M/S.Qualitus Pharma Solutions vs. The Assistant Commissioner Of Central Tax

Held

The Court held that the Summary of Order in Form GST DRC-07 dated July 7, 2025, and the garnishee notice in Form GST DRC-13 dated June 4, 2025, both pertaining to the tax period July 1, 2017, to March 1, 2018, were erroneously issued. This was because previous proceedings for the same period had concluded with 'nil' liability for the petitioner, as evidenced by the order-in-original and the order-in-appeal. The Court found that these impugned proceedings erroneously imposed a liability despite the prior favorable determination. The Court invoked its powers under Section 161 of the CGST Act, which deals with the rectification of mistakes apparent from the record. The Court directed the Assistant Commissioner of Central Tax (Respondent No. 1) to rectify these two proceedings within two weeks of receiving a copy of the order. The writ petition was disposed of accordingly.

Facts

The petitioner, M/s. Qualitus Pharma Solutions, approached the High Court challenging two actions by the Assistant Commissioner of Central Tax. The first was a Summary of Order in Form GST DRC-07 dated July 7, 2025, for the tax period 2017-18, demanding Rs. 41,14,209. The second was a garnishee notice in Form GST DRC-13 dated June 4, 2025, issued to HDFC Bank, demanding Rs. 5,10,682 for the same period. The petitioner contended that these actions were taken despite previous proceedings for the same tax period (July 1, 2017, to March 1, 2018) having concluded with 'nil' liability against them, as per an order-in-original dated November 28, 2023, and an order-in-appeal dated March 21, 2025. The petitioner argued that the impugned actions were illegal and violative of natural justice.

Key Issues

1. Whether the Summary of Order in Form GST DRC-07 dated July 7, 2025, and the garnishee notice in Form GST DRC-13 dated June 4, 2025, for the tax period 2017-18, are illegal and arbitrary, violating the principles of natural justice, given that prior proceedings for the same period resulted in 'nil' liability for the petitioner? Petitioner's Arguments: The petitioner argued that the impugned actions were illegal and without jurisdiction as they imposed a demand and initiated recovery proceedings for a tax period where the liability had already been determined as 'nil' by the adjudicating officer and confirmed by the appellate authority. They contended that issuing a demand and garnishee notice after the proceedings were dropped was contrary to law and principles of natural justice, as it created a liability where none existed and led to the attachment of funds without a valid basis. Respondents' Arguments: The respondents did not record any specific arguments in the judgment. The court noted that the petitioner was compelled to approach the court due to the garnishee notice and the DRC-07 order.