Facts of the Case:

In this case, the petitioner challenged the issuance of a recovery notice in Form DRC-13 dated 23.07.2025, directing Punjab National Bank to debit the petitioner’s account and remit the disputed tax dues to the Government. This notice was issued under Rule 145(1) of the CGST Rules read with Section 79(1)(c) of the CGST Act. Prior to this, the petitioner had suffered adjudication orders dated 13.10.2022 and 14.10.2022. Aggrieved, the petitioner preferred two statutory appeals under Section 107 of the CGST Act. Along with the filing of these appeals on 24.07.2025, the petitioner deposited the mandatory 10% pre-deposit under Section 107(6).

Despite this statutory protection against coercive recovery once the appeal and pre-deposit were made, the Bank—acting on the DRC-13—froze the petitioner’s account. This prompted the petitioner to approach the High Court seeking quashing of the recovery communication and de-freezing of the bank account.

During the proceedings, the State produced instructions confirming that the DRC-13 notice had been issued before the filing of the appeals and the pre-deposit. It was further clarified that although a demand draft had been issued by the Bank in compliance with DRC-13, the same was not encashed, and no further recovery steps were intended once the Department became aware that the petitioner had filed appeals with the requisite pre-deposit.

Issue:

Whether the recovery proceedings initiated under DRC-13,  freezing the petitioner’s bank account can survive once the petitioner has filed statutory appeals under Section 107 of the CGST Act along with the mandatory pre-deposit of 10% of the disputed demand.

Held That:

The High Court held that the recovery communication dated 23.07.2025 issued in Form DRC-13 lost its legal force once it was established that the petitioner had filed appeals under Section 107 on 24.07.2025 along with the statutory pre-deposit. On the basis of the instructions produced by the Department, the Court noted that the recovery action was initiated prior to the filing of the appeals and that the demand draft obtained from the Bank had not been encashed. Accordingly, the DRC-13 notice was quashed and set aside, being rendered infructuous and without relevance in view of the subsequent filing of the appeals. The Court directed that the demand draft be returned to the petitioner on or before 08.12.2025 and ordered the immediate de-freezing of the petitioner’s bank account.

The Court also clarified that its decision was confined strictly to the peculiar facts of the case and did not touch upon the merits of the disputed tax demand, which shall be adjudicated by the appellate authority in accordance with law.

Case Name: Samrat Marble Granite and Tiles Versus Union of India & Ors. dated 24.11.2025

To read the complete judgement 2025 Taxo.online 3057