Deemed withdrawal of assessment order on timely return filing bars recovery action founded on that order

Where a valid return is filed within the statutory period and tax is paid, Section 62(2) deems the assessment order withdrawn by operation of law, so recovery based on that order cannot continue. The High Court's reasoning also indicates that authorities must first account for the filed return before initiating coercive steps against the credit or cash ledger. On that basis, the recovery order and the appellate order rejecting the appeal were treated as unsustainable, while questions relating to interest, costs, and possible contempt were left open.

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Issues: (i) Whether an assessment order passed against a non-filer of returns stood withdrawn when the registered person furnished a valid return and paid tax within thirty days, and whether recovery could thereafter be enforced; (ii) Whether the recovery order and the appellate order rejecting the assessee's appeal were sustainable in law.

Issue (i): Whether an assessment order passed against a non-filer of returns stood withdrawn when the registered person furnished a valid return and paid tax within thirty days, and whether recovery could thereafter be enforced.

Analysis: Section 62(2) creates a legal fiction that where a valid return is furnished within thirty days of the service of the assessment order, the assessment order is deemed to have been withdrawn. The record showed that the return in GSTR-3B was filed within the prescribed period and the tax was paid. Once the assessment order stood withdrawn in law, there was no surviving basis for coercive recovery from the credit ledger or cash ledger, and the authority was required to notice the return already furnished before taking recovery steps.

Conclusion: The issue is answered in favour of the petitioner, and the recovery based on the withdrawn assessment order was unsustainable.

Issue (ii): Whether the recovery order and the appellate order rejecting the assessee's appeal were sustainable in law.

Analysis: The recovery order was passed without properly accounting for the assessee's timely return and without following the lawful sequence required for enforcement. The appellate order was also found to have ignored the binding position earlier laid down by the Court regarding appeals arising from orders under Section 62. The manner in which both authorities acted was held to be contrary to law and procedurally unfair.

Conclusion: The issue is answered in favour of the petitioner, and both impugned orders were liable to be set aside.

Final Conclusion: The writ petitioner succeeded on the substantive challenge to the recovery and appellate orders, and the matter was left open only on the ancillary questions of interest, costs, and possible contempt action.

Ratio Decidendi: Where a valid return is filed within the statutory period under Section 62(2), the assessment order is deemed withdrawn by operation of law, and any recovery action founded on that order lacks legal basis.

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