Facts of the Case

The Petitioner, M/s Shubham Plast, a proprietorship concern represented by Smt. Indira Lahoti, is a GST-registered entity (GSTIN: 36ABPFS2758F1ZR) based in Rangareddy, Telangana. The Petitioner was served with Notice No. RJNR-II/GST-Arrears/2024-25 dated 28.06.2024 by the Assistant Commissioner (State Tax), Rajendranagar-II Circle, treating certain amounts as GST arrears. Pursuant to this notice, the Petitioner's bank account (No. 0948562837) maintained with Kotak Mahindra Bank, Road No. 12, Banjara Hills, Hyderabad, came to be blocked/attached. Aggrieved, the Petitioner approached the High Court under Article 226, seeking to have the arrears notice declared invalid, illegal and without jurisdiction, and for a consequential direction to the bank and the tax authorities to release the attached account. Along with the writ petition, the Petitioner also filed an interlocutory application asking the Court to direct the Assistant Commissioner (State Tax) to dispose of two pending appeals (AD3608240003287 dated 01.08.2024, and a related appeal dated 31.07.2024) filed against the GSTIN in question, together with a condonation-of-delay petition filed on 01.08.2024 — all at an early date, given that the Petitioner's bank account remained restrained in the meantime.

Issues Involved

  1. Whether the GST arrears notice dated 28.06.2024, and the consequent attachment of the Petitioner's bank account, could be sustained while an appeal against the underlying tax order was pending before the appellate authority.
  2. Whether the appellate authority could be directed to expeditiously decide the stay application filed along with the pending appeal, so as to give the Petitioner interim relief from the bank attachment.
  3. Whether the High Court, in writ jurisdiction, needed to examine the merits of the underlying GST demand at this stage.

Petitioner's Arguments

  • Learned counsel for the Petitioner submitted that against the order passed under Section 73 of the Central Goods and Services Tax Act, 2017, dated 30.04.2024, the Petitioner had already preferred a statutory appeal before the competent appellate authority, along with a stay application.
  • Although a copy of the stay application had not been separately filed along with the writ petition, it was submitted that the application was indeed pending before the appellate authority.
  • The Petitioner prayed that the appellate authority be directed to decide the pending stay application expeditiously, given that its bank account stood attached in the interim, causing it financial hardship.

Respondent's Arguments

  • The learned Assistant Government Pleader, representing the State Tax authorities (Respondent Nos. 1 to 3), did not oppose this limited prayer, submitting that the Department had "no objection to this innocuous prayer" — i.e., no objection to the appellate authority being directed to take up and decide the stay application on an expedited basis.
  • No substantive defence was advanced at this stage on the merits of the underlying GST arrears demand itself, since that question was left to be examined by the appellate authority in the pending appeal.

Court Order / Findings

  • Recording the Department's no-objection, the Division Bench (Sujoy Paul, J. and G. Radha Rani, J.) disposed of the writ petition by directing the appellate authority to decide the Petitioner's pending stay application expeditiously, preferably within two weeks from the date of communication of the order.
  • The Court expressly clarified that it had not expressed any opinion on the merits of the case — neither on the validity of the Section 73 order nor on the correctness of the GST arrears notice or the bank attachment.
  • All pending interlocutory applications, including the one seeking release of the bank account, were disposed of in these terms, with no order as to costs.

Important Clarification

  • This order does not set aside the GST arrears notice or direct release of the attached bank account outright. It only compels the appellate authority to take up and decide the pending stay application within a fixed, short timeframe, leaving the substantive dispute — including whether the attachment should continue — to be decided in that forum.
  • The ruling illustrates a recurring pattern in GST recovery disputes: once an appeal along with a stay application is pending, taxpayers facing coercive recovery measures such as bank attachment can approach the High Court not to re-litigate the tax demand, but simply to compel a prompt decision on the stay application itself.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017 — governs determination of tax not paid or short paid, under which the original demand order against the Petitioner was passed.
  • Article 226 of the Constitution of India, 1950 — invoked for the writ remedy before the High Court.
  • Section 151 of the Code of Civil Procedure, 1908 — invoked for the interlocutory application seeking release of the attached bank account.

Decision – In Favour of

Disposed of with limited directions and no finding on merits. The Court did not decide the validity of the GST arrears notice or the bank account attachment, but directed the appellate authority to decide the Petitioner's pending stay application within two weeks — a procedural relief in the Petitioner's favour pending final adjudication of the appeal.

Related Case Laws

No directly on-point case notes on stay applications accompanying Section 73 CGST appeals are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: WP No. 36296 of 2024 and IA No. 1 of 2024
  • CNR: HBHC010706812024
  • Coram: Justice Sujoy Paul and Dr. Justice G. Radha Rani
  • Decision Date: 26-12-2024

Link to Download the Order

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