Statutory waiting period under GST recovery law protected taxpayers from premature debit of the electronic credit ledger.

Recovery under Section 78 of the CGST Act cannot normally begin until three months after service of the order, unless recorded reasons justify earlier action. Here, the Court noted that debit of the electronic credit ledger and allied recovery steps were taken before expiry of the prescribed appeal period and without shown reasons for departing from the statutory waiting period. On that basis, the impugned recovery action was granted interim protection, with stay of the appellate order and direction to re-credit the amount debited in the electronic credit ledger.

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Issues: Whether recovery by debiting the electronic credit ledger could be undertaken before expiry of the appeal period and without recorded reasons justifying departure from the statutory waiting period under Section 78 of the Central Goods and Services Tax Act, 2017.

Analysis: The challenge was treated as similar to pending matters in which interim protection had already been granted. The Court accepted that recovery action was taken before the prescribed appeal period had expired and that the statutory scheme under Section 78 of the Central Goods and Services Tax Act, 2017 contemplates a three-month period from service of the order before recovery proceedings may be initiated, save where reasons are recorded for an earlier action. In the absence of shown reasons to depart from that period, the debit of the electronic credit ledger and allied recovery steps were found to warrant interim protection.

Conclusion: Interim relief was granted in favour of the petitioner, including stay of the impugned appellate order and direction for re-credit of the amount debited in the electronic credit ledger.

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