Facts of the Case

M/s Rely Fab Solutions received scrutiny notices in Form GST ASMT-10 on 17.02.2022 and 22.03.2023 but did not respond to either. Consequently, the Assistant Commissioner issued a notice dated 11.10.2023 under Section 47(1) of the KGST Act demanding Rs. 8,900/-, which also went unanswered. The Department thereafter proceeded to attach the petitioner's bank accounts (Karnataka Bank and Axis Bank) by issuing notices in Form GST DRC-13 dated 27.04.2023 and 07.03.2024. Aggrieved by the freezing of its accounts without any adjudication on the underlying scrutiny discrepancies, the petitioner approached the Karnataka High Court seeking quashing of the DRC-13 notices and de-freezing of its bank accounts.

Issues Involved

  1. Whether bank-account attachment notices under Form GST DRC-13 can be sustained when issued without the assessee having had any opportunity to respond to the underlying ASMT-10 scrutiny notices.
  2. Whether the assessee should be granted a fresh opportunity to reply to the scrutiny notices before recovery action continues.

Petitioner's Arguments

  • The petitioner was willing to submit replies to the ASMT-10 notices at Annexures B and C if the bank attachment notices at Annexures E and F were set aside.
  • One more opportunity to respond to the scrutiny notices ought to be granted before coercive recovery measures such as bank attachment are pursued.

Respondent's Arguments

  • The Department did not dispute that the petitioner had failed to reply to either the ASMT-10 notices or the subsequent Section 47(1) demand, justifying the escalation to bank attachment under DRC-13.

Court Order / Findings

  • The Court noted it was an undisputed fact that the petitioner had not replied to the ASMT-10 notices, but nevertheless found it just and appropriate to grant one more opportunity by remitting the matter to that stage.
  • The bank attachment notices in Form GST DRC-13 dated 27.04.2023 and 07.03.2024 were set aside, and the matter was remitted to the stage of the petitioner submitting replies to the ASMT-10 notices.
  • The Assistant Commissioner was directed to consider the petitioner's replies and proceed further in accordance with law.

Important Clarification

  • Coercive recovery action such as bank-account attachment under Form GST DRC-13 is not insulated from challenge merely because the assessee failed to respond to preceding scrutiny notices; courts may still remit the matter for a fresh opportunity where genuine engagement is shown.
  • Escalation from an ASMT-10 scrutiny notice to a Section 47(1) demand and thereafter to bank attachment reflects an established departmental sequence that assessees must track and respond to promptly to avoid coercive recovery.

Sections Involved

  • Form GST ASMT-10, CGST Rules, 2017 — scrutiny notice pointing out discrepancies in returns filed by a registered person.
  • Section 47(1), KGST Act, 2017 — late fee/demand notice for non-compliance with return-related requirements.
  • Form GST DRC-13, CGST Rules, 2017 — notice to a third person (such as a bank) for recovery of tax dues from amounts held on behalf of the taxable person.

Decision – In Favour of

The decision is in favour of the assessee (Rely Fab Solutions). The bank attachment notices were set aside and the matter remitted to the reply stage, giving the petitioner a fresh opportunity to contest the scrutiny findings.

Case Details

High Court of Karnataka at Bengaluru; Writ Petition No. 30948 of 2025 (T-RES); Coram: Hon'ble Mr. Justice S.R. Krishna Kumar; Order dated 24.11.2025.

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