TaxTMI 
TaxTMI 
Recently the department is issuing DRC 07 notices for recovery of interest on account of belated filing monthly returns of 3B. Now the moot question is whether without issuance of any show cause notice can the revenue straight away issue the said notice / Order DRC 07 ? Direct recovery of interest on unpaid self-assessed tax is gross violation of natural justice and runs contrary to settled jurisprudence. Can it be challenged under Article 226 ? Based on the judgments in case of Mahadeo Constructions, Godavari Commodities, Narsing Ispat, R.K. Transport Pvt Ltd, Daejung Moparts Pvt Ltd and L.C. Infra Projects interest is automatic but recovery is not. I invite the valuable suggestions across this forum at large. The action of the revenue is right or unconstitutional ?
Interest under 50
08 Feb 2023 
11 Replies 
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Recovery of interest: revenue may issue summary recovery notices, but quantification requires an opportunity to be heard.
The statute permits recovery of unpaid self assessed tax and unpaid interest through the recovery mechanism, and the revenue treats Form DRC 07 as a recovery notice allowing summary recovery; however, although interest accrues automatically, principles of natural justice require an opportunity to contest the quantification of interest and related adjustments before enforcement, and affected taxpayers can file the statutory appeal or seek writ relief while weighing practical payment considerations. (AI Summary)
The statute permits recovery of unpaid self assessed tax and unpaid interest through the recovery mechanism, and the revenue treats Form DRC 07 as a recovery notice allowing summary recovery; however, although interest accrues automatically, principles of natural justice require an opportunity to contest the quantification of interest and related adjustments before enforcement, and affected taxpayers can file the statutory appeal or seek writ relief while weighing practical payment considerations. (AI Summary)