Telangana High Court Sets Aside GST Garnishee Notice Due to Discrepancy in DRC-07 Summary

The Telangana High Court has set aside a garnishee notice issued under Form GST DRC-13 demanding Rs.27,26,235/- towards interest and penalty from Asianet Digital Network Pvt. Ltd., after finding a clear discrepancy between the order-in-original and the summary of the order in Form GST DRC-07. The Court clarified that the authorities are at liberty to rectify the summary, and the petitioner may pursue appropriate legal remedies thereafter.

Background and Core Issue

The petitioner, Asianet Digital Network Pvt. Ltd., challenged the garnishee notice dated 22 May 2026, which demanded a substantial sum towards interest and penalty under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner argued that this demand was without jurisdiction and contrary to the order-in-original dated 1 December 2025 and the summary order in Form GST DRC-07, both of which quantified only Rs.50,840/- as tax, with no mention of interest or penalty. The petitioner had already paid the tax and interest prior to the issuance of the impugned notice.

The main grievance was that the recovery proceedings violated Sections 78 and 79 of the CGST Act, as the petitioner had discharged the entire tax liability and interest before the garnishee notice was issued. The petitioner did not file an appeal against the order-in-original, having accepted the summary in Form GST DRC-07, which showed no demand for interest or penalty.

Discrepancy in Orders and Submissions

During the hearing, the Court noted an apparent discrepancy between the order-in-original and the summary in Form GST DRC-07. The order-in-original confirmed the IGST tax demand and also levied interest and penalty under the relevant provisions of the CGST Act, Telangana GST Act, and IGST Act. However, the summary in Form GST DRC-07 reflected only the tax amount of Rs.50,840/-, which the petitioner had already deposited, along with interest of Rs.73,210/-.

The Senior Standing Counsel for the Central Board of Indirect Taxes and Customs (CBIC) acknowledged this discrepancy and submitted that a rectified demand in Form GST DRC-07 would be issued to reflect the correct amounts for interest and penalty. The petitioner’s counsel argued that, in the absence of any demand for penalty in the summary, the garnishee notice was improper. He further submitted that if a rectified summary is issued, the petitioner would consider filing an appeal, but the current recovery notice should not be allowed to stand.

Court’s Analysis and Ruling

The High Court observed that the summary of the order in Form GST DRC-07 did not reflect the interest and penalty as confirmed in the order-in-original. The Court held that the respondents are at liberty to rectify the Form GST DRC-07 to accurately reflect the amounts as per the adjudication order. It was clarified that the petitioner would be entitled to pursue lawful remedies, including appeal, if a rectified summary is issued.

Importantly, the Court found that the present garnishee notice in Form GST DRC-13, dated 22 May 2026, demanding Rs.27,26,235/- towards interest and penalty, could not be sustained in law due to the mismatch in the records. Accordingly, the garnishee notice was set aside.

Conclusion

The writ petition was disposed of with the above observations, and no order as to costs was made. The decision underscores the importance of consistency between the order-in-original and the summary in Form GST DRC-07 before initiating recovery proceedings under the GST regime. The authorities have been permitted to rectify the summary, and the petitioner retains the right to challenge any future demand through appropriate legal channels.