Court sets aside GST recovery proceedings due to lack of clarity in admission, rules attachment not valid without pending proceedings.

The court found the recovery proceedings initiated under the GST Act unsustainable as they were based on an admission lacking clarity and consistency. Despite the respondents' reliance on Section 83 for provisional attachment, the court ruled that attachment could only occur when specific proceedings were pending, which was not the case. The court allowed the writ petition, setting aside the recovery proceedings without expressing an opinion on the merits, leaving resolution to proper legal procedures.

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Issues:
Challenge to recovery proceedings under GST Act without proper assessment or initiation of proceedings.

Analysis:
The petitioner challenged the recovery proceedings initiated by the first respondent demanding payment of a significant sum under the GST Act without prior assessment or initiation of proceedings. The petitioner contended that Section 79 of the Central Goods and Services Tax Act, 2017, cannot be invoked without a proper determination of the tax liability. The petitioner also highlighted that a statement obtained from them regarding input credit was retracted, indicating inconsistencies in the claims made against them.

The first and second respondents argued that the petitioner had admitted liability through a statement, justifying the recovery action under Section 79 of the CGST Act. They claimed that no show cause notice was necessary if the liability was admitted. Additionally, they cited Section 83 of the CGST Act to justify protecting the interest of revenue, even though they confirmed that no pending proceedings existed against the petitioner.

The court examined the case and emphasized that the term "amount payable by a person" under Section 79 implies a liability determined through due process. The court scrutinized the contradictory statements made by the petitioner in response to specific questions, highlighting the lack of clarity and consistency in the admission of liability. It was noted that the retracted statement further complicated the assessment of the tax liability.

Ultimately, the court found the impugned proceedings unsustainable as they were based on an admission that lacked clarity and consistency. Despite the respondent's reliance on Section 83 for provisional attachment, the court ruled that such attachment could only be made when specific proceedings were pending, which was not the case here. Consequently, the court allowed the writ petition, setting aside the recovery proceedings while refraining from expressing any opinion on the merits of the allegations, leaving it to be resolved through proper legal procedures.

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