2021 (11) TMI 754 - HC - GST

Validity of proceedings under Sections 78 and 79 of CGST Act, 2017 - no recovery order as appearing in Annexure P-9 was ever served upon the petitioner - HELD THAT - Perusal of Notice (Annexure P-10) would show that in two of the notices i.e. Recovery No.34 of 2021 and 35 of 2021, order date is mentioned as 18.8.2021. Under Section 78 of the Act of 2017, the period of three months is provided for making payment of the tax assessed/ascertained by the Proper Officer but the letter/notice Annexure P-10 to third party under Section 79 (1) (c) of the Act of 2017 was issued on 1.10.2021 which is less than three months period from the date of the recovery order No.34 of 2021 and 35 of 2021. It is not disputed by learned counsel for the respondents that no specific reasons have been assigned for issuing notice under Section 79 (1) (c) of the Act of 2017 for initiating proceedings under Section 78 of the Act before lapse of three months period. Considering the entirety of the facts and circumstances of the case, submission made by learned senior counsel for the petitioner that no order was served upon the petitioner as required under Section 78 of the act of 2017, as an interim measure, it is directed that effect and operation of order /notice dated 01.10.2021(Annexure P-10) shall remain stayed till the next date of hearing subject to petitioner depositing 50% of the total payable tax amount within a period of three weeks from today. Application disposed off.

Summary

Issues:
1. Compliance with procedural requirements under the Central Goods and Services Tax Act, 2017 for issuance of recovery orders.
2. Validity of recovery proceedings initiated by the Proper Officer without serving the order of assessment.
3. Timeliness of recovery proceedings under Sections 78 and 79 of the Act of 2017.
4. Dispute regarding the service of recovery order upon the petitioner.

Analysis:
1. The petitioner argued that the recovery order issued under Form GST DRC-13 (Annexure P-10) was not in compliance with the procedural requirements of the Central Goods and Services Tax Act, 2017 (referred to as "the Act of 2017"). The petitioner contended that the notice under Section 73(1) of the Act of 2017 and the order of adjudication determining the GST liability were not served, which are mandatory prerequisites for initiating recovery proceedings.

2. The State, represented by counsel, opposed the petitioner's submissions by highlighting that the Proper Officer had issued notices under Section 61 and Section 73 of the Act of 2017. It was argued that the petitioner did not dispute the liability to pay GST, as evidenced by documents annexed to the writ petition. The State contended that the petitioner could not challenge the initiation of recovery proceedings based on the tax liability.

3. The court examined the timeliness of the recovery proceedings under Sections 78 and 79 of the Act of 2017. It was observed that the recovery notice dated 1.10.2021 (Annexure P-10) was issued within a period of less than three months from the date of the recovery orders mentioned in the notices. The court noted that no specific reasons were provided for initiating proceedings under Section 78 before the lapse of the three-month period, as required by law.

4. The petitioner, through counsel, asserted that the recovery order mentioned in Annexure P-9 was never served upon the petitioner. This raised concerns about the legality and arbitrariness of the recovery proceedings initiated by the respondents. The court considered the arguments from both parties and directed that the effect and operation of the recovery order/notice dated 1.10.2021 (Annexure P-10) would remain stayed until the next hearing, provided the petitioner deposited 50% of the total payable tax amount within three weeks, adjusting the amount already paid.

This detailed analysis of the judgment from the Chhattisgarh High Court addresses the issues raised by the parties regarding compliance with procedural requirements, validity of recovery proceedings, timeliness of actions under the Act of 2017, and disputes over the service of recovery orders.