Tax Recovery Challenge: Appellant Wins Procedural Safeguards with Mandatory Notice and Suspension of Coercive Actions

HC ruled in favor of appellant, directing tax department to issue show cause notice within 15 days and provide 10 days for response. No coercive action permitted against appellant until matter is fully adjudicated. Court emphasized proper legal procedure, allowing appellant opportunity to address tax recovery and input tax credit ledger issues through appropriate legal channels.

---

---

Issues:
1. Deficit court fees paid by the appellant.
2. Appeal against the order denying interim relief.
3. Alleged recovery of tax without proper order under Section 74(9) of the CGST Act.
4. Blocking of input tax credit ledger without intimation.
5. Issuance of show cause notice and subsequent actions by the respondent department.

Analysis:
1. The appellant has rectified the deficit court fees, addressing the issue raised by the Additional Stamp Reporter, thus removing the defect.

2. The appeal challenges the denial of interim relief sought in W.P.A. No.1474 of 2021. The appellant, through their advocate, informed the Court that they are not pressing for a specific prayer in the writ petition related to the constitutionality of certain provisions of the Goods and Services Tax Act, which was struck off accordingly.

3. The appellant contests the respondent's actions in recovering tax without a formal order under Section 74(9) of the Central Goods and Services Tax Act, 2017, and also raises concerns about the blocking of their input tax credit ledger without prior notification. The respondent department, represented by the standing counsel, clarified that the recovery was initiated after the appellant voluntarily deposited a sum of Rs.40 lakhs. The department assured that a show cause notice would be issued soon.

4. In light of the arguments presented, the Court directed the respondent department to issue a show cause notice to the appellant within 15 days, providing a minimum of 10 days to respond. The Court emphasized that no coercive action should be taken against the appellant until the matter is adjudicated and a speaking order is passed in accordance with the law.

5. Additionally, the Court noted that the issue of the blocked input tax credit ledger is separate and should be addressed through appropriate legal remedies. The appellant was granted liberty to pursue this matter independently.

6. The Court disposed of the appeal, connected application, and the writ petition, without imposing any costs on either party. The judgment was delivered by Hon'ble Mr. Justice T. S. Sivagnanam, with agreement from Hon'ble Mr. Justice Hiranmay Bhattacharyya.

---