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Bombay HC quashes recovery notice issued to a Bank holding that the notice must be issued to the Petitioner & an opportunity must be given to rebut the presumption of liability

Bimal jain
Bank wrongly served GST recovery notice under Section 79(1)(c) without proper procedure followed The Bombay High Court quashed a GST recovery notice issued directly to a bank under Section 79(1)(c) of the CGST Act, holding that proper procedure was not followed. The petitioner company challenged a notice demanding recovery of Rs. 30.19 crores in GST dues allegedly owed by a defaulter, arguing it held no money for the defaulter and received no prior notice. The court ruled that Section 79(1)(c) requires notice to be served upon the person holding money for the defaulter, allowing them opportunity to rebut the presumption of liability. The court relied on Karnataka High Court precedent and permitted authorities to issue fresh notice to the petitioner at the correct address. (AI Summary)

The Hon’ble Bombay High Court in the case of M/s. Galaxy International Versus Union of India & Ors.  - 2025 (6) TMI 2035 - BOMBAY HIGH COURT held that notice under Section 79(1)(c) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) ought to be issued to the Petitioner instead of the Bank in so far as the Petitioner must be allowed an opportunity of proving to the satisfaction of the proper officer that no amount was due and payable by the Petitioner to a person in default.

Facts:

Galaxy International ('the Petitioner') challenged a notice dated July 9, 2024, issued by the Respondent authorities under Section 79(1)(c) of the CGST Act. The said notice was addressed to the Branch Manager of the third respondent bank at Gurugram, demanding recovery of GST dues allegedly owed by one M/s. Durga Madhab Panda (Urneed Online Retail) to the tune of ₹30.19 crores. The Petitioner contended that it neither held any money for the said defaulter nor had any bank account in Gurugram, with its actual bank account being with the Mulund branch. The Petitioner contended that no notice was served under Section 79(1)(c) and that the Petitioner was denied an opportunity to rebut the presumption of liability.

Issue:

Whether issuance of recovery notice to a third-party bank under Section 79(1)(c) without prior notice to the assessee is legally sustainable?

Held:

The Hon’ble Bombay High Court in M/s. Galaxy International Versus Union of India & Ors.  - 2025 (6) TMI 2035 - BOMBAY HIGH COURT held as under:

 (Author can be reached at [email protected])

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