Case Law Details
SJR Prime Corporation Private Limited Vs Superintendent of Central Tax (Karnataka High Court)
The Karnataka High Court considered a writ petition challenging multiple communications and recovery actions initiated under the Central Goods and Services Tax framework. The petitioner sought quashing of communications, a garnishee notice issued to its bank under Section 79(1)(c), and an order relating to recovery of interest for the period July 2017 to March 2018. The petitioner also sought lifting of attachment on its bank account.
The Court noted that similar reliefs had already been sought in an earlier writ petition, which was disposed of by directing the petitioner to appear before the authorities and submit a reply. The earlier order also required the authorities to provide relevant documents and proceed in accordance with law after granting an opportunity of hearing. Additionally, partial relief was granted by vacating the freezing of the bank account subject to maintaining a minimum balance corresponding to the alleged demand.
Pursuant to the earlier directions, the petitioner appeared before the authority, and the department issued a subsequent communication detailing the recovery proceedings initiated under Section 79 without issuing a show cause notice under Sections 73 or 74. The communication also enclosed documents such as notices, reminders, and prior correspondence forming the basis of recovery.
However, the Court observed that despite receiving the communication and supporting documents, the petitioner failed to submit any reply or response. It was also noted that the authorities had not proceeded further due to the absence of such response.
In view of this undisputed position, the Court declined to examine the merits of the challenge raised in the writ petition. Instead, it held that the appropriate course was to direct the petitioner to participate in the proceedings by submitting its reply. The Court emphasized the importance of procedural compliance and providing an opportunity to both sides before adjudication.
Accordingly, the writ petition was disposed of with directions to the petitioner to submit its reply along with relevant documents within four weeks. The respondent authority was directed to consider the reply, provide a reasonable opportunity of hearing, and pass appropriate orders in accordance with law within three months from receipt of the reply.
The ruling underscores that when an opportunity to respond has been granted but not availed, courts may refrain from intervening and instead direct completion of the statutory process.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
In this petition, the petitioner seeks the following reliefs:
“i. Issue a writ of certiorari or any other writ as the Hon’ble High Court may deem fit and quash the following:
ANNEXURE-C: Impugned communication issued by the Respondent No.2 on 05.12.2023 in GEXCOM/ADT/CAG/21/2023-CGST-RANGE-E-DIV-8-COMMRTE-Bengaluru(E).
ANNEXURE-E: Impugned notice dated 30.07.2024 issued by the Respondent No.2 to the Petitioner’s bank under Section 79(1)(c) of the CGST Act in GST DRC-13 in Notice No.02/2023-24 (DRC-13) and DIN: 20240757000000000D2A.
ANNEXURE-H: Impugned order/communication dated 08.11.2024 issued by the Respondent No.2 in DIN:20241157000000666CA4 for the period July-2017 to March-2018.
ii. To issue the writ of mandamus or any other appropriate writ in the nature of mandamus, order or direction, directing the respondent No.2 to lift the attachment placed on the bank Account No.32445027247 of the Petitioner maintained with State Bank of India, No.117, 7th Block, Industrial Layout, Koramangala, Bengaluru-560034 for recovery of the outstanding interest payable in pursuance to garnishee notice dated 30.07.2024 issued by the respondent No.2 vide Annexure-E;
iii. To issue any other order(s), direction(s), writ(s) or any other relief(s) as the Hon’ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice.”
2. Heard learned counsel for the petitioner and learned counsel for respondents and perused the material on record.
3. A perusal of the material on record will indicate that the prayer Nos.i and ii were earlier sought for by the petitioner in Writ Petition No.26351/2024, which was disposed of by this Court, by order dated 01.10.2024. The said order reads as under:
“ORAL ORDER
In this petition, petitioner seeks the following reliefs:
“ i) issue a writ of certiorari or any other writ as the Hon’ble High Court may deem fit and quash the following:
ANNEXURE-E impugned notice dated 30.7.2024 issued by the Respondent No.2 to the Petitioner’s bank under section 79(1)(c) of the CGST Act in GST DRC-13 in Notice No.02/2023 (DRC-13) and DIN: 20240757000000000D2A.
ii. To issue the writ of mandamus or any other appropriate writ in the nature of mandamus writ, order or direction directing direct the Respondent No.2 to lift the attachment placed on the bank account No.32445027247 of the Petitioner maintained with State Bank of India, No. 117, 7th Block Industrial Layout, Koramangala , Bengaluru – 560034 for recovery of the outstanding interest payable in pursuant to garnishee notice dated 30.07.2024 issued by Respondent No.2 (ANNEXURE-E).
iii) To issue any other order(s), direction(s), writ(s) or any other relief(s) as this Hon’ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice;”
2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned counsel for the petitioner submits that the impugned notice in GST DRC – 13 dated 30.07.2024 issued by respondent No.2 under Section 79(1)(c) of the CGST Act to the State Bank of India blocking/freezing the Bank account for the alleged demand in a sum of Rs.64,49,778/- is illegal, arbitrary and contrary to the principles of natural justice apart from being vitiated on account of non following of prescribed law prior to issuing notice invoking Section 79 of the CGST Act and as such, the impugned order at Annexure-E deserves to be quashed.
4. Per contra, learned counsel for the respondent on instructions submits that respondent has followed the procedure prescribed in law before issuing the notice, which does not warrant interference by this Court.
5. Though several contentions have been urged by both sides with regard to compliance/non compliance of the mandatory prescribed by the CGST Act prior to issue of notice, without expressing any opinion on the merits/demerits of the rival contentions and in order to provide one more opportunity to the petitioner to submit his reply to the alleged demand made in Annexure-E, I deem it just and appropriate to dispose of this petition directing the petitioner to appear before respondent No.2 on 14.10.2024 and to proceed further in accordance with law.
6. In the result, I pass the following:
ORDER
i. Petition is hereby disposed of.
ii. Petitioner is directed to appear before respondent No.2 on 14.10.2024.
iii. On that day, i.e., 14.10.2024, respondent shall furnish copies of notices/intimations/documents etc., which have come into existence prior to Annexure-E dated 30.07.2024 to the petitioner.
iv. Upon the respondents furnishing the said documents to the petitioner, petitioner shall submit reply to the same, pursuant to which respondent No.2 shall provide sufficient and reasonable opportunity to the petitioner and proceed further in accordance with law.
v. It is further directed that blocking/freezing of the Bank account of the petitioner in State Bank of India, Koramangala shall stand vacated except to the extent of alleged demand subject to the condition that the petitioner shall maintain minimum balance of Rs.64,49,778/- till disposal of proceedings by respondent No.2, who shall conclude the proceedings within a period of one month from 14.10.2024.
4. As can be seen from the aforesaid order passed by this Court, the petitioner appeared before the respondent No.2 on 14.10.2024 and pursuant to which, the respondent No.2 issued the impugned communication dated 08.11.2024 (Annexure-H). The relevant portion of the same reads as under:
“3. In this regard, as explained above, recovery proceedings were initiated under Section 79 of the CGST Act by this office without any need of resorting to issuance of SCN under sec.73 or sec.74 of the CGST Act, after following the due procedure of the recovery proceedings as prescribed by the Central Board of Indirect Taxes and Customs (“CBIT”) vide Instruction No.01/2022-GST dated January 7, 2022. Accordingly, as directed by the Hon’ble High Court of Karnataka in the aforesaid order, please find attached copies of following relevant documents issued by this office in respect of recovery proceedings of the interest amount:-
i. ASMt-10 dated 24.02.2023 with DIN 202570000009191B;
ii. Reminder emails dated 27.09.2023 and 05.10.2023.;
iii. Letter No.GEXCOM/ADT/CAG/21/2023-CGST-RANGE-E-DIV-8-COMMRTE-Bengaluru *E) dated 18.10.2023 of the Superintendent of Central Tax, Range-E, Division-8, CGST Commissionerate, Bengaluru East;
iv. DRC-13 dated 30.07.2024.”
5. It is an undisputed fact borne out from the material on record that, in pursuant of the aforesaid order dated 08.11.2024 (Annexure-H), the petitioner has not submitted its reply to the same and the respondents have not proceed further in the matter.
6. Under these circumstances, though several contentions have been urged by the petitioner in the present petition in support of its claim, having regard to undisputed fact that the petitioner has not submitted its reply / response to the impugned communication at Annexure-H dated 08.11.2024, I deem it just and appropriate to dispose of this petition, directing the petitioner to submit its reply / response to the impugned communication at Annexure-H dated 08.11.2024 and by further directing the respondent No.2 to consider the said reply and documents etc., produced by the petitioner and proceed further in accordance with law.
7. In the result, I pass the following:
O R D E R
a. Writ petition is hereby disposed of;
b. The petitioner is hereby directed to submit its reply / response along with relevant documents if any to the impugned communication issued by the respondent No.2 at Annexure-H dated 08.11.2024 within a period of four weeks from today;
c. The respondent No.2, immediately upon receipt of reply / response made along with relevant documents if any as stated above, shall consider the same by providing a sufficient and reasonable opportunity of hearing to the petitioner and take appropriate decision or pass appropriate orders in accordance with law, within an outer limit of three months from the date of the petitioner submitting its reply / response as stated above.
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