Suvida Traders Vs State of Punjab And Others (Punjab and Haryana High Court)
High Court Declares Immediate GST Recovery Illegal Due to Violation of Section 78; GST Recovery From Electronic Cash Ledger Set Aside for Breach of Statutory Procedure; Demand Under Section 74A Invalid as Department Failed to Properly Serve Notice; Punjab and Haryana High Court Sets Aside GST Demand Due to Procedural Violations.
The Punjab and Haryana High Court allowed the petition challenging a GST demand order dated 14.01.2026 passed under Section 74-A(1) read with Section 74-A(5)(ii) of the Central Goods and Services Tax Act, 2017, for the tax period June 2025 to August 2025. The petitioner also challenged the recovery proceedings initiated pursuant to the demand order. The petitioner argued that no prior show cause notice was validly served before raising the demand, as required under Section 74-A(1) of the Act, and that the recovery of GST dues on the very same day as the demand order violated Section 78 of the Act, which grants an assessee three months to make payment unless reasons are recorded in writing for earlier recovery. The State contended that notice had been served through affixation under Section 169 of the Act, though it conceded that no reasons had been recorded before effecting immediate recovery.
