2019 (11) TMI 766 - HC - GST

Recovery of amount on account of tax, cess, interest and penalty from the account maintained by the petitioner - invocation of section 79 of GST Act - It is the specific case of the petitioner that no proceedings whatsoever, was issued against the petitioner for determining either the tax, cess or interest or penalty - principles of natural justice - HELD THAT - It is evident that the statement said to have been given on 19.06.2019 claims to be so called admission by the petitioner, is not available before the Revenue anymore and on the other hand, it is for them to determine the tax liability by resorting to the procedures in accordance with law, instead of issuing the impugned proceedings straightaway under Section 79 based on the so called admission which is subsequently retracted. The impugned proceedings issued under Section 79 is not sustainable. No doubt, the first respondent sought to rely upon Section 83 to contend that the first respondent is entitled to make the provisional attachment - Perusal of Section 83 would show that the such provisional attachment can be resorted to only when proceedings are pending under any of the provisions viz., Section 62, 63, 64, 67, 73 and 74. In this case, as admitted by the learned counsel appearing for the first respondent, no such proceedings are pending as on today under any of the above provisions. Therefore, Section 83 also would not come to the rescue of the respondent to sustain the impugned proceedings - impugned proceedings are not maintainable. Petition allowed.

Summary

Issues:
Challenge to recovery proceedings under GST Act without proper assessment or initiation of proceedings.

Analysis:
The petitioner challenged the recovery proceedings initiated by the first respondent demanding payment of a significant sum under the GST Act without prior assessment or initiation of proceedings. The petitioner contended that Section 79 of the Central Goods and Services Tax Act, 2017, cannot be invoked without a proper determination of the tax liability. The petitioner also highlighted that a statement obtained from them regarding input credit was retracted, indicating inconsistencies in the claims made against them.

The first and second respondents argued that the petitioner had admitted liability through a statement, justifying the recovery action under Section 79 of the CGST Act. They claimed that no show cause notice was necessary if the liability was admitted. Additionally, they cited Section 83 of the CGST Act to justify protecting the interest of revenue, even though they confirmed that no pending proceedings existed against the petitioner.

The court examined the case and emphasized that the term "amount payable by a person" under Section 79 implies a liability determined through due process. The court scrutinized the contradictory statements made by the petitioner in response to specific questions, highlighting the lack of clarity and consistency in the admission of liability. It was noted that the retracted statement further complicated the assessment of the tax liability.

Ultimately, the court found the impugned proceedings unsustainable as they were based on an admission that lacked clarity and consistency. Despite the respondent's reliance on Section 83 for provisional attachment, the court ruled that such attachment could only be made when specific proceedings were pending, which was not the case here. Consequently, the court allowed the writ petition, setting aside the recovery proceedings while refraining from expressing any opinion on the merits of the allegations, leaving it to be resolved through proper legal procedures.