Facts of the Case: Mahadev Hardware, a proprietorship based in Telangana, was subjected to an Order-in-Original dated 03.04.2024, against which it filed a rectification application on 22.04.2025 under Section 161 of the GST Act, invoking the special window granted by Notification No. 22/2024-Central Tax dated 08.10.2024 and CBIC Circular No. 237/31/2024-GST for rectification of orders affected by wrongly availed ITC now regularised under the retrospective amendment to Section 16(5)/(6). While this rectification application remained pending, the Department issued a garnishee notice in Form GST DRC-13 dated 30.07.2025 to the petitioner's banker to recover the confirmed liability, prompting the petitioner to approach the Telangana High Court.

Issues Involved:

  1. Whether recovery through a garnishee notice can proceed while a rectification application under Section 161 remains undecided.
  2. Whether the petitioner is entitled to relief on the ground that its GSTR-3B returns for the disputed period had been filed within the extended time permitted by the retrospective amendment to Section 16(5) and (6).

Petitioner's Arguments:

  • The rectification application filed on 22.04.2025, though technically 14 days beyond the notified window, ought to be considered on merits and disposed of by the proper officer in accordance with law.
  • In the alternative, the petitioner was entitled to refund, since its returns for 2018-19 had been filed on 06.12.2019, within the extended time granted retrospectively under Section 16(5) and (6) of the CGST Act by Notification No. 17/2024-Central Tax.

Respondent's Arguments:

  • The Senior Standing Counsel for CBIC submitted that the rectification application was filed beyond the six-month period prescribed under Notification No. 22/2024-Central Tax.

Court Order / Findings:

  • Since the rectification application was pending before the proper officer, the Court directed the proper officer to decide the rectification application, in accordance with law, within two weeks from receipt of the order.
  • In the meantime, the respondents were restrained from proceeding with recovery of the outstanding dues pursuant to the Form GST DRC-13 garnishee notice until a decision was taken on the rectification application.
  • The Court clarified it had made no comments on the merits, and left the petitioner at liberty to pursue an appropriate remedy if aggrieved by the outcome.

Important Clarification:

  • Where a rectification application under Section 161 (including one invoking the retrospective relief for delayed ITC availment under Section 16(5)/(6) via Notification No. 22/2024) is pending before the proper officer, coercive recovery through a garnishee notice ought to be held in abeyance until that application is decided, so as not to render the rectification remedy illusory.

Sections Involved:

  • Section 161, CGST Act, 2017 — rectification of errors apparent on the face of record.
  • Section 16(5) and (6), CGST Act, 2017 — retrospectively extended time limit for availing ITC.
  • Notification No. 22/2024-Central Tax — special procedure/timeline for rectification applications; Form GST DRC-13 — garnishee notice for recovery from a third party.

Decision – In Favour of: Assessee — interim protective relief granted; the underlying rectification claim was left open for decision by the proper officer.

Case Details: High Court for the State of Telangana at Hyderabad; Writ Petition No. 29593 of 2025; Coram: The Hon'ble The Chief Justice Aparesh Kumar Singh and Hon'ble Sri Justice G.M. Mohiuddin; Date of Order: 13th November, 2025.

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