Recovery communication loses effect after statutory appeal and pre-deposit, with account de-freezing and demand draft return ordered.

A recovery communication lost efficacy after the assessee filed statutory appeals under the CGST Act and deposited the prescribed pre-deposit, so no further recovery action could continue on those facts. The HC quashed the recovery measure, directed de-freezing of the bank account, and ordered return of the demand draft. The merits of the additional demand were left open for adjudication in the pending appellate proceedings, preserving the competent authority's role on the underlying liability.

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Issues: Whether the recovery communication issued during pendency of the appeals, after deposit of the requisite pre-deposit, could survive and whether consequential de-freezing and return of the demand draft were warranted.

Analysis: The petitioner had filed appeals under Section 107 of the Central Goods and Services Tax Act, 2017 and had deposited the requisite pre-deposit under Section 107(6). The respondents placed instructions stating that the impugned recovery communication had been issued before filing of the appeals and that, after the appeals and deposit were made, no further recovery action was warranted. In these circumstances, the Court found that the impugned communication had lost its efficacy and relevance. The Court also left the merits of the additional demand open for adjudication by the competent authority under the Act.

Conclusion: The recovery communication was quashed and set aside, the petitioner's account was ordered to be de-freezed, and the demand draft was directed to be returned.

Ratio Decidendi: A recovery measure loses efficacy where, on the relevant facts, the assessee has already invoked the statutory appellate remedy and deposited the prescribed pre-deposit, leaving the merits of the underlying demand to be decided in the appeal.

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