Facts of the Case

The petitioner, M/s Shubham Plast (GSTIN 36ABPFS2758F1ZR), Shivarampally, Rangareddy, Telangana, represented by its proprietor Smt. Indira Lahoti, approached the High Court against Notice No. RJNR-II/GST-Arrears/2024-25 dated 28.06.2024, seeking a declaration that it was invalid, illegal, arbitrary and without jurisdiction, together with a consequential direction to release its bank account No. 0948562837 maintained with Kotak Mahindra Bank, Road No. 12, Banjara Hills, Hyderabad, which stood blocked/attached. An order had been passed against the petitioner under Section 73 of the Central Goods and Services Tax Act, 2017 dated 30.04.2024. Against that order the petitioner had already preferred an appeal before the competent appellate authority, along with a stay application, and had also sought condonation of delay. Since the operation of its bank account was restrained, the petitioner pressed for early disposal of the pending stay application.

Issues Involved

  1. Whether the recovery notice dated 28.06.2024 issued towards GST arrears was invalid, illegal, arbitrary and without jurisdiction.
  2. Whether the blocking/attachment of the petitioner’s bank account was liable to be lifted while the statutory appeal remained pending.
  3. Whether the appellate authority could be directed to decide the pending stay application expeditiously.

Petitioner’s Arguments

  • Against the order passed under Section 73 of the CGST Act, 2017 dated 30.04.2024, the petitioner had already preferred an appeal before the competent appellate authority along with a stay application.
  • Although a copy of the stay application had not been filed along with the writ petition, it was indeed pending before the appellate authority.
  • The petitioner had prayed before the appellate authority for a stay of the impugned notice dated 28.06.2024, and sought a direction that the said stay application be decided expeditiously.

Respondent’s Arguments

  • The respondents, represented by the learned Assistant Government Pleader for the Special Government Pleader for State Tax, raised no objection to the prayer, which the Court recorded as an innocuous prayer.

Court Order / Findings

  • The Hon’ble Division Bench noted that the statutory appeal against the Section 73 order, along with the stay application, was already pending before the competent appellate authority.
  • Since the other side had no objection, the Court disposed of the writ petition by directing the appellate authority to decide the stay application expeditiously, preferably within two weeks from the date of communication of the order.
  • The Court made it clear that it had not expressed any opinion on the merits of the case.
  • No order as to costs was passed, and pending interlocutory applications stood closed.

Important Clarification

  • Where a statutory appeal and a stay application against an order under Section 73 are already pending, the High Court will ordinarily not examine the validity of the consequential recovery notice on merits.
  • The appropriate relief in such circumstances is a direction for time-bound disposal of the pending stay application, rather than adjudication of the demand by the writ court.
  • A direction of this nature does not amount to any finding on the legality of the recovery notice or the attachment of the bank account.

Sections Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017 – Determination of tax not paid, short paid, erroneously refunded or input tax credit wrongly availed or utilised
  • Article 226 of the Constitution of India – Writ jurisdiction of the High Court

Decision – In Favour of

The writ petition was disposed of with directions, in part in favour of the Assessee. The petitioner obtained a time-bound direction for disposal of its stay application, but the Court expressly refrained from expressing any opinion on the merits of the demand or on the attachment of the bank account.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: W.P. No. 36296 of 2024  |  CNR: HBHC010706812024
  • Coram: Hon’ble Sri Justice Sujoy Paul and Hon’ble Dr. Justice G. Radha Rani
  • Date of Order: 26 December 2024  |  Disposal: Disposed of, no costs

Link to Download the Order

Click here to download the full order – M/s Shubham Plast vs The State of Telangana & Ors. (W.P. No. 36296 of 2024)