Facts of the Case

M/s Shree Gajanan Industries challenged a garnishee notice dated 14.10.2025 issued under Section 79(1)(c) of the CGST Act, 2017, directing its banker, Central Bank of India, Nizamabad, to maintain a lien over its account towards recovery of tax of Rs.64,45,020. The recovery traced back to an order-in-original dated 01.11.2023 for the period July 2017 to March 2020, as affirmed in appeal on 10.05.2024. The petitioner had already deposited 10% of the tax dues as a pre-deposit by February 2025 for filing a second appeal, but the GST Appellate Tribunal (GSTAT) had not yet commenced functioning at the time the garnishee notice was issued.

Issues Involved

  1. Whether recovery through a garnishee notice under Section 79(1)(c) can proceed against an assessee who has made the pre-deposit and intends to appeal to the GST Appellate Tribunal once it becomes functional.

Petitioner's Arguments

  • The petitioner had already deposited 10% of the tax dues as pre-deposit by February 2025 in anticipation of filing a second appeal.
  • Despite this, the Assistant Commissioner proceeded to issue the garnishee notice in Form GST DRC-13, even though the GSTAT had not yet started functioning, leaving the petitioner without recourse.

Respondent's Arguments

  • The Senior Standing Counsel for CBIC drew the Court's attention to the GSTAT's order dated 24.09.2025, which laid down a staggered timeline within which appeals against orders passed by appellate/revisional authorities between 01.02.2024 and 31.05.2024 may be filed — specifically between 01.01.2026 and 31.01.2026, or any later date not beyond 30.06.2026 — since the Tribunal had since commenced accepting filings.

Court Order / Findings

  • Noting that the petitioner was inclined to avail the statutory appeal remedy under Section 112 and claimed to have already made the pre-deposit, the Court granted liberty to approach the Assistant Commissioner for stay of the impugned recovery proceedings.
  • The petitioner was directed to file its appeal before the GSTAT within the window prescribed by the Tribunal's order dated 24.09.2025.
  • If the petitioner satisfies the Assistant Commissioner that the statutory pre-deposit for the second appeal has been made, the Assistant Commissioner was directed to decide on stay of the recovery proceedings within two weeks thereafter.

Important Clarification

  • Now that the GST Appellate Tribunal has commenced accepting appeals, assessees whose second-appeal period was earlier frustrated by the Tribunal's non-constitution must file within the staggered windows notified for their specific order-dates, all closing not later than 30 June 2026.
  • Coercive recovery action, including a Section 79(1)(c) garnishee, can be stayed at the assessing authority's level once the pre-deposit for the second appeal is demonstrated, without the need for the writ court to adjudicate the recovery's validity itself.

Sections Involved

  • Section 79(1)(c) of the CGST Act, 2017 — recovery of tax by requiring any person owing money to the defaulter (including a bank) to pay the Government.
  • Section 112 of the CGST Act, 2017 — appeal to the GST Appellate Tribunal.

Decision – In Favour of

Disposed of with directions, partly in favour of the Assessee — no ruling on the garnishee's validity itself, but procedural relief secured via the GSTAT appeal route and a stay application.

Case Details

Court: High Court for the State of Telangana at Hyderabad — Case No.: Writ Petition No. 33352 of 2025 — Coram: Hon'ble Chief Justice Aparesh Kumar Singh and Justice G.M. Mohiuddin — Date of Order: 4 November 2025.

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