HC | Recovery of GST Interest Needs DRC-01D Notice & Hearing

Case Details: Reliance Formulation (P.) Ltd. vs. Assistant Commissioner of State Tax - [2025] 176 taxmann.com 608 (Gujarat)

Judiciary and Counsel Details

• BHARGAV D. KARIA and Pranav Trivedi, JJ.
• Ashutosh S. Dave for the Petitioner. 
• Ms. Shrunjal Shah, AGP for the Respondent.

The Petitioner challenged an advisory issued by the jurisdictional officer under GST, directing payment of interest on delayed self-assessed tax and cautioning that recovery proceedings may be initiated under section 79 of the CGST Act and Gujarat GST Act in the event of non-payment or absence of sufficient clarification. The Petitioner submitted that no recovery proceedings could be contemplated without first affording an opportunity of hearing and without considering any explanation. It was contended that such an advisory, though not in the form of a formal notice, effectively initiated coercive recovery steps without due process. The matter was accordingly placed before the High Court.

HC Held

The High Court held that recovery of interest under section 50(1) of the CGST Act, read with rules 88B and 88C of the CGST Rules and Gujarat GST Rules, can be undertaken under section 79(1) only after issuance of an intimation in Form GST DRC-01D as prescribed under rule 142B. The Court observed that the advisory merely placed the Petitioner on notice regarding a potential liability based on departmental records did not constitute initiation of recovery proceedings. It further held that once Form GST DRC-01D is issued, the officer must provide an opportunity to file a reply and, if requested, an opportunity of hearing under section 75(4), in compliance with principles of natural justice. Accordingly, The High Court held that since the advisory itself did not trigger recovery and was subject to further procedural steps, no interference was warranted.

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