Facts of the Case: 

In this case, the petitioner challenged the notice and subsequent bank attachment order for recovery of ₹28,16,834/- towards interest on delayed payment of GST under Section 50(1) read with Section 75(12) of the CGST/GGST Acts. The department alleged that the petitioner had short-paid interest on self-assessed tax declared in GSTR-3B returns. Despite several reminder letters (dated 24.04.2023, 22.05.2023, and 31.05.2023), the petitioner failed to pay, prompting the issuance of Form GST DRC-13, attaching the petitioner’s bank accounts with HDFC Bank, Bank of Baroda, and Axis Bank under Section 79(1)(c).

The petitioner contended that the department had not issued any show cause notice or assessment order before initiating recovery. Section 75(12) does not empower the department to proceed directly to recovery without due process. The payment of ₹7,50,000 was made under protest due to coercive pressure.

Issue:

Whether the department can recover interest under Section 75(12) without issuing notice or following adjudicatory procedure under Sections 73 or 74 of the CGST Act. Whether the bank attachment under Form GST DRC-13 was valid in absence of intimation in Form GST DRC-01D as required by Rule 142B

Held that:

The Court held that interest under Section 50(1) can be recovered under Section 79(1) only after issuance of intimation in Form GST DRC-01D, as mandated by Rule 142B of the CGST Rules (inserted vide Notification dated 04.08.2023). Without such intimation, no effective recovery proceedings can be undertaken.

The Court observed that the so-called “advisory” notices merely referred to Section 75(12) and 79 but did not qualify as a notice of recovery. They could only serve as a preliminary intimation to alert the taxpayer regarding potential liability.

Reliance placed upon Rajkamal Builder Infrastructure (P) Ltd. v. Union of India and Reliance Formulation Pvt. Ltd. v. Assistant Commissioner of State Tax, wherein it was held that recovery of self-assessed tax or interest must follow the procedure laid down in Rule 142B.

Upon issuance of Form GST DRC-01D, the taxpayer must be granted opportunity to reply and be heard as per Section 75(4) of the CGST Act.  Since the department failed to issue DRC-01D, the impugned bank attachment was quashed and set aside. The Court directed that the department may initiate fresh proceedings only by following the prescribed procedure under Rule 142B.

The Gujarat High Court reaffirmed that interest recovery under Section 75(12) must comply with Rule 142B and Form DRC-01D procedure. Direct invocation of Section 79 without prior intimation amounts to violation of natural justice and is procedurally invalid.

Case Name:  Bombay Art Versus Union Of India & Ors. dated 10.10.2025

To read the complete judgement 2025 Taxo.online 2750