Case Law Details
Tvl. Cargotec India Private Limited Vs Assistant Commissioner (ST) (Madras High Court)
The case of TVL. Cargotec India Private Limited vs. Assistant Commissioner (ST) was brought before the Madras High Court through a Writ Petition seeking a direction for the recredit or refund of amounts recovered pursuant to assessment orders for the assessment years 2017-2018, 2018-2019, and 2019-2020.
The petitioner’s counsel argued that the assessment orders were issued on 28.12.2022, and according to Section 78 of the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act), no recovery measures shall be undertaken by the GST authorities for a period of three months from the date of such order. This is because a three-month limitation period is prescribed for filing an appeal before the first appellate authority. The petitioner contended that although appeals were lodged on 06.04.2023, recovery proceedings were initiated even before the expiry of the three-month period, with amounts debited from the petitioner’s Electronic Cash and Credit Ledgers in February 2023.
The Government Advocate representing the respondents relied on the counter affidavit, particularly paragraphs 6 and 10, to justify the initiation of recovery measures.
Section 78 of the TNGST Act states that any amount payable by a taxable person in pursuance of an order passed under the Act shall be paid within three months from the date of service of such order, failing which recovery proceedings shall be initiated. However, the proviso to Section 78 allows the proper officer to require the taxable person to make payment within a period less than three months if it is deemed expedient in the interest of revenue, provided that reasons are recorded in writing.
The Court noted that the proviso to Section 78 can only be invoked if the proper officer records in writing the reasons for requiring the taxable person to make payment before the expiry of the prescribed three-month period. In this case, no such justification was provided by the respondents.
In the counter affidavit, the respondents admitted to recovering the amount from the Electronic Credit Ledger and Electronic Cash Ledger even before the expiry of the 90-day period under the proviso to Section 78 of the CGST Act/TNGST Act, 2017. However, they failed to provide satisfactory reasons for invoking this proviso.
Based on the lack of justification for the early recovery, the Court ruled in favor of the petitioner and ordered the first respondent to refund the recovered amount or recredit it to the petitioner’s Electronic Cash or Credit Ledgers, as the case may be, within one month from the date of receipt of the order. No costs were awarded, and the connected Writ Miscellaneous Petition was closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By this Writ Petition, the petitioner seeks a direction for recredit or refund of the amounts recovered pursuant to assessment orders pertaining to assessment years 2017-2018, 2018-2019 and 2019-2020.
2. Learned counsel for the petitioner submits that the assessment orders were issued on 28.12.2022. By relying on Section 78 of applicable GST enactments, she contends that no recovery measures shall be undertaken by the GST authorities for a period of three months from the date of such order since a three month limitation period is prescribed for filing an appeal before the first appellate authority. She points out that appeals were lodged on 06.04.2023. However, she submits that recovery proceedings were initiated even prior to the expiry of the three month period and that amounts were debited from the petitioner’s Electronic Cash and Credit Ledgers in February 2023. She submits that this Writ Petition was filed in the said facts and circumstances.
3. Mr.V.Prashanth Kiran, learned Government Advocate, appears on behalf of the respondents. He placed reliance on the counter affidavit, particularly paragraphs 6 and 10 thereof. On such basis, he contends that the action of the respondents in initiating recovery measures is justified.
4. Section 78 of the Tamil Nadu Goods and Services Tax Act, 2017 is as under:-
“78. Initiation of recovery proceedings.-
Any amount payable by a taxable person in pursuance of an order passed under this Act shall be paid by such person within a period of three months from the date of service of such order failing which recovery proceedings shall be initiated.
Provided that where the proper officer considers it expedient in the interest of revenue, he may, for reasons to be recorded in writing, require the said taxable person to make such payment within such period less than a period of three months as may be specified by him.”
5. The proviso to Section 78 of the Tamil Nadu Goods and Service Tax Act, 2017, may be invoked only if the proper officer records in writing the reason as to why he considers it expedient in the interest of the revenue to require the taxable person to make payment even before the expiry of the prescribed three month period. In the case in hand, no material has been placed on record to justify invoking the proviso to Section 78 of the applicable GST enactments.
6. In the counter affidavit, the respondents have stated as under in paragraphs 10 and 33 thereof:
“10. It is submitted that the fourth respondent had recovered the amount both from the Electronic Credit Ledger and Electronic Cash Ledger even before the expiry of the 90 days under proviso to Section 78 of the CGST Act/TNGST Act, 2017 and it is extracted below.
“provided that where the proper officer consider it expedient in the interest of revenue, he may, for reasons to be recorded in writing, require the said taxable person to make such payments within such period less than a period of three months as may be specified by him.”
It is only against this early recovery of the taxes from the GST Electronic Credit Ledger and Electronic Cash Ledger of the taxable person, the petitioner had approached the Honourable Court, for necessary relief.
33. With regard to the averments made in Para 50 of the affidavit, it is submitted that the First Respondent is ready to issue the refund of recovered amount by way of re-credit to Credit Ledger and Cash Ledger respectively if the petitioner preferred a refund application in the GST portal.”
7. In view of the fact that the respondents have failed to satisfactorily explain the recourse to the proviso to Section 78, the petitioner is entitled to a refund.
8. Consequently, W.P.No.13104 of 2023 is allowed by directing the first respondent to either refund the recovered amount or recredit the same to the petitioner’s Electronic Cash or Credit Ledgers, as the case may be, within one month from the date of receipt of a copy of this order. No costs. Connected Writ Miscellaneous Petition is closed.
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