Tax Interest Recovery Dispute Resolved: Partial Payment Ordered, Appeal Mechanism Activated for Balanced Resolution

HC examined a writ petition challenging a garnishee notice for tax interest recovery under WBGST Act. The court stayed the notice, directing petitioner to pay 20% of the interest and mandating the Appellate Authority to resolve the appeal within six weeks. Recovery of the remaining amount was made contingent on the appeal's final outcome, ensuring procedural fairness while partially protecting the department's recovery rights.

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Issues involved:
The issues involved in the judgment are the challenge to an impugned garnishee notice dated 13th February, 2023, for the recovery of interest demand arising from an adjudication order, the legality of taking steps for recovery before the expiry of the statutory period of 90 days of filing an appeal, and the justification of the impugned recovery proceeding under Section 78 of the WBGST Act, 2017.

Summary:
In this writ petition, the petitioner challenged the impugned garnishee notice issued for the recovery of interest due amounting to Rs. 24,74,434/- arising from an adjudication order. The petitioner contended that such recovery steps were taken prematurely, before the expiry of the three-month period for filing an appeal, under Section 78 of the WBGST Act, 2017. The learned Advocate for the petitioner argued that the impugned garnishee order was issued on the same day when reasons for recovery under Section 78 were recorded, indicating a lack of proper procedure.

The Additional Government Pleader justified the initiation of the recovery proceeding, stating that there is no absolute bar on taking recovery steps before the expiry of the 90-day statutory period for filing an appeal, as per the proviso to Section 78 of the Act. The department provided reasons for resorting to the proviso, which were found to be recorded by the Adjudicating Authority. The petitioner's Advocate, however, pointed out that the recovery steps were initiated before the reasons for resorting to the proviso were fully formed, questioning the procedural correctness of the actions taken.

The Court, without delving into the merits of the recorded reasons for invoking the proviso to Section 78 during the pendency of the appeal, decided to stay the impugned garnishee order subject to the petitioner paying 20% of the interest due within seven days. The Appellate Authority was directed to expeditiously dispose of the appeal within six weeks, and the final recovery of the due amount was made contingent upon the outcome of the appeal and in accordance with the prescribed legal procedures. Consequently, the writ petition was disposed of with the mentioned observations and directions.

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