Facts of the Case

The petitioner, Mindlogicx Infratec Limited, was assessed GST payable of Rs.52,18,878/- for FY 2017-18 by adjudication order dated 03.03.2023, along with interest of Rs.1,52,02,600/- and penalty of Rs.5,21,888/-, aggregating Rs.2,09,43,366/-. On account of non-payment, the respondent issued multiple orders of attachment of receivables under Section 79(1)(c) of the KGST Act, 2017 read with Rule 145(1) of the KGST Rules, 2017, directed to entities including SGBUC, Aryabhatta Knowledge University, and Sant Gadge Baba Amravati University. The petitioner had already paid Rs.50,00,000/- in two instalments (21.04.2023 and 28.04.2023), leaving a balance of Rs.1,59,43,360/-.

Issues Involved

  1. Whether the multiple bank/receivable attachment orders issued under Section 79(1)(c) of the KGST Act should be vacated in view of part-payment and an undertaking to pay the balance.
  2. What conditions should attach to any vacation of the attachment orders to secure the department's interest pending full payment.

Petitioner's Arguments

  • The petitioner filed an undertaking affidavit acknowledging the total demand, the part-payment of Rs.50,00,000/- already made, and undertook to pay the remaining Rs.1,59,43,360/- within 90 days (by 03.10.2023).
  • On the strength of this undertaking, the petitioner sought vacation of the attachment orders.

Respondent's Arguments

  • The State's Additional Government Advocate submitted that the undertaking must be strictly adhered to, with stipulation for consequences in case of default.

Court Order / Findings

  • The Court, taking note of the petitioner's undertaking, vacated the attachment orders on the receivables from Aryabhatta Knowledge University and other entities (Annexures H to L), but directed that the attachment on Sant Gadge Baba Amravati University's dues (Annexure M) would continue for 90 days as security for payment of the balance amount.
  • It was made explicit that there would be no further extension of time, and that default would expose the deponent to contempt of court proceedings, with liberty reserved to the respondents to initiate recovery proceedings.
  • The attachment at Annexure-M was to stand lifted automatically upon payment of the undertaken amount within the stipulated 90 days.

Important Clarification

Where multiple attachment orders under Section 79(1)(c) of the GST Act have been issued against a taxpayer's receivables from different parties, and the taxpayer offers a credible, court-recorded undertaking (with part-payment already made) to clear the balance within a fixed timeframe, courts will vacate most attachments but retain one as continuing security pending full payment — with non-compliance exposing the taxpayer to contempt proceedings and revival of recovery action.

Sections Involved

  • Section 79(1)(c), Karnataka Goods and Services Tax Act, 2017 – empowers the proper officer to recover tax dues by requiring any person owing money to the defaulter to pay that money to the Government instead.
  • Rule 145(1), Karnataka Goods and Services Tax Rules, 2017 – prescribes the procedure for issuing notice for recovery from a third party under Section 79(1)(c).

Decision – In Favour of

The petition was disposed of on undertaking, with most attachments vacated and one retained as security — an outcome favouring the Assessee to the extent of relief from most attachments, subject to strict compliance with the payment undertaking.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: Writ Petition No. 11054 of 2023 (T-RES)
Neutral Citation: 2023:KHC:22724
Coram: Hon'ble Mr. Justice S Sunil Dutt Yadav
Date of Order: 03.07.2023

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