In the case of Ramms India Pvt. Ltd. Versus Deputy Commissioner of Commercial Taxes (AUDIT), Bengaluru, Writ Petition No. 34270 of 2025 decided on 19-12-2025, it is held by the Hon’ble High Court of Karnataka that common directorship between two separate companies does not justify lifting the corporate veil to recover GST dues of one entity from another; recovery proceedings against the petitioner were quashed as both companies are distinct juristic entities.
Case details are given hereunder:
Facts:
Ramms India Pvt. Ltd. (incorporated 1994) and Xylem Resource Management Pvt. Ltd. (XRMPL, incorporated 2007) are distinct legal entities sharing a common director, Gautam Chowdhury. A show cause notice under Section 73 of KGST Act was issued to XRMPL on 01.08.2023, leading to an adjudication order on 29.11.2023 confirming demand for FY 2022-23. Instead of recovering from XRMPL, authorities issued GST DRC-13 notice on 14.10.2025 to petitioner’s bank (Canara Bank), recovering Rs.24,73,000/-, prompting the writ petition to quash the recovery and seek refund.
Finding and Analysis of the court
The Court found that the petitioner and XRMPL are separate legal entities regardless of shared leadership. The Court specifically held that the adjudication order passed against XRMPL does not extend liability to the petitioner-company. A critical finding was that the petitioner was not a garnishee, meaning it held no money for or on account of the defaulting entity, XRMPL. The Court also analyzed Section 79 of the CGST Act, noting that a notice must be served upon a person to allow them the opportunity to satisfy the officer that the money demanded was not due to the person in default. The failure to serve such notice on the petitioner before recovering funds rendered the DRC-13 notice liable to be quashed
Conclusion:
The writ petition was allowed; impugned GST DRC-13 dated 14.10.2025 quashed. Authorities directed to consider refund claim by 05.01.2026, with timelines for decision and interest-bearing refund if approved.
GST Proceedings Post-Cancellation Cannot Be Sustained Where Notice Is Served Solely Through GST Portal – Violation of Section 169 and Natural Justice Opening Summary In
GST Recovery: Karnataka High Court Holds Common Directorship Insufficient to Justify Lifting Corporate Veil for Tax Dues In the case of Ramms India Pvt. Ltd.
The Supreme Court of India, in Viraj Impex Pvt. Ltd. v. Union of India [S.L.P.(C) Nos. 1979, 2297, 2778, 1977 of 2019, decided on 21.01.2026], has held that a notification issued under the Foreign Trade (Development and Regulation) Act, 1992 becomes legally enforceable only from the date of its publication in the Official Gazette.
