GST recovery proceedings: incomplete reply and unsupported invoice cancellation led to remand for fresh adjudication.

An incomplete reply to a GST recovery intimation justified further consideration by the authority, and a proper response supported by annual books of account was required before final action. The Court noted that if taxable services were in fact supplied, liability would arise even without receipt of payment, and later unilateral cancellation of invoices would not by itself negate that liability. The impugned recovery proceedings were therefore not finally set aside; instead, the matter was remitted for fresh adjudication after giving the taxpayer an opportunity to file a complete reply with supporting evidence.

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Issues: Whether the impugned GST recovery proceedings called for interference and whether the matter should be remitted for fresh consideration on the petitioner's reply and supporting records.

Analysis: The petitioner's stand was that the invoices were cancelled after the transaction did not fructify and no tax was payable, while the respondent relied on the entries in GSTR-1, the incomplete reply to the DRC-01B intimation, and the power to recover under the GST recovery machinery. The Court noted that the reply to the DRC-01B intimation was incomplete, and that if the petitioner had in fact supplied services, tax liability would still arise even if payment had not been received. It was also observed that a proper reply supported by annual books of account was necessary, and that unilateral cancellation of invoices at a later stage would not by itself be sufficient.

Conclusion: The matter was remitted to the respondent to pass a fresh order after affording the petitioner an opportunity to file a proper reply with evidentiary materials; the writ petition stood disposed of on that basis.

Final Conclusion: The challenge to the recovery action was not finally accepted, but the petitioner obtained a fresh opportunity before the assessing authority and the impugned proceedings were sent back for reconsideration.

Ratio Decidendi: Where the taxpayer's explanation to a GST recovery intimation is incomplete, the authority may require supporting accounts and may proceed to fresh adjudication, and unilateral invoice cancellation does not displace tax liability if taxable supply is otherwise established.

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