M/S A.K Iron Traders vs. The Assistant Commissioner (St)
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The petitioner, M/s A.K Iron Traders, filed a writ petition challenging the garnishee proceedings initiated by the Assistant Commissioner (ST) through Form GST DRC-13 dated March 30, 2022. These proceedings were for the recovery of alleged tax demands for the assessment periods 2018-19, 2019-20, and 2020-21 under the CGST/SGST Act, 2017. The petitioner contended that this action was illegal, arbitrary, and without jurisdiction, violating principles of natural justice. The respondents, including the Assistant Commissioner and the Commissioner of State Tax, were asked to respond. During the proceedings, the respondents' counsel, on instructions, conceded that no order had been passed by the authority under Sections 73 or 74 of the CGST Act prior to the issuance of the garnishee notices.
Held
The Court held that the garnishee proceedings initiated by the first respondent, dated March 30, 2022, were illegal and quashed them. This decision was based on the concession made by the respondents' counsel that no prior order under Sections 73 or 74 of the CGST Act, 2017, had been passed before issuing the garnishee notices. The Court found merit in the petitioner's contention that such coercive action without a preceding adjudication order was contrary to law and principles of natural justice. The ratio decidendi is that recovery proceedings, including garnishee actions, under the GST regime must be preceded by a formal order passed under the relevant adjudication sections (Sections 73 or 74 of the CGST Act). The Court directed that the impugned garnishee notices be set aside and quashed. No order as to costs was made. The writ petition was disposed of.
Key Issues
1. Whether the garnishee proceedings initiated by the first respondent for recovery of alleged tax demands for the assessment periods 2018-19, 2019-20, and 2020-21, without a prior order under Sections 73 or 74 of the CGST Act, 2017, are illegal, arbitrary, and without jurisdiction, in violation of the principles of natural justice. Petitioner's Argument: The petitioner argued that the garnishee proceedings were illegal, arbitrary, and high-handed, initiated without proper authority of law and jurisdiction, and in contravention of the principles of natural justice and the provisions of the Act. They sought to have these proceedings set aside. Respondents' Argument: The respondents, through their learned Standing Counsel, fairly submitted on instructions that no order was passed by the authority under Sections 73 or 74 of the CGST Act prior to the issuance of the garnishee notices on March 30, 2022. They conceded that the Court could consider passing appropriate orders.
Sections Cited
Section 73, Section 74
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Cause title — parties, addresses and appearances
The Court made the following : ORDER
WRIT PETITION No.18794 of 2022 ORDER: (Per Hon'ble Srt Justice Ujjal Bhuyon) Heard Mr. Shaik Jeelani Basha, learned counsel for the petitioner and Mr. L.Ve nkateshwar Rao, learned Standing Counsel for Commercial Taxes for the respondents.
By filing this Writ Petition, under Article 226 of lh,e Constitution of India, petitioner seeks a declaration that the action of the lst respondent in initiating coercive action through garnishee proceedings for recovery of the alleged tax demand for the assessment periods 2}la-lg, 2Olg-2O and 2O2O-21 under the Central Goods and Services Tax Act, 2017 (btiefly"the CGST Act' hereinafter), is illegal and therefore should be set aside and quashed.
When the Writ Petition was moved on I3.O4.2O22 Mr.Rao, learned counsel for the respondents sought for time to obtain instructions. Today, Mr.Rao submits, on instructions, that no order was passed by the authority under Sections 73174 ol the CGST Act before issuing the garnishee notices on ! T C THE HONOURABLE SRI JUSTICE UJJAL BH(ryAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA
UB,J&SN,J W.P.No.18794 of 2022 30.O3.2O22. He therefore , fairly submits that Court may consider passing appropriate order(s).
In view of the fair stand taken by learned counsel for the respondents, the impugned garnishee notices, dated 3O.O3.2O22, are hereby set aside and quashed.
This disposes of the writ petition. However, there shall be no order as to costs.
As a sequel, misceilaneous applications pending, if any, in this Writ Petition, shall stand closed. 2 .T.SRINIVAS ASSISTANT REGISTRAR To, //// SECTION OFFICER '
The Assistant Commissioner (ST), Lad Bazar Circle, Charminar Division, Hyderabad
The Commissioner of State Tax, Government of Telangana, Hyderabad.
State ofTelangana, Rep. by its Principal Secretary (Revenue)(CT) Department' Secretariat Buildings, Hyderabad.
Mr. K . Vi.jay Sreenu, Assistant Commissioner (Sf ), Lad Baz Circle , 1 1 th floor Gagan Vihar, Nampally, Hyderabad
One CC to SRI SHAIK JEELANI BASHA, Advocate [OPUC]
One CC to SRI L.VENKATESHWARE RAO STANDING COUNSEL CON/MRCIAL TAX
Two CD Copies
One Spare Copy KS BS h.- I
HIGH COURT DATE D : 1 910412022 ORDER WP.No.18794 ot 2022 DISPOSED OF THE WRIT PETITION WITHOUT COSTS. \",'/ b 2 5 JUN 2['i2 a ( * 6 9TAI[ Ll tlESpAi{ tror) {Y' /t- @ .z
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.