GST Notice U/S 79(1)(c) Can't Be Issued Directly To Bank; Must Be Served To Actual Taxpayer: Bombay High Court

Justices M.S. Sonak and Jitendra Jain observed that the notice under Section 79(1)(c) of the CGST Act was not addressed to the assessee but directly to the bank.

“Where such notice is served on a person, he can prove to the satisfaction of the officer issuing the notice that the money demanded or any part thereof was not due to the person in default or that he did not hold any money for or on account of the person in default at the time the notice was served on him nor is the money demanded or any part thereof, likely to become due to the said person or be held for or on account of such person” opined the bench.

Section 79(1)(c) Of the Central Goods and Services Tax Act, 2017, authorises the GST authorities to issue a notice to any third party—such as a debtor—who owes money to the defaulter or holds funds on their behalf.

In this case, the assessee/petitioner has challenged the order issued under Section 79(1)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act).

The notice was not addressed to the assessee but the same was addressed to the Branch Manager of the Bank at Gurugram/3^rd respondent.

The assessee has stated that the he does not have any bank account at Gurugram and the bank account referred to in the impugned notice is with the Mulund Branch.

A notice had to be served upon the assessee so that the assessee would have an opportunity of proving to the satisfaction of the officer issuing the notice that no amount was due and payable by the assessee to the person in default. No such notice was admittedly served upon the assessee. On this short ground, the notice is liable to be quashed and set aside, stated the bench.

The bench referred to the case of S.J.R. Prime Corporation Pvt. Ltd. v. Superintendent of Central Tax, Bengaluru 2025 (92) G.S.T.L. 154 (Kar.) where a notice was directly served to the bank and not to the person who was allegedly due and payable some amount to the person in default. The bench noted that this was in breach of the mandatory procedure prescribed under the CGST Act and quashed the impugned notice.

In view of the above, the bench quashed the notice but left it open to the department to serve a fresh notice on the assessee.

Case Title: M/s. Galaxy International v. Union of India & Ors.

Case Number: WRIT PETITION NO. 11399 OF 2024

Counsel for Petitioner/Assessee: Prakash Shah

Counsel for Respondent/Department: Jitendra B. Mishra

Click Here To Read/Download The Order