Tax Dispute Resolution: HC Grants Writ Petition Relief, Directs Appellate Authority Approach and Stays Recovery Proceedings

HC allowed writ petition challenging GST demand, finding procedural irregularities in tax assessment. The Court directed the petitioner to approach the appellate authority within two weeks to resolve IGST, CGST, and SGST tax disputes. Recovery proceedings were stayed for four weeks, with instructions to resolve tax apportionment through statutory channels.

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Issues:
1. Jurisdictional validity of the impugned order dated 10.06.2024
2. Adjustment of IGST against demand of CGST and SGST
3. Dropping of proceedings initiated against the petitioner
4. Restraining coercive action by the UP GST Department

Analysis:
1. The petitioner, a private limited company engaged in supplying manpower services, challenged an order by the UP GST Officer demanding payment of CGST and SGST for supply made in Uttar Pradesh. The petitioner contended that it had already paid IGST for inter-state supplies and should not be liable for additional taxes. The High Court allowed the writ petition on grounds of natural justice violation and remanded the matter for fresh consideration.

2. Despite the petitioner's explanation that IGST had been paid and tax could not be demanded again, the respondent issued a demand order for CGST and SGST. The Court noted the petitioner's compliance with IGST but observed that the matter of penalty and interest could be addressed by the appellate authority under Section 107 of the GST Act. The Court directed the petitioner to approach the appellate authority within two weeks for resolution.

3. The respondent argued that the petitioner's registration under IGST was a mistake, as the supplies were intra-state and not inter-state. The Court acknowledged the petitioner's payment of IGST but highlighted that the dispute over ITC benefit remained unresolved. It directed the appellate authority to consider the penalty and interest issues if a bona fide mistake in payment was established.

4. The Court stayed recovery proceedings for four weeks or until the appellate authority's decision, emphasizing that its intervention was due to the belief that IGST had been paid without revenue loss. The petitioner was instructed to seek relief from the appellate authority within the specified timeframe, failing which the benefits of the Court's order would not apply. The judgment focused on the proper apportionment of taxes and the resolution of penalty and interest disputes through the statutory appellate process.

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