Constitutional challenge to GST input tax restriction and premature recovery halted by interim protection against coercive action.

A constitutional challenge was raised to section 16(4) of the CGST Act on grounds of arbitrariness, discrimination and violation of fundamental and property rights, and the Court directed notice to the respondents and the Attorney General of India. The order also records a prima facie view that the impugned recovery action appeared to have been initiated without prior show-cause or assessment proceedings. Pending further hearing, the Court restrained coercive recovery and directed the matter to be heard with connected cases.

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Issues: (i) challenge to the constitutional validity of section 16(4) of the Central Goods and Services Tax Act, 2017 on the grounds of arbitrariness, discrimination and violation of fundamental and property rights; (ii) whether coercive recovery could proceed pursuant to the impugned recovery order without show-cause or assessment proceedings.

Analysis: Notice was directed to be issued to the respondents and to the Attorney General of India in view of the constitutional challenge. The order records a prima facie view that the impugned recovery order or notice appeared to have been issued without any show-cause or assessment proceedings. Interim protection was granted restraining coercive recovery till the next date of hearing.

Outcome: Notice issued and interim protection against coercive recovery granted, with the matter directed to be heard along with connected cases.

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