HC Quashes Tax Recovery via Bank Due to No Notice to Debtor

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  • Last Updated on 11 July, 2025

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Tax Recovery Notice

Case Details: Galaxy International vs. Union of India - [2025] 176 taxmann.com 35 (Bombay)

Judiciary and Counsel Details

  • M.S. Sonak & Jitendra Jain, JJ.
  • Prakash Shah, Sr. Adv., Brijesh Pathak & Dulraj Jain for the Petitioner.
  • Jitendra B. Mishra, Ms Sangeeta Yadav & Rupesh Dubey for the Respondent.

Facts of the Case

The petitioner was subjected to a tax recovery action under section 79(1)(c) of the CGST Act/ Maharashtra GST Act through an impugned notice issued solely to the petitioner’s bank for recovery of tax dues of a person in default. The petitioner submitted that no notice under section 79(1)(c) was ever served upon them, and the impugned notice was not addressed to them at all. It was contended that this omission deprived the petitioner of the statutory opportunity to prove to the satisfaction of the officer issuing the notice that no amount was due and payable by them to the person in default. On this basis, the petitioner challenged the validity of the recovery proceedings, and the matter was accordingly placed before the Bombay High Court.

High Court Held

The Bombay High Court held that under section 79(1)(c), it is mandatory for the officer to serve a notice upon the person from whom recovery is proposed, in order to enable such person to establish that no sum is owed to the person in default. Since no such notice was admittedly issued to the petitioner, the impugned action was found to be in breach of statutory requirements and principles of natural justice. On this short but decisive ground, the recovery notice issued only to the bank was quashed and set aside.

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List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied