Nexus Shantiniketan Retail Private Limited Vs Union of India (Karnataka High Court)
In a recent development, the Karnataka High Court has temporarily halted coercive recovery proceedings initiated by GST authorities against Nexus Shantiniketan Retail Private Limited. The company was facing a demand of approximately ₹9.51 crore, and the tax department had issued notices to its tenants, M/s Reliance Project and Property Management Services Ltd. and M/s. Westside Unit of Trent Ltd., to recover the dues under Form GST DRC-13. The court’s decision provides relief to the petitioner, reserving liberty to file an appeal before the appellate authority, and extends interim protection against further recovery actions.
Nexus Shantiniketan Retail had filed a petition challenging various aspects of the recovery process, including the validity of the recovery notice (Form GST DRC-13), the alleged forceful recovery of ₹56.44 lakh, and the non-receipt of the original assessment order. The petitioner sought a writ of certiorari to quash the recovery notice, a writ of mandamus to prevent the respondent bank from releasing the demanded amount, and a directive to serve the Order-in-Original, considering the date of service as the communication date for appeal purposes. Crucially, the petitioner also requested a mandamus to halt any coercive action.
During the proceedings, it was revealed that the Order-in-Original dated June 23, 2024, which formed the basis of the demand, was eventually provided to the petitioner via email on April 22, 2025, during the pendency of the writ petition. This development was a key factor in the court’s decision to dispose of the petition while granting the petitioner the option to pursue their appellate remedy. The court noted the petitioner’s submission to this effect and proceeded to pass an order to that end.
The interim orders passed by the High Court during the course of the petition played a significant role in protecting the petitioner from immediate coercive action. On April 2, 2025, the court directed respondents not to withdraw or recover further money from the petitioner’s bank account. This was reinforced on April 4, 2025, with an additional directive allowing Nexus Shantiniketan Retail to operate its bank account. Furthermore, on April 15, 2025, the court specifically directed respondents not to take any “precipitative/coercive steps” against any of the petitioner’s tenants pursuant to the recovery notices. These interim protections are now extended for a period of six weeks from the date of the High Court’s final order, providing a window for the petitioner to file their appeal.
The case underscores the importance of due process in tax recovery, particularly the timely and proper communication of assessment orders, which serves as the starting point for a taxpayer’s right to appeal. The power to provisionally attach property, including bank accounts, under Section 83(1) of the CGST Act is a stringent measure aimed at protecting government revenue. However, courts have consistently emphasized that such powers must be exercised judiciously and not coercively, especially without proper adjudication or when the taxpayer has not been duly informed of the demand. While the full merits of Nexus Shantiniketan Retail’s case will now be decided by the appellate authority, the High Court’s intervention has ensured that the company has the opportunity to pursue its legal recourse without immediate financial duress. The amounts already recovered by the department will remain subject to the final outcome of the appeals.
The matter was argued by Ld. Counsel Bharat Raichandani.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
Learned counsel for the petitioner has filed a memo along with documents and the same are taken on record.
2. In this petition, petitioner seeks for the following reliefs:-
“a) Issue a writ of certiorari, or a writ or order or direction in the nature of writ of certiorari and after going into the validity and legality of the provisions set aside and quash the Impugned Notice in Form GST DRC-13 vide DIN 20250357000000666d0E dated 27.03.2025 (Annexure-B) issued by the Respondent No.2 as bad in law.
b) Issue a writ of Mandamus, or a writ or order or direction in the nature of writ of Mandamus and after going into the validity and legality of the provisions direct the Respondent No.6 to not to pay / release the sum of Rs.9,51,79,611/- under Section 83(1) of the CGST Act in terms of Impugned Notice in Form GST DRC-13 vide DIN 20250357000000666D0E dated 27.03.2025 (Annexure-B) issued by the Respondent No.2 to Respondent No.6.
c) Issue a writ of Mandamus, or a writ or order or direction in the nature of writ of Mandamus and after going into the validity and legality of the provisions direct the Respondent No.4 to serve the Order in Original vide No.02/GST/2023-24 dated 23.06.2024 and to consider the date of serving the order as date of the communication of the order.
d) Issue a writ of Mandamus, or a writ or order or direction in the nature of writ of Mandamus and after going into the validity and legality of the provisions direct the Respondent No.2 to refund the amount of Rs.56,44,918/- along with interest, which was recovered by Respondent No.2 under force and threat (Annexure-M).
e) Issue a writ of Mandamus, or a writ or order or direction in the nature of writ of mandamus and direct the Respondent No.2 by himself, his subordinate servants and agents, pending disposal of the present petition not take coercive action based on the Impugned Notice in Form GST DRC-13 vide DIN 20250357000000666D0E dated 27.03.2025 (Annexure-B) issued by the Respondent No.2;
f) Issue any other direction or grant any other relief, as deemed fit in the facts and circumstances of this case, in the interest of justice.
g) Issue a direction to provide for the cost of this petition.”
3. After arguing the matter for some time, learned counsel for the petitioner submits that in view of furnishing of Order-in-Original dated 23.06.2023 to the petitioner via email dated 22.04.2025 by the respondents during the pendency of the present petition, the present petition may be disposed of reserving liberty in favour of the petitioner to file an appeal before the appellate authority in accordance with law and by continuing the interim order passed by this Court for a period of four weeks from today. The said submission is placed on record.
4. On 02.04.2025, 04.04.2025 and 15.04.2024, the following interim orders were passed by this Court:-
Dated 02.04.2025
“Sri. Madanan Pillai, learned CGC is directed to accept notice for respondent No.1.
Sri. Jeevan J. Neeralgi, learned counsel is directed to accept notice for respondent Nos.2 to 5.
Sri. Francis Xavier, learned counsel is directed to accept notice for respondent No.6.
Copies to be served.
Re-list on 04.04.2025.
In the meanwhile, respondents are directed not to withdraw / recover further money from the bank account of the petitioner in respondent No.6 – bank, till the next date of hearing.
Office objection to be complied with by the next date of hearing.
Hand delivery of this order is permitted.” Dated 04.04.2025
“Learned counsel for the respondents seeks time to produce a copy of the order dated 23.06.2024 passed against the petitioner by the next date of hearing.
Re-list on 17.03.2025 at 2:30 p.m.
In the meanwhile, in addition to the interim direction/order dated 02.04.2025, whereby respondent Nos.1 to 5 were directed not to withdraw/recover any further money from the bank account of the petitioner from respondent No.6-Bank, respondent No.6-Bank shall permit the petitioner to operate the bank account, until further orders.
Hand delivery of this order is permitted.”
Dated 15.04.2025
“This matter came up for hearing on 04.04.2025 and this Court directed the matter to be listed on 17.04.2025. In the meanwhile, the petitioner has moved the present petition to be taken up today i.e., 15.04.2025 at 2:30 p.m., inter alia contending that despite pendency of the present petition and the interim orders dated 02.04.2025 and 04.04.2025 passed by this Court, respondents have issued two notices in Form GST DRC-13, both dated 20.03.2025, to the tenants of the petitioner i.e., M/s Reliance Project and Property Management Services Ltd., and M/s. Westside Unit of Trent Ltd., and as such, there is urgency in the matter.
Learned counsel for the petitioner has filed a memo of even date, enclosing copies of two notices, both dated 20.03.2025 and the same are taken on record.
Learned counsel for the respondents seeks time to obtain instructions.
Re-list on 23.04.2025 at 2:30 p.m.
In the meanwhile, respondents are directed not to take any precipitative/coercive steps against any of the tenants of the petitioner pursuant to the aforesaid notices or otherwise, till the next date of hearing.
In addition thereto, the interim orders dated 02.04.2025 and 04.04.2025 are extended till the next date of hearing.
Hand delivery of this order is permitted.”
5. 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.
