GST authorities must consider whether bank credits represent loans or intra-account transfers before imposing tax.

The petitioner challenged notices and orders concerning the tax period April 2021 to March 2022.

The first respondent had issued a pre-intimation under Section 73(5), a show-cause notice under Section 73, and an adjudication order under Section 73(9), followed by a garnishee notice under Section 79(1)(c).

The adjudication order recorded that the petitioner had not responded to the notices, which had been uploaded on the portal; it treated receipts through UPI platforms as undeclared taxable services.

The petitioner contended that the turnover included loans and transfers between his own accounts, and that notices should have been served in accordance with Section 169.

The State sought relegation to the statutory appeal under Section 107, noting that the petitioner’s rectification application had been rejected on 23 June 2026.

Whether the Court should restore the proceedings to the first respondent or relegate the petitioner to the alternative remedy under Section 107 of the KGST/CGST Act.

Section 73 of the CGST/KGST Act governs proceedings for determination of tax not paid or short-paid and the resulting adjudication; Section 79(1)(c) provides for recovery through a notice to a third person; and Section 107 provides an appellate remedy.

The Court did not decide the petitioner’s Section 169 service contention or the merits of the tax assessment.

Although the petitioner had not participated in the original proceedings, the Court considered that the assessment might have treated loans and transfers between the petitioner’s own accounts as taxable turnover.

Those matters required consideration before liability could be determined.

Rather than decide the jurisdictional, service, or taxability questions in writ proceedings, the Court restored the adjudication to the first respondent and allowed the petitioner to provide a detailed response and supporting documents.

The adjudication order dated 9 December 2025 and the recovery notice dated 23 April 2026 were quashed, and the proceedings were restored to the first respondent for reconsideration.

The petitioner was permitted to file a detailed response with documents by 30 October 2026; the first respondent was directed to pass appropriate orders.

Any challenge following reconsideration was to be pursued through the remedy available under Section 107.