Recovery proceedings become infructuous after depositing 10% disputed tax amount under Section 107(6)(7) CGST Act 2017

The HC held that recovery proceedings for Central Goods and Services Tax became infructuous after petitioner deposited 10% of disputed tax amount during pendency of two appeals. Under Section 107(6) and (7) of CGST Act 2017, recovery of remaining balance was deemed stayed. The impugned garnishee proceedings could not be given effect to and became redundant. Any fresh demand arising from Appellate Authority's decision could be realized through GST APL-04 issuance. The writ petition was disposed of as it served no further purpose.

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Issues:
1. Quashing of Notice under Section 79 of CGST Act
2. Determination of alleged dues without considering ITC
3. Direction for recalling garnishee order and fixing installments
4. Any other appropriate writ(s) or order(s)

Analysis:

Issue 1: Quashing of Notice under Section 79 of CGST Act
The petitioner sought a writ for quashing a Notice dated 24.07.2020 issued under Section 79 of the CGST Act for the alleged recovery of Government dues without an adjudication process under Section 73 or 74. The petitioner highlighted discrepancies in the computation of dues solely based on GSTR-1 statement without considering the Input Tax Credit (ITC) claimed in the GSTR-3B statement. The petitioner emphasized the need for a fair adjudication process before resorting to recovery measures.

Issue 2: Determination of alleged dues without considering ITC
The petitioner argued that the determination of dues amounting to Rs. 4,28,86,464 without granting the benefit of ITC admissible to them was arbitrary and contrary to the provisions of the CGST Act. The petitioner had a substantial ITC credit which was not taken into account while calculating the alleged dues. The petitioner contended that denying the claimed ITC without proper adjudication was unjust and illegal.

Issue 3: Direction for recalling garnishee order and fixing installments
The petitioner requested a direction for recalling the garnishee order and setting reasonable installments for the payment of the admitted tax due amount, considering mitigating factors such as the petitioner's financial condition and the impact of the COVID-19 pandemic. The petitioner sought a fair and informed decision from the authorities, particularly Respondent No. 2, to address the issue of recovery in a manner that accommodates the petitioner's circumstances.

Issue 4: Any other appropriate writ(s) or order(s)
The petitioner also sought any other writ(s), order(s), or direction(s) deemed fit and proper by the court in the interest of justice. The petitioner's plea encompassed a comprehensive request for legal remedies or interventions necessary to address the grievances arising from the alleged arbitrary actions of the authorities under the CGST Act.

In the subsequent development, two separate adjudication orders were passed, and the petitioner filed appeals depositing 10% of the demand amount as required by the CGST Act. The court noted that upon filing appeals and depositing the required amount, recovery of the balance was deemed stayed. The court acknowledged that the impugned Garnishee notice had become infructuous due to the stay operating at the appellate stage. The court disposed of the writ petition as infructuous, considering the circumstances and legal provisions governing the recovery process under the CGST Act.

This detailed analysis of the judgment outlines the key issues raised by the petitioner, the legal arguments presented, and the subsequent developments leading to the disposal of the writ petition.

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