Writ petition dismissed as infructuous after appellate authority annulled GST demand notice making garnishee notices ineffective

The Jharkhand HC dismissed a writ petition as infructuous after the petitioner succeeded before the appellate authority, which annulled the GST demand notice under DRC-07. Consequently, the garnishee notices under GST DRC-13 dated 14.2.2020 and 15.01.2021 became ineffective since the underlying demand notice was set aside. The court noted that subsequent developments during the petition's pendency rendered the matter moot, as recovery through garnishee notices could not proceed without a valid demand notice.

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Issues:
Challenge to notice dated 14.12.2020 issued in FORM GST DRC-13 by Respondent No.2.
Challenge to notice dated 15.01.2021 issued in Form GST DRC-13 by Respondent No.2.

Analysis:
1. Challenge to Notice dated 14.12.2020:
The writ petition challenged the notice issued on 14.12.2020 in FORM GST DRC-13 by Respondent No.2, directing the petitioner's bank to pay GST amounting to Rs. 38,14,026.24. The petitioner had filed an appeal against this order on 09.01.2021 with a pre-deposit. Another appeal was filed on 02.03.2021 with a pre-deposit. The petitioner argued that the appeals were filed within the prescribed timeframe under Section 107 of the JGST Act. The petitioner contended that as per Sections 107(6) and 107(7) of the Act, once a deposit is made, there is an automatic stay of the remaining amount. The State initially claimed that no appeal was filed against the order, but GSTN confirmed the appeal was filed on 09.01.2021. The Court noted that the subsequent garnishee notices dated 15.01.2021 covered both appeals, and due to the pre-deposit made by the petitioner, interim protection was granted, staying the operation of the impugned notice until further proceedings.

2. Challenge to Notice dated 15.01.2021:
Subsequently, an interlocutory application was filed challenging the notice dated 15.01.2021 issued in Form GST DRC-13 to a third party, directing them to pay GST amounting to Rs. 85,65,368.24 allegedly due against the petitioner. The petitioner had filed another appeal on 02.03.2021 with a pre-deposit. The Court noted that the subsequent garnishee notice dated 15.01.2021 was inclusive of amounts from previous orders. The State argued that the procedure after filing the appeals was not followed, but acknowledged that the appeals were not dismissed for non-compliance. The Court, considering the provisions of Section 107 of the JGST Act and the pre-deposits made by the petitioner, granted interim protection by staying the operation of the notice. The State was given time to respond to the affidavits and provide explanations for discrepancies in their submissions.

3. Final Disposition:
During subsequent proceedings, it was revealed that both appeals had been decided in favor of the petitioner by the appellate authority. The appellate orders annulled the demand notices under GST DRC-07, rendering the garnishee notices under GST DRC-13 dated 14.12.2020 and 15.01.2021 irrelevant. The writ petition was deemed infructuous as the demand notices were set aside by the appellate orders. Consequently, the Court disposed of the writ petition accordingly, noting that no recovery pursuant to the garnishee notices was necessary due to the success of the petitioner before the appellate authority.

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