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of <h1>Tax recovery under Section 79(1) GST remitted for fresh decision after unilateral invoice cancellation deemed insufficient</h1> <h3>M/s. Sudhan VFX, Represented by its Proprietor Mr. Hariharasudhan Ravindran Versus The Superintendent, Range-IV, Valasaravakkam Division, Chennai</h3> HC considered a challenge to recovery proceedings under Section 79(1) of the GST enactments, arising from tax liability on invoices where the underlying ... Liability to discharge tax, when the contract did not fructify as the recipient failed to honour the contract - invocation of machinery under Section 79(1) of the respective GST enactments - HELD THAT:- A reading of the reply in Part-B to Form GST DRC-01B dated 29.09.2023 seems to indicate that the Petitioner has cancelled the invoice post facto - The reply is incomplete and therefore the impugned recovery proceeding has been initiated to recover the aforesaid sum from the Petitioner. The Petitioner ought to have given a proper reply by substantiating the same with the Annual Books of Account. If the amounts are shown in the Annual Books of Account are receivable, mere cancellation of the invoices unilaterally at a later point of time is of no avail - Considering the overall facts of the case, this Writ Petition is disposed of by remitting the case back to the Respondent to pass a fresh order within a period of thirty days from the date of receipt of a copy of this order. Petition disposed off. Petitioner raised invoices recorded in Form GSTR-1 (July 2023) but not in Form GSTR-3B, asserting the contract 'did not fructify' and no service was provided; payment was not received. Respondent issued Form GST DRC-01B (Rule 88C) and thereafter recovery notice Form GST DRC-01D under Section 79, demanding IGST of Rs. 39,60,000/- for 4-5 July 2023, on the ground that tax liability had accrued. Petitioner's Part-B reply stated: 'The three invoices have been cancelled and payment has not been received from the vendor side. Therefore we have deduct that amount and file the GST Return.' The reply was held to be incomplete; unilateral post-facto cancellation without substantiation in the Annual Books of Account is inadequate. It was observed that even if services were rendered but payment not received, tax liability may still arise under the GST enactments. Matter is remitted to Respondent to pass a fresh order within 30 days; Petitioner to file a proper evidentiary reply or the writ will be deemed dismissed in limine. No costs.
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