GST recovery must follow pre-notice intimation procedure; clarificatory amendment to self-assessed tax creates no new liability.

Under the GST recovery framework, garnishee action for a mismatch between outward supplies and the return cannot be initiated without first following the mandatory pre-recovery intimation procedure under Rule 88C, including FORM GST DRC-01B and an opportunity to respond; the notice was therefore unsustainable and set aside. The explanation inserted in Section 75(12) was treated as clarificatory, meaning "self-assessed tax" includes tax payable on outward supplies not reflected in the return, and it did not create any new substantive liability. Recovery may proceed afresh only in accordance with the prescribed procedure.

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Issues: (i) Whether the garnishee recovery notice issued under the GST framework was liable to be set aside for want of prior compliance with the procedure prescribed for intimation and response; (ii) whether the explanation inserted in Section 75(12) of the Central Goods and Services Tax Act, 2017 operated prospectively or merely clarified the existing meaning of "self-assessed tax".

Issue (i): Whether the garnishee recovery notice issued under the GST framework was liable to be set aside for want of prior compliance with the procedure prescribed for intimation and response.

Analysis: The dispute concerned a mismatch between outward supplies reflected under Section 37 and the return furnished under Section 39 for the relevant tax period. The recovery machinery under Section 79 could be triggered only after the proper officer followed the intimation procedure contemplated by Rule 88C of the Central Goods and Services Tax Rules, 2017, by issuing the prescribed FORM GST DRC-01B and affording an opportunity to explain the difference or discharge the liability. The record showed that the prescribed intimation procedure was not complied with before resorting to garnishee action under FORM GST DRC-13.

Conclusion: The impugned garnishee notice was unsustainable and was set aside.

Issue (ii): Whether the explanation inserted in Section 75(12) of the Central Goods and Services Tax Act, 2017 operated prospectively or merely clarified the existing meaning of "self-assessed tax".

Analysis: The explanation inserted by Section 114 of the Finance Act, 2021 was read as clarifying that "self-assessed tax" includes tax payable on outward supplies furnished under Section 37 but not included in the return under Section 39. On that construction, the amendment did not create any fresh substantive liability; it only explained the reach of the existing recovery mechanism in cases of mismatch of disclosed outward supplies and return liability.

Conclusion: The explanation was treated as clarificatory and not as imposing a new liability.

Final Conclusion: Recovery could proceed only after the statutory pre-recovery intimation procedure was followed, and the impugned notice was therefore annulled while leaving the Revenue free to proceed afresh in accordance with law.

Ratio Decidendi: Where the GST Rules prescribe a mandatory pre-recovery intimation and opportunity to respond for discrepancy-based demands, recovery action under Section 79 cannot be initiated by garnishee notice without first complying with that procedure; an explanatory amendment to Section 75(12) does not by itself create a new liability.

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