Innotex (India) Private Limited Vs State of Rajasthan (Rajasthan High Court)
Summary: The Rajasthan High Court, Jaipur Bench, considered a writ petition filed by M/s Innotex (India) Private Limited challenging a GST demand and the subsequent rejection of its rectification application. The petitioner sought quashing of the order dated 03.12.2025 passed under Section 73 of the CGST/RGST Act, 2017, under which tax demand of Rs.2,58,55,445/-, interest of Rs.1,69,26,223/- and penalty of Rs.26,31,862/- were raised, together with the consequential rectification rejection order dated 24.04.2026. The petitioner’s books of accounts, records and returns for FY 2021-22 had been audited, following which Form GST ADT-02 dated 01.09.2025 was issued and Form GST DRC-01 dated 18.09.2025 proposed the demand. The petitioner contended that the order dated 03.12.2025 had merely been uploaded under “Additional Notices and Orders” on the GST portal and had not been manually served or supplied in hard copy.
Its GST affairs had been handled by an accountant whose registered email ID and mobile number remained on the portal even after he had left its service, and the petitioner claimed that it became aware of the proceedings only subsequently. On 03.03.2026, the petitioner filed an application under Section 161, seeking rectification and a personal hearing to place reconciliation and supporting material on record. While that application was pending, the department debited the balance available in the Electronic Credit Ledger and blocked the ledger to the extent of approximately Rs.4.52 crores. The rectification application was rejected on 24.04.2026 on the ground that no error apparent on the face of the record was found, without granting the requested personal hearing. Further, Section 79(1)(c) proceedings were invoked through Form GST DRC-13 dated 12.05.2026 against the petitioner’s bank accounts, directing a hold on Rs.4,54,13,530/- and its remittance towards the demand. The respondents opposed maintainability of the writ petition on the ground that an alternative statutory remedy of appeal under Section 107 of the CGST Act, 2017 was available. The Court reproduced Section 107(1), which provides for an appeal to the Appellate Authority within three months from communication of the decision or order. The High Court declined to directly entertain the writ petition without exhaustion of the alternate statutory remedy and dismissed the petition with liberty to pursue an appeal under Section 107.
The Court directed that if the appeal was filed within 30 days, it should be entertained without objection as to limitation and decided on merits with respect to the rectification order dated 24.04.2026 read with the Order-in-Original dated 03.12.2025. All issues and contentions raised in the writ petition were expressly left open for adjudication by the appellate authority. The source order contains a reference in paragraph 5 to an impugned order dated 18.02.2026, while the operative direction in paragraph 7 refers to the rectification order dated 24.04.2026 read with the Order-in-Original dated 03.12.2025; the inconsistency is retained without correction.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. The petitioner herein, inter alia, seeks quashing of the order dated 03.12.2025 passed under Section 73 of the CGST/RGST Act, 2017, whereby demand of GST amounting to Rs.2,58,55,445/-, interest amounting to Rs.1,69,26,223/- and penalty of Rs.26,31,862/- has been raised against the petitioner, along with the consequential order dated 24.04.2026, rejecting the petitioner’s application for rectification.
2. Brief facts of the case are that the petitioner’s books of accounts, records and returns for the Financial Year 2021-22 were audited by the respondent-department, pursuant to which Form GST ADT-02 dated 01.09.2025 was issued. Thereafter, Form GST DRC-01 dated 18.09.2025 was issued proposing a tax demand of Rs. 2,58,55,445/-, along with applicable interest and penalty. Pursuant thereto, an order under Section 73 of the CGST/RGST Act, 2017 was passed on 03.12.2025, confirming a tax demand of Rs. 2,58,55,445/-, interest of Rs. 1,69,26,223/- and penalty of Rs. 26,31,852/-. The said order was uploaded on the GST portal under the head “Additional Notices and Orders”. The petitioner contends that the order was neither served manually nor supplied in hard copy and that it came to know of the order only when an officer of the respondent-department subsequently informed the petitioner telephonically about the outstanding demand. It is stated that the petitioner’s GST-related affairs were being handled by its accountant, whose email ID and mobile number were registered on the GST portal, but who had left the petitioner’s service by the time the relevant notices and order were issued. Consequently, the petitioner claims to have remained unaware of the proceedings. Upon engaging a new counsel and having the GST portal examined, the petitioner came to know of the order and the demand raised thereunder.
2.1 Thereafter, on 03.03.2026, the petitioner submitted an application under Section 161 of the CGST/RGST Act, 2017 seeking rectification of the order dated 03.12.2025 and specifically sought an opportunity of personal hearing to place on record the relevant reconciliation and supporting material. While the said application was pending consideration, the respondent-department, on 07.04.2026, debited the balance available in the petitioner’s Electronic Credit Ledger and blocked the ledger to the extent of approximately Rs. 4.52 crores. The rectification application was thereafter rejected vide order dated 24.04.2026 on the ground that no error apparent on the face of the record was found, without granting the petitioner the requested opportunity of personal hearing. The petitioner has consequently approached this Court challenging the order dated 03.12.2025 as well as the rectification rejection order dated 24.04.2026. The petitioner states that the statutory appeal against the order dated 03.12.2025 could not be instituted within the prescribed period as the petitioner claims to have acquired knowledge of the order only subsequently, and therefore seeks condonation of the delay in filing the appeal on the aforesaid ground.
2.2. Respondent No.3 issued Form GST DRC-13 dated 12.05.2026 under Section 79(1)(c) of the CGST/RGST Act, 2017 to the Managers of Punjab National Bank, Delhi and Bank of Baroda, in respect of the petitioner’s bank accounts, directing them to place a hold on Rs.4,54,13,530/- and remit the same towards the demand. It is, therefore, prayed that the order dated 03.12.2025 and the rectification rejection order dated 24.04.2026 be set aside and, in the alternative, the matter be remitted to respondent No.3 for fresh consideration on merits after affording an opportunity of hearing to the petitioner, with consequential directions for removal of the hold/attachment over the petitioner’s bank accounts and unblocking of the Electronic Credit Ledger after re-crediting the amount debited therefrom.
3. In the aforesaid backdrop, we have heard the learned counsels for the parties and perused the record.
4. At the outset, learned counsels for the respondents object to the maintainability of the writ petition herein stating that the alternative remedy as provided under Section 107 of the CGST Act, 2017, has not been availed.
5. Statutory remedy by way of an appeal under Section 107 of the CGST Act, 2017 before the Appellate Authority is provided against the impugned order dated 18.02.2026. Section 107 reads as under:-
“Section 107. Appeals to Appellate Authority.-
(1) Any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.
x-x-x-x-x”
6. In view of the aforesaid, we are not inclined to directly entertain the writ petition without the petitioner exhausting its alternate statutory remedy.
7. Accordingly, the present writ petition is dismissed with liberty to seek appropriate statutory remedy of an appeal under Section 107 of the CGST/RGST Act, 2017. In case the appeal is filed within 30 days, the same shall be entertained without raising any objection as to limitations and shall be disposed of on merits with respect to the impugned rectification order dated 24.04.2026 read with Order-in-Original dated 03.12.2025.
8. It is made clear that all issues and contentions raised in the present writ petition are left open to be urged before and adjudicated upon by the appellate authority in accordance with law.
9. Accordingly, the present writ petition stands disposed of.
10. All pending application(s) also stand disposed of.
