Case Law Details
PVR Enterprises Vs Deputy Commissioner (ST) (Madras High Court)
In , the Madras High Court disposed of a writ petition challenging a recovery notice issued in Form GST DRC-13 dated 05.02.2026 and granted relief by directing vacation of the garnishee attachment on the petitioner’s bank account, subject to certain conditions.
The impugned recovery notice was preceded by an email communication dated 22.01.2026 from the department informing that the bank account of the petitioner’s supplier, Tvl. Praveen Traders, had been attached. The supplier had earlier suffered an adverse order dated 09.05.2025 under Section 122 of the GST enactments. The supplier had filed an appeal against the order on 22.08.2025, for which APL-02 was issued on 23.08.2025, but the appeal was dismissed on 24.10.2025. It was also submitted before the Court that the supplier proposed to file a further appeal against the appellate order.
Parallel proceedings had also been initiated against the petitioner in relation to supplies received from the same supplier. The petitioner had initially received an intimation in Form DRC-01A dated 03.03.2025, followed by a notice in Form DRC-01 dated 04.04.2025.
The department alleged that the petitioner had availed Input Tax Credit (ITC) under Section 16 on invoices raised by the supplier amounting to Rs.3,64,346 for supplies made between 10.12.2024 and 28.12.2024.
According to the petitioner, it had responded to the proceedings by filing a reply dated 02.05.2025 and had also reversed the ITC availed on the invoices issued by the supplier. It was further submitted that after such reversal, the department dropped the proceedings against the petitioner through an order dated 02.05.2025.
The petitioner contended that it did not owe any amount to the supplier in view of the disputes initiated by the department, the earlier proceedings culminating in the order dated 02.05.2025, and the parallel proceedings against the supplier.
On a query raised by the Court regarding receipt of goods, counsel for the petitioner confirmed that the supplies had in fact been received. However, the petitioner had reversed the ITC in view of the departmental proceedings.
The Court observed that there remained a possibility of the petitioner making payment to the supplier towards the supplies covered under 67 invoices issued between 10.12.2024 and 28.12.2024, after adjusting the ITC amount already reversed. The total value of the consignments covered under those invoices was approximately Rs.20,36,267.
The Court further noted that the supplier may or may not ultimately succeed in recovering the amounts from the petitioner and that there was also the possibility of collateral proceedings being initiated by the supplier for such recovery.
Balancing the interests of both the petitioner and the supplier, the Court directed the respondent authorities to vacate the attachment of the petitioner’s bank account arising from the impugned recovery notice. However, this relief was made conditional upon the petitioner not making any direct or indirect payment to the supplier until the collateral disputes were resolved in appropriate proceedings.
The Court also directed the concerned bank to ensure that no payments were made by the petitioner to the supplier unless appropriate orders were obtained from the competent authority in any pending or future collateral proceedings.
Accordingly, the writ petition was disposed of with the above observations and the connected miscellaneous petitions were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Mr.TNC.Kaushik, learned Additional Government Pleader takes notice for the 1st Respondent.
2. This Writ Petition is disposed of after dispensing with the notice on the 2nd Respondent, since no adverse orders are proposed to be passed. In fact the Petitioner ought to have made the supplier also a party to the proceedings However, no adverse orders are proposed to be passed at this stage. This Writ Petition is disposed of after hearing learned counsel for the Petitioner and the learned counsel for the 1st
3. The Petitioner is before this court against the impugned recovery notice in Form GST DRC 13 dated 05.02.2026. The impugned recovery notice was preceded by an intimation of the office of the 1st Respondent through an E-mail dated 22.01.2026, whereby the bank account of the Petitioner’s supplier namely Tvl.Praveen Traders has been attached.
4. Independently, the said supplier had suffered an adverse order dated 09.05.2025 under Section 122 of the respective GST Enactments. Against the said order, supplier also appears to have filed an Appeal on 22.08.2025, in respect of which APL 02 was issued on 23.08.2025. The Appeal of the supplier before the Appellate Authority also appears to have been dismissed on 24.10.2025.
5. It is informed by the learned Counsel for the Petitioner that the supplier is also proposing to file an Appeal against the aforesaid order dated 01.11.2025, rejecting the said Appeal against the order in DRC 07 dated 09.05.2025 passed under Section 122 of the respective GST Enactment.
6. As far as the Petitioner is concerned, parallel proceedings were initiated in respect of the supply made by the said Tvl.Praveen Traders. Petitioner was earlier issued with an intimation in DRC-01 A dated 03.03.2025 followed by a notice in DRC-01 dated 04.04.2025.
7. It appears that the Petitioner has availed Input Tax Credit under Section 16 on various invoices raised on the Petitioner by the said supplier for a total sum of Rs.3,64,346/- between 10.12.2024 and 28.12.2024.
8. According to the Petitioner, the Petitioner had discharged the liability proposed in the aforesaid intimation and notice in DRC-01 dated 04.04.2025 by filing a reply on 02.05.2025 and Petitioner also reversed the amount of Input Tax Credit availed on the supplies made by the said supplier between 10.12.2024 and 28.12.2024, and that the Department also dropped the proceedings against the Petitioner by an order dated 02.05.2025.
9. The case of the Petitioner is that the Petitioner does not owe any amount to the said supplier in view of the dispute raised by the Department which had culminated in the above mentioned intimation and Show Cause Notice to the Petitioner dated 03.03.2025 and 04.04.2025 respectively, and order dated 02.05.2025, and in view of the parallel proceedings initiated against the supplier.
10. On a specific query as to whether the Petitioner had received the consignment from the supplier or not, learned Counsel for the Petitioner submitted that the Petitioner had indeed received the supply, however, has reversed the Input Tax Credit in view of the proceedings.
11. Thus, it is evident that the there is a possibility of the Petitioner making payment for the supplies covered by the 67 invoices between 10.12.2024 and 28.12.2024 less the Input Tax Credit, which was reversed by the Petitioner pursuant to the intimation dated 03.03.2025 and 04.04.2025. The total value of the consignment covered by the 67 invoices approximately comes to Rs.20,36,267/-.
12. The supplier may or may not be entitled to recover the amount, and there is a possibility of further proceedings being initiated to recover the same by the supplier. There is also possibility of the Petitioner making the payment of the aforesaid amount to the said supplier.
13. Although the Petitioner has reversed the Input Tax Credit availed pursuant to the intimation in DRC01 dated 03.03.2025 and notice in DRC 01 dated 04.04.2025. Balancing the interest of the Petitioner and also the supplier, I am inclined to direct the Respondent to vacate the attachment of the Petitioner’s bank account pursuant to the impugned recovery notice, subject to the Petitioner not making any direct or indirect payment to the said supplier pending resolution of collateral disputes in an appropriate forum in appropriate proceedings.
14. The 2nd Respondent/Bank with whom the Petitioner maintains the account shall ensure that no amounts are paid directly or indirectly by the Petitioner to the said supplier unless appropriate orders are obtained from the appropriate authority by the said supplier in collateral proceedings that may be pending or initiated independently.
This Writ Petition is disposed of with the above observations. No costs. Connected Miscellaneous Petitions are closed.
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