order in Original dated 23.06.2024, which is a prerequisite for enforcement actions. The respondents initially did not produce the order but later furnished it via email on 22.04.2025 during pendency of the petition. In view of the service of the order during the pendency, the Court observed that the petitioner has an adequate remedy by way of appeal before the appellate authority. The Court did not delve into the substantive legality of the notice but reserved liberty for the petitioner to challenge it through appeal. The Court's interim orders restrained recovery and coercive actions based on the impugned notice, acknowledging the need to maintain status quo pending adjudication. Direction to Respondent No.6 (Bank) regarding release of funds The petitioner sought a writ of mandamus directing the bank not to release Rs.9,51,79,611/- pursuant to the impugned notice. The legal basis is Section 83(1) of the CGST Act, which empowers recovery from third parties. The Court granted interim relief restraining the bank from withdrawing or recovering any further amounts from the petitioner's account during the pendency of the petition and permitted the petitioner to operate the account. This indicates the Court's recognition of the petitioner's right to maintain control over its funds until the matter is finally adjudicated. However, the Court did not issue a final direction on this issue, leaving it open for determination in the appellate proceedings. Service and communication of the Order in Original dated 23.06.2024 The petitioner contended that the order was not properly served, and the date of service should be considered the date of communication for purposes of limitation and enforcement. The Court noted that the order was eventually furnished by the respondents during the pendency of the petition via email on 22.04.2025. Consequently, the Court allowed the petitioner to challenge the order through appeal, implicitly recognizing the importance of proper service as a procedural safeguard. The Court did not issue a direct mandamus to Respondent No.4 for service but disposed of the petition with liberty to appeal, thus addressing the issue indirectly. Refund of amount recovered under coercion The petitioner claimed that Rs.56,44,918/- was recovered by Respondent No.2 under force and threat and sought a writ of mandamus for refund with interest. The Court did not issue any specific order on refund but included the amounts already recovered as subject to the final outcome of the appeals. This preserves the petitioner's right to seek refund or adjustment in appellate proceedings. Interim relief restraining coercive action During the pendency of the petition, the Court passed multiple interim orders restraining respondents from withdrawing further amounts from the petitioner's bank account and from taking precipitative or coercive steps against the petitioner's tenants pursuant to notices dated 20.03.2025. The Court extended these interim orders multiple times, reflecting the urgency and potential prejudice to the petitioner if coercive steps were allowed. The interim reliefs were continued for six weeks post-disposal to enable the petitioner to file appeals. This demonstrates the Court's balancing of interests, ensuring that enforcement does not outpace procedural fairness. Other reliefs and costs The petitioner sought any other reliefs deemed fit and costs of the petition. The Court did not specifically address costs but disposed of the petition with liberty to file appeals and continuation of interim reliefs, effectively leaving ancillary reliefs to be considered in appellate proceedings. 3. SIGNIFICANT HOLDINGS The Court held that the petitioner's remedy lies in filing an appeal against the Order in Original dated 23.06.2024, which was furnished during the pendency of the petition. The Court disposed of the writ petition accordingly, while continuing interim orders restraining recovery and coercive action for six weeks to protect the petitioner's interests. Notable excerpts from the order include:
Core principles established include:
Final determinations on each issue were procedural rather than substantive, with the Court emphasizing the petitioner's right to appeal and maintaining interim protections until the appeal process is exhausted.
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