Facts of the Case

The petitioner, M/s Smart Sanitary Stores, Hyderabad, represented by its proprietor Ashok Katta, challenged the summary of a show cause notice in Form GST DRC-01 dated 30.05.2022 and the consequent order passed under Section 73 of the Telangana Goods and Services Tax Act, 2017, in Form GST DRC-07, dated 08.07.2024, for the tax period 2019-20, contending both were issued without authority of law and were violative of Articles 14, 19(1)(g) and 265 of the Constitution. Alongside the writ petition, the petitioner filed an interlocutory application seeking a copy of, and protection against, a Form GST DRC-13 garnishee notice by which the department had frozen its bank account with ICICI Bank's Sunder Nagar branch, New Delhi, pending disposal of the writ petition. This is an interim order, with the matter still at a preliminary stage.

Issues Involved

  1. Whether the summary show cause notice (DRC-01) and the demand order (DRC-07) passed under Section 73 of the TGST Act for the tax period 2019-20 are without authority of law and violative of Articles 14, 19(1)(g) and 265.
  2. Whether coercive recovery through the garnishee notice (DRC-13) freezing the petitioner's bank account should continue pending final adjudication of the writ petition.

Petitioner's Arguments

  • The DRC-01 show cause notice and the subsequent Section 73 order in Form DRC-07 were issued without any authority of law, arbitrarily, and in violation of Articles 14, 19(1)(g) and 265 of the Constitution.
  • The department had frozen the petitioner's bank account by way of a garnishee notice (DRC-13) even while the underlying demand itself was under challenge, and the petitioner sought both a copy of that notice and protection from coercive recovery pending disposal of the writ petition.

Respondent's Arguments

  • No substantive defence on the merits of the demand is recorded at this interim stage; the Special Government Pleader for State Tax sought, and was granted, time to file a counter affidavit responding to the writ petition.

Court Order/Findings

  • The Court did not record any findings on the validity of the show cause notice or the Section 73 demand order at this stage, since the matter is yet to be finally heard.
  • The Special Government Pleader for State Tax was granted one week to file a counter affidavit, with a further week thereafter for the petitioner to file a reply affidavit if necessary.
  • Pending the next hearing, the Court directed that no coercive steps shall be taken against the petitioner pursuant to the garnishee notice issued in Form GST DRC-13.
  • The matter was directed to be listed on 01.04.2026 along with a connected writ petition (W.P.No.34751 of 2025) and batch.

Important Clarification

  • Where a taxpayer's bank account has been frozen by a garnishee notice (DRC-13) while the underlying tax demand itself is under challenge in a writ petition, courts may grant interim protection restraining coercive recovery pending final disposal, without expressing any view on the merits of the demand.
  • Such interim orders are procedural safeguards only; they do not amount to a finding that the demand itself is unsustainable.

Sections Involved

  • Section 73, Telangana GST Act, 2017 — determination of tax not paid/short paid for reasons other than fraud, the basis of the impugned demand.
  • Form GST DRC-01, DRC-07 and DRC-13, CGST Rules, 2017 — prescribed forms for the show cause notice summary, the summary of the demand order, and the garnishee notice for recovery from a third party respectively.
  • Articles 14, 19(1)(g) and 265, Constitution of India — constitutional grounds urged against the notice and order.

Decision – In Favour of

This is a thin, purely interim order; the writ petition remains pending and no decision on merits has been rendered. On the limited interim relief granted — restraining coercive recovery under the garnishee notice — the outcome for now favours the Assessee, but the underlying challenge to the Section 73 demand is yet to be heard and decided, with the matter listed for further hearing along with a batch of connected petitions.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana, Hyderabad
  • Case No.: WRIT PETITION NO: 7395 OF 2026
  • CNR: Not available on record
  • Coram: Chief Justice Aparesh Kumar Singh and Justice G.M. Mohiuddin
  • Decision Date: 12 March 2026
  • Disposal Nature: Interim order - matter listed for further hearing; no coercive steps pending pursuant to garnishee notice

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