Chhattisgarh High Court Halts Tax Recovery Order Pending Deposit, Cites Procedural Concerns

The Chhattisgarh High Court stayed the effect of the recovery order/notice dated 1.10.2021 until the next hearing, requiring the petitioner to deposit 50% of the total payable tax amount within three weeks. This decision was made due to concerns raised by the petitioner regarding non-compliance with procedural requirements, validity of recovery proceedings, timeliness of actions under the Central Goods and Services Tax Act, 2017, and disputes over the service of recovery orders.

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Issues:
1. Compliance with procedural requirements under the Central Goods and Services Tax Act, 2017 for issuance of recovery orders.
2. Validity of recovery proceedings initiated by the Proper Officer without serving the order of assessment.
3. Timeliness of recovery proceedings under Sections 78 and 79 of the Act of 2017.
4. Dispute regarding the service of recovery order upon the petitioner.

Analysis:
1. The petitioner argued that the recovery order issued under Form GST DRC-13 (Annexure P-10) was not in compliance with the procedural requirements of the Central Goods and Services Tax Act, 2017 (referred to as "the Act of 2017"). The petitioner contended that the notice under Section 73(1) of the Act of 2017 and the order of adjudication determining the GST liability were not served, which are mandatory prerequisites for initiating recovery proceedings.

2. The State, represented by counsel, opposed the petitioner's submissions by highlighting that the Proper Officer had issued notices under Section 61 and Section 73 of the Act of 2017. It was argued that the petitioner did not dispute the liability to pay GST, as evidenced by documents annexed to the writ petition. The State contended that the petitioner could not challenge the initiation of recovery proceedings based on the tax liability.

3. The court examined the timeliness of the recovery proceedings under Sections 78 and 79 of the Act of 2017. It was observed that the recovery notice dated 1.10.2021 (Annexure P-10) was issued within a period of less than three months from the date of the recovery orders mentioned in the notices. The court noted that no specific reasons were provided for initiating proceedings under Section 78 before the lapse of the three-month period, as required by law.

4. The petitioner, through counsel, asserted that the recovery order mentioned in Annexure P-9 was never served upon the petitioner. This raised concerns about the legality and arbitrariness of the recovery proceedings initiated by the respondents. The court considered the arguments from both parties and directed that the effect and operation of the recovery order/notice dated 1.10.2021 (Annexure P-10) would remain stayed until the next hearing, provided the petitioner deposited 50% of the total payable tax amount within three weeks, adjusting the amount already paid.

This detailed analysis of the judgment from the Chhattisgarh High Court addresses the issues raised by the parties regarding compliance with procedural requirements, validity of recovery proceedings, timeliness of actions under the Act of 2017, and disputes over the service of recovery orders.

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