GST recovery demands need prior assessment and proper notice before adverse action; detained vehicles may be released on security.

Recovery under the GST detention mechanism cannot be enforced before an assessment order, and adverse material not set out in the original show cause notice cannot be relied on without giving the affected person an opportunity to respond. On that basis, the demand notice was set aside and the matter was remitted for fresh assessment after allowing an additional reply. The court also held that detained vehicles need not remain in custody during the continued proceedings where prolonged detention is unjustified; their release may be ordered on appropriate security. Conditional release was therefore directed against the furnishing of a bank guarantee and bond as specified in the demand notices.

---

---

Issues: (i) Whether the demand notice could be sustained without an assessment order and on grounds not set out in the original show cause notice; (ii) whether the detained vehicles were entitled to release pending reassessment and further proceedings.

Issue (i): Whether the demand notice could be sustained without an assessment order and on grounds not set out in the original show cause notice.

Analysis: The demand was found to be procedurally irregular because it was issued before any assessment order had been passed. The later ground regarding the temporary registration number on the e-way bills was not part of the original show cause notice, so the petitioner had no opportunity to answer that allegation. A recovery demand cannot precede assessment, and the affected person must be given a proper opportunity before adverse action is taken.

Conclusion: The demand notice was set aside and the assessment process was required to be undertaken afresh after allowing the petitioner to file a further reply.

Issue (ii): Whether the detained vehicles were entitled to release pending reassessment and further proceedings.

Analysis: The vehicles had remained detained for a considerable period, and their continued detention was found unwarranted while assessment proceedings were to continue. The Court balanced the need for revenue protection against the risk of deterioration of the vehicles and held that release could be ordered on security. Conditional release was therefore directed against a bank guarantee and bond for the amounts mentioned in the demand notices.

Conclusion: The vehicles were ordered to be released on furnishing security in the form directed.

Final Conclusion: The petition succeeded in part: the recovery demand was annulled, fresh assessment with hearing was permitted, and interim release of the detained vehicles was allowed on conditions.

Ratio Decidendi: Recovery under the GST detention mechanism cannot be enforced before assessment and without notice of the material grounds relied upon, and detained goods or vehicles may be released on appropriate security where continued detention would be unjustified pending completion of lawful proceedings.

---