Export incentive recovery stayed until show-cause adjudication, with no coercive action permitted before the notice is decided.

The Bombay High Court dealt with a challenge to a revenue communication demanding repayment of amounts said to have been wrongly obtained under an export incentive scheme. The revenue stated that it would not initiate recovery or give effect to the communication until the proposed show-cause notice was adjudicated, and the Court accepted that statement. In view of that assurance, the Court found no basis for interference at that stage. It further clarified that no coercive recovery could be taken before adjudication, although any voluntary payment would not be restrained.

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Issues: Whether the revenue could enforce the impugned demand and initiate recovery before issuance and adjudication of the show-cause notice.

Analysis: The challenge was to a communication requiring payment of the amount claimed to have been wrongly obtained under the export incentive scheme. The revenue stated that it would not initiate recovery proceedings until an adjudication order was passed on the proposed show-cause notice, and would not give effect to the impugned communication until then. The Court accepted that statement and held that, in view of it, no interference was warranted at that stage. It also clarified that no coercive recovery would be taken before adjudication, while acceptance of any voluntary payment would not be restrained.

Conclusion: The impugned communication was not interfered with at that stage, and the revenue was restrained from taking recovery action until adjudication of the show-cause notice.

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