Telangana HC Permits Delayed GST Appeal Against Section 74 Demand Orders

Imthiaz Ali Mohammed Vs Superintendent of Central Tax (Telangana High Court)

Telangana High Court Permits Delayed GST Appeal Against Section 74 Demand Orders – Relief Granted to Taxpayer Despite Delay in Challenging DRC-07 Recovery Proceeding 

The Telangana High Court in Mr. Imthiaz Ali Mohammed v. Superintendent of Central Tax once again adopted a liberal approach in matters involving delayed GST appeals and coercive recovery proceedings. The Court granted the petitioner an opportunity to avail the statutory appellate remedy despite delay and also protected the taxpayer from immediate coercive recovery action during the interim period.

Introduction

Under the GST regime, taxpayers frequently approach High Courts after discovering assessment orders only at the recovery stage, particularly when garnishee notices are issued for attachment of bank accounts. In many cases, taxpayers contend that they were unaware of the adjudication proceedings or the final demand orders passed under Section 74 of the CGST/SGST Acts.

In the present case, the Telangana High Court dealt with a situation where the petitioner claimed to have become aware of the tax liability only after issuance of a garnishee notice attaching the bank account. Instead of deciding the merits of the assessment, the Court allowed the petitioner to pursue the statutory appellate remedy with protection against coercive action.

Case Background

The petitioner, proprietor of M/s Mawa Medicals and Surgicals, challenged the following proceedings before the Telangana High Court:

• Order-in-Original dated 24.02.2025;
• Summary of Order in Form GST DRC-07 dated 25.02.2025; and
• consequential proceedings initiated under Section 74 of the CGST/SGST Acts for tax period 2020-21.

The petitioner contended that he came to know about the demand only when the department issued a garnishee notice in Form GST DRC-13 dated 15.01.2026 for attachment of his bank account.

The writ petition was therefore filed seeking quashing of the adjudication order and consequential recovery proceedings.

Key Legal Issue

The principal issue before the Court was:

Whether the petitioner should be permitted to avail the statutory appellate remedy despite delay, particularly when recovery proceedings had already commenced through garnishee action?

A connected issue was whether interim protection from coercive recovery should be granted during the period allowed for filing the appeal.

Arguments Presented

Petitioner’s Submissions

The petitioner argued that:

• he became aware of the GST liability only after issuance of the garnishee notice;
• the assessment proceedings and DRC-07 order were arbitrary and contrary to the provisions of the CGST/SGST Acts;
• coercive recovery proceedings had already been initiated through attachment of bank account; and
• an opportunity should be granted to challenge the order before the appellate authority.

During the course of hearing, the petitioner sought liberty to withdraw the writ petition and pursue the appellate remedy under the GST law. The petitioner also requested that the appellate authority be directed to sympathetically consider the delay in filing the appeal.

Respondents’ Submissions

The CBIC standing counsel submitted that:

• the petitioner had an effective statutory remedy of appeal;
• all factual and legal grounds could be raised before the appellate authority; and
• the appellate authority could consider the case in accordance with law if the petitioner preferred the appeal along with statutory pre-deposit and delay condonation application.

Court Observations

The Division Bench comprising Hon’ble Chief Justice Sri Aparesh Kumar Singh and Hon’ble Sri Justice G.M. Mohiuddin refrained from examining the merits of the assessment proceedings since the petitioner expressed willingness to avail the statutory appellate remedy.

The Court observed that:

• the petitioner should be granted an opportunity to file an appeal against the Order-in-Original and DRC-07;
• the appellate authority should consider the delay by taking into account that the petitioner had been pursuing the writ remedy before the High Court; and
• the petitioner should be allowed to raise all grounds on facts and law before the appellate authority.

Importantly, the Court also granted interim protection by directing that no coercive steps should be taken pursuant to the garnishee notice for a period of two weeks, enabling the petitioner to file the appeal.

Final Judgment

The Telangana High Court disposed of the writ petition with the following directions:

1. The petitioner was permitted to file an appeal within two weeks along with:

• • statutory pre-deposit; and
  • delay condonation application.

2. The appellate authority was directed to consider the appeal in accordance with law, while taking into account the time spent by the petitioner before the High Court.

3. The petitioner was granted liberty to raise all factual and legal grounds before the appellate authority.

4. No coercive action pursuant to the garnishee notice dated 15.01.2026 was to be taken during the two-week period granted for filing the appeal.

Author’s Analysis

1. High Courts Continue to Encourage Exhaustion of Appellate Remedies

The judgment reflects the consistent judicial approach that taxpayers should ordinarily pursue statutory appellate remedies before invoking writ jurisdiction, especially in GST adjudication matters.

2. Delay in Filing Appeals May Be Viewed Liberally

Where taxpayers demonstrate bona fide reasons for delay — particularly when they were pursuing remedies before the High Court — appellate authorities may be expected to adopt a practical approach while considering delay condonation applications.

3. Recovery Proceedings Often Trigger Litigation

In several GST matters, taxpayers become aware of assessment orders only when bank attachment or recovery proceedings commence. This case highlights the importance of regularly monitoring GST portal communications and notices.

4. Interim Protection Against Coercive Action Is Significant

The Court’s direction restraining coercive recovery for a limited period provided immediate relief to the taxpayer and ensured that the appellate remedy remained meaningful.

5. Writ Courts Prefer Not to Examine Merits Where Alternative Remedy Exists

Even though serious allegations were raised against the assessment proceedings, the High Court consciously avoided adjudicating merits once the petitioner opted for the appellate route.

Conclusion

The Telangana High Court’s ruling in Mr. Imthiaz Ali Mohammed v. Superintendent of Central Tax reinforces the principle that GST disputes involving adjudication orders should ordinarily be resolved through statutory appellate mechanisms. At the same time, the judgment demonstrates the Court’s willingness to protect taxpayers from immediate coercive recovery where genuine circumstances exist and appellate remedies are still capable of being pursued.

The decision is particularly relevant for taxpayers facing delayed appeals, garnishee notices, and bank attachment proceedings under GST law, as it emphasizes procedural fairness while preserving the statutory framework of appeals under the CGST Act.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Heard Mr. Mohammed Rafi, learned counsel appearing for Mr. Shaik Jeelani Basha, learned counsel for the petitioner and Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appearing for respondents No.1 and 2.

2. This Writ Petition is filed for the following relief:

“to issue Writ of Mandamus or any other appropriate Writ or Order or Direction declaring the action of the 1st Respondent in issuing Order-in-Original dated 24.02.2025 and Summary of the Order in Form GST DRC-07 dated 25.02.2025 and Order issued under Section 74 of the CGST/SGST Acts, 2017, for the tax period 2020-21 as arbitrary, contrary to the provisions of the CGST/SGST Acts, 2017, and against Articles 14, 19(2)(g), 21 and 265 of Constitution of India and consequently set aside the Order-in-Original of the 1st Respondent dated 24.02.2025 and Summary of the Order in Form GST DRC-07 dated 25.02.2025 as null and void, not valid in the eye of law and pass such other order or orders as this Court may deem fit and proper in the circumstances of the case.”

3. The petitioner has approached this Court alleging that he has come to know about the liability only upon the issuance of the garnishee notice in Form GST DRC-13 on 15.01.2026 for attachment of its bank account (Annexure P5).

4. However, after some arguments, learned counsel for the petitioner seeks liberty to the petitioner to prefer an appeal against the impugned 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 impugned orderin-original and summary of the order in Form GST DRC-07 taking all grounds as are available to it in law and on facts before the appellate authority in respect of the subject tax period.

6. Upon hearing 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 along with a delay condonation application, the learned appellate authority would consider it in accordance with law also taking 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. If the appellate authority is satisfied that the delay is explained, he would entertain the appeal on merits. 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 dated 15.01.2026.

8. The Writ Petition is, accordingly, disposed of with the aforesaid liberty. However, there shall be no order as to costs.

As a sequel, miscellaneous petitions, pending if any, stand closed.