2025 (7) TMI 1321 - HC - GST

Tax authorities must expeditiously resolve pending GST appeals after unlawful search and recovery actions

Karnataka HC allowed a writ petition concerning unlawful search and forceful money recovery by tax authorities due to discrepancies between petitioner's ... Unlawful search - recovery of money forcefully by threat of arrest - discrepancy between petitioner’s GSTR-3B and GSTR-7 returns - HELD THAT:- There is an order passed by the authorities which is now questioned by the petitioner before the appellate authority. The appellate authority would decide on merits in accordance with law and respondent would co-operate in disposal of the said appeal. The said appeal is preferred on 13.02.2025, now we are in the month of July, 2025. The appellate authority is yet to issue notice to the petitioner. Under the circumstances, this Court is of the opinion that when the petitioner has failed to challenge the orders of authority for imposition of tax and recovery of the amount, same would have to be decided in the time bound manner. Writ of mandamus is issued directing respondent No.5 to consider the appeal preferred by the petitioner in accordance with law expeditiously taking into consideration decisions relied upon by learned counsel for the petitioner in the cases mentioned hereinabove, the appeal shall be disposed of. Petition allowed. 1. ISSUES:1. Whether the inspection and search conducted under Section 67(1) of the Central GST Act were lawful, given alleged procedural irregularities and incomplete authorization details.2. Whether coercive recovery of GST dues without issuance of statutory notice or order violates procedural safeguards under the GST Act.3. Whether the appellate authority is obliged to dispose of the appeal under Section 107(1) of the GST Act expeditiously, especially where coercive recovery is alleged.4. Whether the question of voluntariness or coercion in payment of recovered amounts is a matter for appellate determination.2. RULINGS / HOLDINGS:1. The Court observed that the authorization for inspection under Section 67(1) was issued but lacked the complete address of the premises; however, the legality of the search and inspection is subject to further adjudication.2. The Court held that allegations of coercive recovery without statutory notice or order are serious but must be examined by the appellate authority; the Court did not find sufficient ground to interfere at this stage.3. The Court issued a writ of mandamus directing the appellate authority to consider and dispose of the appeal preferred under Section 107(1) of the GST Act expeditiously, emphasizing timely adjudication.4. The Court clarified that determination of whether payments were made voluntarily or under coercion is a matter for the appellate authority to decide, not the High Court at this stage.3. RATIONALE:1. The Court applied the statutory framework under the Central Goods and Services Tax Act, 2017, particularly Sections 67(1) (inspection and search) and 107(1) (appeals), emphasizing adherence to procedural requirements.2. Reliance was placed on precedent authorities cited by the petitioner to underscore principles against unlawful search and coercive recovery, but the Court refrained from expressing any opinion on merits.3. The Court recognized the importance of expeditious disposal of appeals to safeguard taxpayer rights and prevent undue hardship from prolonged proceedings.4. The Court maintained judicial restraint by leaving all substantive contentions open for the appellate authority's determination, thereby respecting the appellate process and statutory scheme.