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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the recovery certificate for GST could be enforced against the contractor and, if so, whether it could extend to the entire amount mentioned in the citation or only to the GST component.
Analysis: The dispute arose out of a contractual arrangement in which the contractor undertook liability to pay GST. The statutory scheme under the U.P. Goods and Service Tax Act, 2017 recognised the local authority as the recipient in the transaction and provided for recovery through the proper officer under Section 79, including recovery as arrears of land revenue. Section 79(2) also permitted recovery in accordance with the agreement between the parties. Rule 143 of the U.P. Goods and Services Tax Rules, 2017 placed the obligation of deduction on the specified officer of the local authority. On the admitted facts, the local authority had adjusted the security deposit without deducting GST, while the recovery citation had been issued for both the consideration amount and GST. Since the consideration amount had already been adjusted, the composite recovery could not be sustained in full, but the admitted GST liability remained recoverable from the contractor.
Conclusion: The recovery certificate was modified and could be enforced only to the extent of the GST amount of Rs. 3,24,000/-, subject to the contractor's undertaking to pay it.
Final Conclusion: The challenge succeeded only in part, as the demand was curtailed to the unpaid tax component while the statutory liability to pay GST was upheld.
Ratio Decidendi: Where the statute and the contract permit recovery of GST from the liable contracting party, the recovery may proceed as arrears of land revenue through the proper officer, but it cannot include amounts already satisfied by adjustment and must be confined to the subsisting tax liability.
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