Telangana HC Allows GSTAT Appeal Despite Ongoing Recovery Proceedings Against Assessee:

The Telangana High Court on 15 May granted relief to M/s Krishna Pharma in a matter relating to GST recovery proceedings, holding that the assessee may approach the GST Appellate Tribunal against the order-in-appeal and seek stay of recovery after satisfying the authorities regarding statutory pre-deposit compliance. A Division Bench comprising Justice T. Madhavi Devi and Justice G.M. Mohiuddin disposed of the writ petition challenging garnishee proceedings initiated under Section 79(1)(c) of the Central Goods and Services Tax Act, 2017.

The writ petition was filed against a garnishee notice dated 06.05.2026 issued to the petitioner’s banker, Bank of Baroda, directing maintenance of a lien over the petitioner’s account for recovery of GST dues amounting to Rs. 31.01 lakh. The recovery proceedings arose out of an order-in-original dated 30.12.2022 relating to the period March 2020 to December 2020, which was later affirmed on appeal on 30.12.2023.

Before the High Court, the petitioner submitted that it had already deposited 10% of the disputed tax amount as a statutory pre-deposit for filing an appeal. It was contended that despite such compliance, the department proceeded to issue a recovery notice in Form GST DRC-13 to the petitioner’s bank account. The Court pointed out that the petitioner argued that even after making the statutory pre-deposit, the department initiated garnishee proceedings by directing the bank to maintain lien over the account.

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The department, on the other hand, submitted that the GST Appellate Tribunal had commenced functioning and appeals against appellate orders passed between 01.03.2023 and 31.01.2024 could be filed during the prescribed window period ending on 30.06.2026. The revenue further contended that the petitioner should avail the statutory remedy before the Tribunal and seek an appropriate stay against recovery proceedings.

After considering the submissions, the High Court observed that since the petitioner was willing to avail the appellate remedy under Section 112 of the GST Act, liberty could be granted to approach the Tribunal within the prescribed time period.

The Court directed that if the petitioner satisfies the authorities regarding payment of statutory pre-deposit, the concerned officer shall take a decision on stay of recovery proceedings within two weeks.

Thus, the High Court disposed of the writ petition by granting liberty to the petitioner to file an appeal before the GST Appellate Tribunal and approach the jurisdictional authority for a stay of the impugned recovery proceedings.