Case Law Details
Gayathri Seeds & Pesticides Vs Assistant Commissioner of Central Tax (Telangana High Court)
Telangana High Court Permits Appeal Against GST Section 73 Order Despite Delay Due to Alleged Non-Service of Order
The Telangana High Court granted liberty to the taxpayer to pursue the statutory appellate remedy against a GST demand order passed under Section 73 of the CGST Act, while directing the appellate authority to consider the appeal in accordance with law, taking into account that the petitioner had been pursuing a writ remedy before the Court.
Introduction
In M/s. Gayathri Seeds & Pesticides vs Assistant Commissioner of Central Tax & Others, the Telangana High Court dealt with a challenge to an Order-in-Original and Form GST DRC-07 issued under Section 73 of the CGST Act for FY 2020-21.
The petitioner contended that it became aware of the GST demand only after receiving a garnishee notice for attachment of its bank account and therefore sought relief before the High Court.
Background of the Case
The petitioner challenged:
- Order-in-Original dated 30.01.2025
- Summary Order in Form GST DRC-07 dated 04.02.2025
- Proceedings under Section 73 of the CGST Act, 2017
- Tax period 2020-21
The petitioner submitted that:
- It was unaware of the demand order.
- Knowledge of the proceedings arose only upon receipt of a garnishee notice in Form GST DRC-13 dated 17.10.2025.
- Its bank account had been subjected to recovery proceedings.
Key Legal Issue
The principal issue before the Court was:
Whether a taxpayer who claims to have become aware of a GST demand only upon receipt of recovery proceedings should be permitted to avail the appellate remedy despite delay?
Petitioner’s Contentions
The petitioner argued that:
- It came to know of the tax liability only after issuance of the garnishee notice.
- Recovery proceedings had already commenced through bank account attachment.
- Liberty should be granted to file a statutory appeal.
- Any delay in filing the appeal should be viewed sympathetically considering the circumstances.
Revenue’s Stand
The Revenue submitted that:
- The petitioner had an effective alternative remedy under Section 107 of the CGST Act.
- All factual and legal grounds could be raised before the appellate authority.
- The dispute should be adjudicated through the statutory appellate mechanism.
Court’s Observations
The Telangana High Court observed that:
- The petitioner intended to avail the statutory appellate remedy.
- The Court did not consider it necessary to examine the merits of the GST demand in writ jurisdiction.
- The petitioner should be allowed to approach the appellate authority and raise all available factual and legal grounds.
- The fact that the petitioner had been pursuing a writ remedy could be considered while dealing with the appeal.
Final Directions of the Court
The Court disposed of the writ petition with the following directions:
1. The petitioner may file a statutory appeal within two weeks.
2. The appeal must be accompanied by the statutory pre-deposit.
3. The appellate authority shall consider the appeal in accordance with law.
4. The petitioner is free to raise all grounds of fact and law before the appellate authority.
5. No coercive recovery action shall be taken pursuant to the garnishee notice during the two-week period granted for filing the appeal.
6. The Court did not express any opinion on the merits of the dispute.
7. No order as to costs was passed.
Author’s Analysis
1. High Court Reinforces Preference for Statutory Appeals
The judgment reiterates the Telangana High Court’s consistent approach of directing taxpayers to avail the statutory appellate remedy under Section 107 before invoking writ jurisdiction.
2. Relief Granted Despite Recovery Proceedings
Although recovery proceedings had already commenced through a garnishee notice, the Court protected the taxpayer by restraining coercive action during the period granted for filing the appeal.
3. Pursuit of Writ Remedy May Be Relevant for Delay Consideration
The Court specifically observed that the appellate authority may take into account the fact that the petitioner had been prosecuting a writ petition while considering the appeal.
This provides procedural protection where taxpayers approach the High Court before invoking the appellate remedy.
4. Recovery Cannot Override Appellate Rights
The order reflects the principle that taxpayers should be afforded a reasonable opportunity to challenge adjudication orders before coercive recovery measures are pursued.
5. Consistent Telangana GST Jurisprudence
The decision aligns with several recent Telangana High Court rulings where taxpayers claiming lack of knowledge of GST orders uploaded on the portal or discovered during recovery proceedings have been directed to pursue statutory appeals with appropriate protection from immediate recovery.
Conclusion
The Telangana High Court in M/s. Gayathri Seeds & Pesticides vs Assistant Commissioner of Central Tax & Others reaffirmed that disputes arising from GST demand orders should ordinarily be pursued through the statutory appellate mechanism. At the same time, the Court protected the taxpayer from immediate recovery action and ensured an opportunity to challenge the demand before the appellate authority.
The ruling highlights the Court’s balanced approach of encouraging statutory remedies while safeguarding taxpayers from coercive recovery during the transition to the appellate process.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Sri K.P. Amarnath Reddy, learned counsel for the petitioner.
Sri Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appears for respondent Nos.1 to 3.
Sri B. Mukherjee, learned counsel representing Sri N.Bhujanga Rao, learned Deputy Solicitor General of India, appears for respondent No.4.
2. The writ petition has been preferred against the order-in-original dated 30.01.2025 along with summary of order in Form GST DRC-07 dated 04.02.2025 passed under Section 73 of the Central Goods and Services Tax Act, 2017, for the tax period 2020-2021 imposing the tax, penalty and interest.
3. The petitioner has approached this Court alleging that it has come to know about the liability only upon the issuance of the garnishee notice in Form GST DRC-13 on 17.10.2025 for attachment of its bank account (Annexure P4).
4. However, after some arguments, learned counsel for the petitioner seeks liberty to the petitioner to prefer an appeal against the order-in-original. He submits that some delay might have been occurred in approaching the appellate authority and therefore, he may be directed to consider it sympathetically.
5. Learned Senior Standing Counsel for CBIC submits that the petitioner was at liberty to prefer an appeal against the order-in-original and DRC-07 taking all the grounds as are available in law and on facts before the appellate authority in respect of the subject tax period.
6. However, upon hearing the learned counsel for the parties, since the petitioner seeks liberty to prefer an appeal, we do not wish to comment on the merits of the contentions raised by the parties.
7. If the petitioner prefers an appeal within a period of two weeks with statutory pre-deposit, the learned appellate authority would consider it in accordance with law also keeping into consideration that it has been pursuing the writ remedy before this Court in the meantime as well. The petitioner will be at liberty to take all the grounds in law and on facts before the appellate authority. During the period of two weeks within which the petitioner has to file the appeal, no coercive steps be taken against the petitioner pursuant to the impugned garnishee notice.
8. The writ petition is accordingly disposed of with the aforesaid liberty. However, there shall be no order as to costs.
Miscellaneous applications pending, if any, shall stand closed.
Author Bio
