Case Law Details
Seven Star Mining Agencies LLP Vs Assistant Commissioner of Central Tax (Telangana High Court)
Telangana High Court Permits GST Appeal Against Recovery Proceedings; Grants Interim Protection from Garnishee Notices
Summary: The Telangana High Court disposed of a writ petition challenging an Order-in-Original, Form DRC-07 and recovery notices in Form GST DRC-13 relating to the tax period from April 2018 to March 2019. The petitioner contended that it became aware of the impugned order only upon issuance of a Form GST DRC-13 to a third party and sought to challenge the proceedings, while the respondent opposed the writ petition on the ground of delay. During the hearing, the petitioner sought liberty to file a statutory appeal along with a delay condonation application under Section 107(1) read with Section 107(4) of the CGST Act, 2017. The High Court declined to examine the merits of the dispute and permitted the petitioner to approach the appellate authority within two weeks with a delay condonation application and the statutory pre-deposit. The Court directed that the appellate authority consider the question of delay and, if satisfied with the reasons, decide the appeal on merits. It also directed that no coercive steps be taken pursuant to the impugned garnishee notices in Form GST DRC-13 during the two-week period for filing the appeal.
Introduction: In M/s. Seven Star Mining Agencies LLP v. Assistant Commissioner of Central Tax & Others, the Telangana High Court considered a writ petition challenging an Order-in-Original, recovery proceedings initiated through Form GST DRC-13, and the constitutional validity of Section 16(2)(c) of the CGST and TGST Acts.
However, instead of examining the merits of the dispute, the Court held that the petitioner should first avail the statutory appellate remedy available under Section 107 of the CGST Act, 2017.
Facts of the Case
The petitioner challenged:
- The constitutional validity of Section 16(2)(c)of the CGST and TGST Acts.
- Order-in-Original No. 110/2023 dated 02.2024along with Form GST DRC-07.
- Garnishee notices issued in Form GST DRC-13for recovery of tax dues.
The petitioner contended that:
- The matter pertained to the tax period April 2018 to March 2019.
- It became aware of the adjudication proceedings only after a Form GST DRC-13 dated 30.09.2025was issued to a third party, M/s. R.K. Enterprises Earth Moving Spares.
- Since no show cause notice had been served, it had no knowledge of the proceedings and approached the High Court after learning about the recovery action.
Petitioner’s Contentions
The petitioner submitted that:
- The adjudication order and recovery proceedings were illegal as it had not been served with the show cause notice.
- The writ petition was not barred by delay because knowledge of the demand arose only through the garnishee notice issued to a third party.
- Alternatively, liberty may be granted to file a statutory appeal along with a delay condonation application under Sections 107(1) and 107(4) of the CGST Act.
Revenue’s Stand
The CBIC opposed the writ petition by contending that:
- The writ petition suffered from considerable delay.
- Reliance was placed on the Supreme Court’s decision in Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Limited (2020) 19 SCC 681, emphasizing that writ jurisdiction should ordinarily not be invoked where statutory remedies are available.
- The petitioner should pursue the appellate remedy provided under the GST law.
Court’s Observations
The High Court observed that the petitioner had sought permission to pursue the statutory appellate remedy instead of pressing the writ petition on merits.
Without expressing any opinion on the constitutional challenge or the legality of the adjudication order and recovery proceedings, the Court held that the appropriate course was to permit the petitioner to file a statutory appeal.
The Court further observed that the appellate authority should independently examine the delay condonation application and, if satisfied with the explanation offered, decide the appeal on its merits.
Considering that the petitioner intended to avail the appellate remedy, the Court also considered it appropriate to protect the petitioner from immediate coercive recovery during the limited period granted for filing the appeal.
Final Decision
The Telangana High Court:
- Granted liberty to the petitioner to file a statutory appeal within two weeks.
- Directed that the appeal be accompanied by the prescribed statutory pre-deposit and a delay condonation application.
- Directed the appellate authority to consider the question of delay in accordance with law and, if satisfied, decide the appeal on merits.
- Ordered that no coercive steps be taken pursuant to the impugned Form GST DRC-13 garnishee notices during the two-week period granted for filing the appeal.
- Disposed of the writ petition without any order as to costs.
Key Takeaways
1. Statutory Appeal Remains the Primary Remedy
Even where recovery proceedings have commenced, the High Court may direct taxpayers to first exhaust the appellate remedy under Section 107 of the CGST Act.
2. Delay Condonation Can Still Be Considered
Where the taxpayer claims lack of knowledge of the adjudication proceedings, the appellate authority is required to independently examine the explanation for delay before rejecting the appeal on limitation.
3. Interim Protection Against Recovery May Be Granted
The High Court may grant temporary protection from coercive recovery proceedings to enable taxpayers to effectively pursue the statutory appellate remedy.
4. Constitutional Issues Need Not Be Decided if Alternative Remedy Exists
Although the petitioner challenged the constitutional validity of Section 16(2)(c) of the CGST and TGST Acts, the Court refrained from examining those issues in view of the availability of an effective appellate mechanism.
Conclusion
In M/s. Seven Star Mining Agencies LLP v. Assistant Commissioner of Central Tax & Others, the Telangana High Court reaffirmed the principle that disputes arising from GST adjudication should ordinarily be addressed through the statutory appellate framework. At the same time, the Court ensured procedural fairness by granting the taxpayer an opportunity to file a delayed appeal and protecting it from coercive recovery through garnishee proceedings during the interim period. The ruling underscores the judiciary’s consistent approach of balancing the availability of alternate remedies with the need to safeguard taxpayers against irreversible recovery actions while appellate rights are being exercised.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. P.Venkat Prasad, learned counsel representing M/s. P.V. Prasad Associates, appearing for the petitioner and Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appearing for respondent Nos.1 to 4.
2. The writ petition has been preferred with the following prayer:
“For all the reasons stated in the accompanying affidavit, it is prayed that this Hon’ble High Court may be pleased to issue a writ, order, or direction more particularly one in the nature of writ of mandamus declaring
a) The Provisions of Section 16(2)(c) of the CGST Act, 2017 as well as Section 16(2)(c) of the TGST Act, 2017 as arbitrary, without jurisdiction, unconstitutional, against the principles of natural justice and as ultra-vires to the provisions of Article 14, 300A and Article 19(1)(g) of the Constitution of India.
b) The Order-in-Original No. 110/2023 dated 01.02.2024 read with Form DRC-07 bearing ZD3602240104131 dated 07.02.2024 as being void, arbitrary, illegal, without jurisdiction, without authority of law apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India, and to consequently set aside the same.
c) Recovery notices in Form GST DRC 13 dated 10.04.2026 issued to Respondent Nos. 6 to 7 as being void, arbitrary, illegal, without jurisdiction, without authority of law apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India, and to consequently set aside the same.
d) Recovery notices in Form GST DRC 13 dated 30.09.2025 vide C.No: V/01/04/2024 issued to the Respondent no. 8 as being void, arbitrary, illegal, without jurisdiction, without authority of law apart from being violative of Articles 14, 19(1)(g) and 265 of the Constitution of India, and to consequently set aside the same and/or pass such further or other order(s) as this Hon’ble Court may deem fit and proper in the circumstances of the case.”
3. The petitioner has taken a plea that it came to know of the impugned order when Form GST DRC-13 dated 30.09.2025 was issued to third person – M/s. R.K. Enterprises Earth Moving Spares. The matter relates to tax period from April, 2018 to March, 2019. Therefore, the matter is not belated. This Court may entertain the writ petition on the ground that the petitioner was not served with the show cause notice and not aware of the proceedings initiated by the Department.
4. Learned Senior Standing Counsel for CBIC has opposed the prayer at the outset on the ground of huge delay in preferring this writ petition. He has relied upon the decision of the Hon’ble Supreme Court in Assistant Commissioner (CT) LTU, Kakinada, v. Glaxo Smith Kline Consumer Health Care Limited1 .
5. Learned counsel for the petitioner, therefore, seeks liberty to the petitioner to prefer an appeal with a delay condonation application in terms of Section 107(1) read with Section 107(4) of the Central Goods and Services Tax Act, 2017. He submits that the appellate authority may be directed to consider the question of delay in view of the reasons explained in the delay condonation application.
6. Having regard to the facts and circumstances as noted above, this Court is not inclined to enter into the merits of the issue as the petitioner is being allowed liberty to approach the appellate authority. He may approach the appellate authority within a period of two weeks with a delay condonation application and statutory pre-deposit. It is open for the petitioner to take all such grounds in law and on facts in the appeal. Needless to say, the appellate authority would consider the question of delay and if it is satisfied with the reasons explained in the delay condonation application, it shall decide the case on merits. During the period of two weeks within which the petitioner has to file an appeal, no coercive steps be taken against the petitioner pursuant to the impugned garnishee notices in Form GST DRC-13 dated 30.09.2025 and 10.04.2026.
7. The instant Writ Petition is disposed of accordingly. There shall be no order as to costs.
Miscellaneous applications, if any pending, shall stand closed.
Note:
1 (2020) 19 SCC 681
Author Bio
