2026 (3) TMI 244 - HC - GST

Provisional enforcement suspension where taxpayer offers documents; require prompt submission and expedited administrative consideration.

Garnishee attachment in relation to a disputed GST recovery should be suspended where the taxpayer has offered to furnish supporting credit notes and ... Garnishee proceedings - provisional attachment withdrawal - Garnishee notice - failure to consider submissions - opportunity to furnish documents - fresh consideration on merits. Garnishee notice - failure to consider submissions - HELD THAT:- The court found that the petitioner had already communicated particulars and offered to furnish the requisite documents and clarifications regarding credit notes and adjustments, and that those materials had not been considered by Respondent No.2 before initiating recovery by way of garnishee. Given the petitioner's undisputed reputation and readiness to cooperate, and the absence of a finding of deliberate evasion, the court concluded that immediate recovery by freezing the petitioner's bank account was not justified. The court therefore ordered withdrawal of the garnishee notice to permit the petitioner to operate its account and to avoid prejudice pending departmental examination of the materials. [Paras 8, 9, 10] Garnishee notice dated 3rd February 2026 issued to the petitioner's banker is to be withdrawn forthwith and shall not be acted upon. Opportunity to furnish documents - fresh consideration on merits - HELD THAT: - The court directed the petitioner to submit the documents and material within ten days of a copy of the order being made available. Respondent No.2 was directed to examine those documents/materials, call for any clarification or hearing if required, and take an appropriate view on the recovery question. The mandate preserves the parties' contentions and confines the order to providing an opportunity for the department to verify the petitioner's submissions and decide the recovery question on merits within a stipulated timeframe. [Paras 9, 10] Petitioner to furnish documents within ten days; Respondent No.2 to consider the submissions and decide on recovery within one month of submission. Final Conclusion: The writ petition is disposed of by directing immediate withdrawal of the garnishee notice against the petitioner's bank account and by directing the petitioner to submit requisite documents within ten days, with Respondent No.2 to reconsider and decide the recovery issue within one month of such submission; all contentions are kept open. Issues: Whether the garnishee notice issued by the tax authority to the petitioner's banker and resulting hold on the petitioner's bank account should be withdrawn pending submission and consideration of documents by the petitioner in relation to a disputed GST recovery demand.Analysis: The record shows that credit notes and related return filings were previously communicated by the petitioner and that the petitioner has offered to furnish all supporting documents and clarifications. The tax authority issued statutory recovery intimation and thereafter a garnishee notice placing a hold on the petitioner's bank account before completing consideration of the petitioner's explanations and documentary material. Given the petitioner's readiness to produce documents and the availability of a process for the authority to examine the materials, the garnishee notice operates as an immediate and disproportionate interference with the petitioner's banking operations. It is appropriate to require the petitioner to submit the outstanding documents within a short, specified period and to require the authority to consider the submissions within a defined timeframe while protecting the petitioner from immediate attachment where there is no reasonable apprehension of evasion and where the petitioner is a reputed entity.Conclusion: The garnishee notice dated 3rd February 2026 issued to the petitioner's banker shall be withdrawn forthwith and shall not be acted upon; the petitioner shall submit the required documents within ten days of service of the order and the authority shall consider the submissions and take an appropriate decision within one month of receipt.Final Conclusion: The matter is disposed of by permitting the petitioner an opportunity to furnish documents and by directing the tax authority to decide on recovery after consideration of the materials within a fixed period; the interim withdrawal of the garnishee notice preserves the petitioner's right to operate its bank account pending such decision.Ratio Decidendi: Where a taxpayer has shown readiness to furnish documentary proof and there is no reasonable apprehension of evasion, provisional enforcement by garnishee/attachment should be withdrawn pending fair opportunity for submission and expedited consideration by the tax authority.