Best Agrolife Limited Vs State of Maharashtra (Bombay High Court)
Summary: The Bombay High Court considered a challenge by Best Agrolife Limited to a notice dated 25/03/2025 issued by respondent No.4 directing payment of tax and interest within seven days, failing which recovery proceedings under Section 79 of the Maharashtra Goods and Services Tax (MGST) Act, 2017 would be initiated.
The petitioner did not make payment pursuant to the notice. Instead, through an email dated 11/04/2025, it explained that it had issued credit notes under Section 34 of the CGST Act, 2017 read with Rule 53 of the CGST Rules, 2017 in respect of returned goods and rate differences. According to the petitioner, the credit notes were declared through the e-invoice portal and the corresponding outward tax liability was adjusted against sales effected during previous months/financial years. It contended that this reduced its output tax liability but did not result in any short payment of tax because the liability had ultimately been discharged.
The petitioner further stated that it had furnished a “Tax Liability Report” generated through the GSTN Portal for April 2022 to February 2025, containing remarks against the relevant months reflecting “negative sales”. It also furnished a “NEGATIVE LIABILITY STATEMENT” generated through the common portal for 01/09/2024 to 27/03/2025. According to the petitioner, negative liability in a tax period in which no amount was payable was maintained on the GST Portal and automatically adjusted against subsequent tax-period liability. The petitioner referred to the changes introduced through Notification No. 12/2024 – Central Tax dated 10/07/2024, contending that the reporting facility from September 2024 onwards was intended to streamline reconciliation.
The petitioner’s case was that the relevant information was already available on the GST Portal maintained by the respondents and that necessary adjustments ought to have been made. Its grievance was that the Revenue did not consider its communication/representation. The learned Senior Counsel submitted that further representations were made in May 2025, October 2025 and again thereafter during 2025, but without result.
Instead of considering those representations, the respondents issued multiple notices under Section 79 for recovery. The first such notice was issued to ICICI Bank on 18/07/2025. Subsequent notices were issued to State Bank of India, Akola Branch, and State Bank of India, New Delhi Branch, dated 26/02/2026 and 09/03/2026 respectively. These notices were challenged by the petitioner.
The petitioner sought interim relief. The Court, however, noted that the Revenue’s notice dated 25/03/2025 had expressly informed the petitioner that appropriate proceedings under Section 79 would be initiated in the event of non-payment. The petitioner had thereafter made its communication dated 11/04/2025, which, according to it, was not considered by the Revenue. The Court held that the petitioner should have approached the Court in April or May 2025. Considering the unjustified delay, the prayer for interim relief was rejected.
The Court nevertheless issued notice to the respondents, returnable on 10/04/2026, with the learned A.G.P. waiving service for respondent Nos.1 to 4. Significantly, the Court sought an explanation from the respondents as to why the petitioner’s representation was not considered and why action was not taken immediately after expiry of the seven-day period mentioned in the notice.
The order therefore does not finally determine the petitioner’s underlying GST liability or the legality of the recovery demand. The immediate interim relief was rejected on the ground of delay, while the Revenue was called upon to explain its treatment of the petitioner’s representation and the timing of its recovery action.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
The challenge is to the notice dated 25/03/2025 issued by respondent No.4 directing the petitioner to make payment of tax and interest within seven days with a rider that if the same is not paid within time, the proceedings shall be initiated to recover the outstanding dues as per the provisions of Section 79 of the Maharashtra Goods and Services Tax (MGST) Act, 2017.
02. The petitioner responded to the said notice not by making payment, but by issuing a communication dated 11/04/2025 (through email), the relevant portion of which reads as under:
i. We issued credit notes in terms of section 34 of the CGST Act 2017 (read with rule 53 of the CGST Rules 2017) for claiming tax adjustment in r/o the goods supplied which were returned by the recipients and the rate difference. This had been done to treat the goods return through credit note rather than treating it as a new supply in which case the recipient returning the goods shall issue tax invoice. We duly declared the details of such credit notes through e-invoice portal for the month during which such credit notes have been issued and the outward tax liability was adjusted in r/o the sales effected during the previous months/fiscal. This led to reduction in the output tax liability at our end which was ultimately discharged by us. On the other hand, reporting of the credit notes on the portal reduced the ITC availability to this extent at the end of the respective buyers/consignees as provided under the GST provisions.
ii. For the sake of your ready reference, we duly furnished the “Tax Liability Report’ (generated through GSTN Portal) for the period April’22 to February’25 Incorporating the remarks against each of the month reflecting ‘negative sales due to above reasons. The perusal of these data made it clear that the reduction in the tax liability had not led to any short payment of tax at our end. We also furnished the “NEGATIVE LIABILITY STATEMENT”, generated through common portal, for 01/09/2024 to 27/03/2025. By this statement, it was evident that in case there is any negative liability in a tax period and no amount is payable during that tax period by the taxpayer, then such negative liability is maintained by the GST Portal in Negative Liability Statement. The Balance, if any, lying in the Negative Liability Statement, will automatically be adjusted against the liability of subsequent tax period(s). From September 2024 onwards, taxpayers are allowed to report negative liabilities in Table No. 3 of GSTR-38. The introduction of this provision is aimed at streamlining the reconciliation process vide Notification No. 12/2024 (10 July 2024). Had this reporting facility be available for prior period, there would have no confusion in this regard.”
03. As could be seen, according to the petitioner, the entire information is available on the GST Portal maintained by the respondents and, therefore, necessary adjustments ought to have been made.
04. The grievance of the petitioner is that the respondents did not consider the said communication/representation. The learned Senior Counsel for the petitioner submits that thereafter the petitioner made further representations in the months of May 2025 and October 2025, and again thereafter in the year 2025, but to no avail.
05. The respondents have, instead of considering the representation, issued multiple notices under Section 79 of the Act for recovery of money. The first such notice was issued to ICICI Bank on 18/07/2025. Subsequent notices were issued to the State Bank of India, Akola Branch, and the State Bank of India, New Delhi Branch, dated 26/02/2026 and 09/03/2026, respectively. These notices have been challenged by the petitioner.
06. The petitioner is seeking interim relief. However, considering the fact that by notice issued under Rule 142b on 25/03/2025, the Revenue informed the petitioner that, in the event of non-payment of the amount, appropriate proceedings under Section 79 of the Act would be initiated and further that the petitioner made a communication dated 11/04/2025, which, according to the petitioner, was not considered by the Revenue, the petitioner should have approached this Court in April or May 2025. The unjustified delay would require rejection of the prayer for interim relief and thus it is accordingly rejected.
07. Issue notice to the respondents, returnable on 10th April, 2026.
08. The learned A.G.P. waives service of notice on behalf of respondent Nos.1 to 4.
09. We would like to know from the respondents as to why was the petitioner’s representation not considered and secondly why action not taken immediately after the lapse of seven days as mentioned in the notice.
