Galaxy International Vs Union of India & Ors. (Bombay High Court)
Bombay HC quashes recovery notice issued to a Bank holding that the notice must be issued to the Petitioner & an opportunity must be given to rebut the presumption of liability
The Bombay High Court, in the case of M/s. Galaxy International v. Union of India & Ors., recently quashed a recovery notice issued to a bank under Section 79(1)(c) of the Central Goods and Services Tax (CGST) Act, 2017. The court determined that such notices must be served directly to the person from whom money is believed to be due, allowing them an opportunity to rebut the presumption of liability. Galaxy International, the petitioner, challenged a July 9, 2024, notice addressed to a Gurugram bank branch, demanding ₹30.19 crores in GST dues allegedly owed by M/s. Durga Madhab Panda (Urneed Online Retail). The petitioner argued that it neither held money for the alleged defaulter nor had an account in Gurugram, and critically, no notice was served to them directly, thus denying them the chance to challenge the claim.
The court observed that Section 79(1)(c) of the CGST Act explicitly requires a notice to be served upon a person who holds or may hold money for a defaulter. This provision is designed to provide that person with an opportunity to demonstrate that no amount is due to the person in default. Given that no notice was served to Galaxy International, the court found that the petitioner was deprived of this crucial opportunity to prove that it did not hold any money for the defaulter. Citing the Karnataka High Court’s decision in J.R. Prime Corporation Pvt. Ltd. v. Superintendent of Central Tax, Bengaluru, which similarly quashed a notice issued directly to a bank without prior notice to the assessee, the Bombay High Court concluded that the impugned notice was unsustainable due to non-compliance with the pre-conditions under Section 79. Consequently, the court quashed the notice and allowed the respondents to issue a fresh notice to Galaxy International at their correct address, which was already on record.
******
The Hon’ble Bombay High Court in the case of M/s. Galaxy International v. Union of India & Ors. [Writ Petition No. 11399 of 2024, dated June 24, 2025] held that notice under Section 79(1)(c) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) ought to be issued to the Petitioner instead of the Bank in so far as the Petitioner must be allowed an opportunity of proving to the satisfaction of the proper officer that no amount was due and payable by the Petitioner to a person in default.
