M/S Galaxy International vs. Union Of INDIA Throu. The Sec. Ministry Of Law And Justice Dept Of Legal Affairs And Ors
Original PDF →Facts
The petitioner, M/s. Galaxy International, challenged a notice dated July 9, 2024, issued under Section 79(1)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act). The notice was addressed to the Branch Manager of the 3rd respondent-Bank at Gurugram, not directly to the petitioner. The petitioner contended that they do not have a bank account in Gurugram and that the bank account mentioned in the notice is with the Mulund Branch. Furthermore, the petitioner asserted that no amount is due and payable by them to M/s. Durga Madhab Panda (Urneed Online Retail), who allegedly owes GST dues of Rs. 30.19 crores. The High Court noted that Section 79 contemplates a notice to a person from whom money is due or who holds money for the person in default, allowing that person an opportunity to prove no amount is due.
Held
The High Court held that the impugned notice dated July 9, 2024, issued under Section 79(1)(c) of the CGST Act, 2017, is liable to be quashed and set aside. The Court reasoned that Section 79 contemplates that a notice must be served upon the person from whom money is due or who holds money for the person in default. This service is essential to provide such a person with an opportunity to satisfy the issuing officer that no amount is due or that they do not hold any money for the person in default. In the present case, the notice was admittedly not served upon the petitioner. The Court found this to be a short ground for quashing the notice. The Court also referred to a Karnataka High Court decision in S.J.R. Prime Corporation Pvt. Ltd. Vs. Superintendent of Central Tax, Bengaluru, which similarly quashed a notice served directly to a bank without serving the alleged debtor, deeming it a breach of mandatory procedure. The Court quashed the notice but left it open for the respondents to serve a fresh notice on the petitioner at the address provided in the cause title.
Key Issues
1. Whether the notice dated July 9, 2024, issued under Section 79(1)(c) of the CGST Act, 2017, is liable to be quashed and set aside for not being served upon the petitioner, who is allegedly holding money for the person in default. Petitioner's contention: The petitioner argued that Section 79 of the CGST Act mandates that a notice be served upon the person from whom money is due or who holds money for the person in default. This notice is crucial to provide an opportunity to the recipient to prove that no amount is due or that they do not hold any money for the person in default. Since the impugned notice was addressed to a bank and not to the petitioner, it violates this mandatory procedure. The petitioner also pleaded that no amount is due from them to M/s. Durga Madhab Panda. Revenue's contention: The judgment does not record any specific contentions made by the respondents (Union of India & Ors.) regarding the procedural defect of the notice not being served on the petitioner. The court proceeded to decide based on the petitioner's submissions and the statutory provisions.
Sections Cited
Section 79(1)(c), Section 79(1)(c)(i), Section 79(1)(c)(vii)
AI-generated summary — verify with the full judgment below
13-WP.11399.24.DOCX PPN IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURI ICTION WRIT PETITION NO. 11399 OF 2024 M/s. Galaxy International … Petitioner Versus Union of India & Ors. … Respondents ______________________________________________________ Mr. Prakash Shah, Senior Advocate with Mr. Brijesh Pathak and Dulraj Jain for Petitioner. Mr. Jitendra B. Mishra a/w Ms. Sangeeta Yadav and Mr. Rupesh Dubey for the Respondent Nos.1 & 2. _____________________________________________________ CORAM : M.S. Sonak & Jitendra Jain, JJ. DATED : 24 June 2025 PC. (M.S. Sonak, J.) :-
Heard learned counsel for the parties.
Rule. The rule is made returnable immediately at the request and with the consent of Mr. Mishra, the learned counsel for respondent nos. 1 and 2. Mr. Shah, learned Senior Counsel appearing for the petitioner, states that the 3rd respondent has been served. For the order that we propose to make now, the presence of the 3rd respondent is not essential.
The petitioner challenges the notice dated 9 July 2024 issued under Section 79(1)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act) on several grounds that are set out in the petition. PRACHI PRANESH NANDIWADEKAR PRANESH NANDIWADEKAR Date: 2025.06.27 15:08:41 +0530
13-WP.11399.24.DOCX
Upon consideration of the rival contentions, we are satisfied that the impugned notice is required to be set aside
for the reasons briefly discussed hereafter.
Section 79 of the CGST Act, 2017 is concerned with the recovery of tax. Section 79 (1)(c)(i) provides that the proper officer may, by a notice in writing, require any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay to the Government either forthwith upon the money becoming due or being held, or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount.
Section 79(1)(c)(vii) of the CGST Act provides that where a person on whom a notice is served under sub-clause (i) proves to the satisfaction of the officer issuing the notice that the money demanded or any part thereof was not due to the person in default or that he did not hold any money for or on account of the person in default, at the time the notice was served on him, nor is the money demanded or any part thereof, likely to become due to the said person or be held for or on account of such person, nothing contained in this section shall be deemed to require the person on whom the notice has been served to pay to the Government any such money or part thereof. 13-WP.11399.24.DOCX
In the present case, the impugned notice though issued under Section 79(1)(c) was not addressed to the petitioner but the same is addressed to the Branch Manager of the 3rd respondent-Bank at Gurugram. The petitioner has stated that the petitioner does not have any bank account at Gurugram and the bank account referred to in the impugned notice is with the Mulund Branch. The petitioner has also pleaded that no amount is due and payable to M/s. Durga Madhab Panda (Urneed Online Retail) which is allegedly liable to pay GST dues to the extent of Rs.30.19 crores.
At this stage, we do not propose to examine the factual controversies or the rival factual contentions. Suffice to mention that Section 79 contemplates a notice to a person from whom the money is due or may become due to such person or holds or may subsequently hold money for or on account of such person to pay the amount to the Government, either forthwith upon money becoming due or being held or within the time specified in the notice not being before the money becomes due or is held.
Where such notice is served on a person, he can prove to the satisfaction of the officer issuing the notice that the money demanded or any part thereof was not due to the person in default or that he did not hold any money for or on account of the person in default at the time the notice was served on him nor is the money demanded or any part thereof, likely to become due to the said person or be held for or on account of such person. 13-WP.11399.24.DOCX
Thus, in this case, a notice had to be served upon the petitioner so that the petitioner would have an opportunity of proving to the satisfaction of the officer issuing the notice that no amount was due and payable by the petitioner to the person in default i.e. M/s. Durga Madhab Panda. No such 2025 (92) G.S.T.L. 154 (Kar.) 13-WP.11399.24.DOCX
Mr. Shah, on instruction, states that the petitioner's correct address is the one reflected in the cause title of this petition. Therefore, if any notice is served at the said address, the same would-be sufficient notice.
Rule is made absolute in the above terms without any cost order. (Jitendra Jain, J) (M.S. Sonak, J)
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.