2025 (11) TMI 1790 - HC - GST

Recovery under Rule 145(1) and Section 79(1)(c) quashed; bank account de-frozen, demand draft returned to taxpayer

Samrat Marble Granite and Tiles Versus Union of India & Ors.

HC quashed the impugned DRC-13 recovery communication issued under Rule 145(1) of the CGST Rules read with Section 79(1)(c) of the CGST Act, holding that ... Issuance of DRC-13 (recovery notice) by invoking the provisions of Rule 145(1) of the Central Goods and Services Tax Rules, 2017, read with Section 79(1)(c) of the CGST Act, to the Branch Manager, Punjab National Bank, VPO Dhanas, Chandigarh, directing the Bank to pay the amount - HELD THAT:- In view of facts and circumstances, especially the instructions placed on record by learned Additional Advocate General, the impugned communication dated 23.07.2025 (Annexure P-4) has lost its efficacy and relevancy, and accordingly, the same is quashed and set aside. Resultantly, the demand draft handed over by respondent No. 4-Bank to respondent No. 3 shall be returned by respondent No. 3 to the petitioner on or before 08.12.2025, and the account of the petitioner shall be de-freezed. It is clarified that quashing of the impugned communication is confined to aforesaid facts and circumstances and we have not adjudicated the merits of the additional demand raised by the respondent-authority and disputed by the petitioner, and the said issue shall be adjudicated by the Competent Authority as provided under the CGST Act. Petition disposed off. The petitioner challenged a DRC-13 recovery notice dated 23.07.2025 issued under Rule 145(1) of the Central Goods and Services Tax Rules, 2017 read with Section 79(1)(c) of the CGST Act, whereby the Branch Manager, Punjab National Bank, was directed to pay the disputed tax amount to the Government, resulting in freezing of the petitioner's bank account. The petitioner had already filed two appeals under Section 107 of the CGST Act against orders dated 13.10.2022 and 14.10.2022 and had deposited the requisite pre-deposit under Section 107(6). The State clarified that the impugned recovery communication was issued prior to filing of the appeals on 24.07.2025, that the demand draft prepared pursuant to the DRC-13 had not been encashed, and that no further coercive action was warranted after the statutory pre-deposit and filing of appeal, subject to the final outcome. Holding that the impugned communication had 'lost its efficacy and relevancy,' the Court quashed and set it aside, directed return of the demand draft and de-freezing of the bank account, and clarified that it was not adjudicating the merits of the additional tax demand, which remain for decision by the competent appellate authority under the CGST Act.