Case Law Details
Tvl. R. Selvarathinam Vs Deputy State Tax Office -II (Madras High Court)
Summary: The Madras High Court, in the case of Tvl. R. Selvarathinam v. Deputy State Tax Officer-II, ruled that recovery proceedings cannot be initiated while an appeal against an assessment order is pending. The petitioner challenged the order dated April 30, 2024, issued under Section 73 of the Tamil Nadu GST Act, 2017, seeking to restrain the revenue department from recovering the assessed tax, including interest and penalties, from the petitioner’s bank account. Despite responding to a show cause notice issued in August 2023, the petitioner’s replies were allegedly not considered before the order was passed. Subsequently, the department initiated recovery proceedings in August 2024, prompting the petitioner to file a writ petition. The petitioner argued that an appeal against the order was filed on August 28, 2024, and should have stayed any recovery actions. The court held that the petitioner must pursue the appeal before the Appellate Authority as per the legal framework. However, acknowledging the ongoing recovery actions, the court directed the department to defer all recovery proceedings until the appeal is resolved. The judgment aligns with Section 107(7) of the TNGST Act, which states that recovery proceedings must be stayed when the appellant has deposited the required pre-deposit at the time of filing the appeal. The ruling reinforces procedural safeguards for taxpayers, ensuring that recovery actions do not proceed prematurely while appeals remain undecided.
Facts:
Tvl. R. Selvarathinam (“the Petitioner”), has filed the petition for quashing of order dated April 30, 2024 (“the Impugned Order”), passed by the Revenue Department (“the Respondent”), under Sections 73 of the Tamil Nadu Goods and Services Tax Act, 2017 (“the TNGST Act”), to restrain the Respondent from recovering the tax liability, including interest and penalty from the Petitioner’s bank account.
The Petitioner had been issued a show cause notice in Form GST DRC-01 dated August 21, 2023 (“the SCN”), for which the Petitioner had filed replies on April 12, 2024, April 26, 2024 and April 29, 2024, however, the Respondent, without considering the replies filed, passed the Impugned order and in pursuance of the said Impugned Order, also initiated recovery proceedings dated August 02, 2024, from the Petitioner’s bank account, thus aggrieved by the recovery proceedings, the Petitioner has filed the said petition.
Issue:
Whether recovery proceedings could be initiated in cases where appeal has been filed against the assessment order?
Held:
The Hon’ble Madras High Court in W.P. No. 26893 of 2024 held as under:
- Opined that, the Petitioner has preferred an Appeal which is yet to be disposed of, however, the Respondent irrespective of the said fact, proceeded with the recovery proceedings.
- Held that, the writ petition is disposed with the direction to the Respondent to defer the recovery proceedings till the disposal of the Appeal.
Our Comments:
Section 107(7) of the TNGST Act, clearly states that where the Appellant has paid the amount of pre-deposit at the time of filing of appeal as per Section 107(6) of the TNGST Act, the recovery proceedings for the disputed amount in appeal shall deemed to be stayed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
With consent, the main Writ Petition is taken up for final disposal at the stage of admission itself.
2. The challenge in this Writ Petition is to the order dated 30.04.2024 passed by the respondent under Sections 61, 73 and 50 of the TNGST Act 2017 and to quash the same and consequently, to restrain the respondent from recovering the tax liability, including interest and penalty from the petitioner’s bank account.
3. Mr. M. Varun Pandian, learned counsel for the petitioner would submit that the petitioner has been issued with a show cause notice in Form GST DRC-01 dated 21.08.2023, to which, the petitioner filed their replies on 12.04.2024, 26.04.2024 and 29.04.2024, however, the respondent, without considering those replies in a proper perspective, passed the impugned order dated 30.04.2024 and in pursuance of the said impugned order, also initiated recovery proceedings dated 02.08.2024 and recovered a sum of Rs.5,35,346 from the petitioner’s bank account, which necessitated the petitioner to file the present Writ Petition.
4. The learned counsel would submit that challenging the impugned order, the petitioner has preferred an Appeal dated 28.08.2024 and the said Appeal is yet to be disposed of, however, irrespective of the same, the respondent proceeded with the recovery proceedings. Therefore, the learned counsel prayed for appropriate orders.
5. Mr. C. Harsha Raj, the learned Additional Government Pleader (T) who takes notice on behalf of the respondent submitted that since the Writ Petition is coming up for admission today, he has no instructions as regards the status of the Appeal filed by the petitioner, however, he submitted that in terms of the provisions of the TNGST Act, once the assessment order is passed by the Adjudicating Authority (respondent herein) and any amount is to be recovered from the assessee( petitioner in this case) the proper officer has to initiate recovery proceedings if the assessee does not pay the said amount within three months from the date of service of such order. Thus, by averring so, the learned Additional Government Pleader (T) justified the act of the respondent in initiating the recovery proceedings, which is in fact in pursuance to the impugned order.
6. I have given due considerations to the submissions made on either side and perused the materials available on record.
7. Though the petitioner has filed this Writ Petition challenging the order dated 30.04.2024, challenging the very same order dated 30.04.2024, the petitioner has also filed an Appeal before the Appellate Authority, therefore, certainly, the petitioner has to pursue his remedy via. Appeal before the Appellate Authority, in accordance with law. However, taking into considering of the fact that in pursuance of the impugned order dated 30.04.2024, the petitioner has been initiated with recovery proceedings, this Court is inclined to disposed of the Writ Petition with the following directions;-
i The respondent is directed to defer the recovery proceedings till the disposal of the Appeal filed by the petitioner dated 28.08.2024.
8. In the result, this Writ Petition is disposed of accordingly. No costs. Consequently, connected W.M.P.No.29419 of 2024, viz, the Dispense With Petition is ordered and W.M.P.Nos.29420 and 29422 of 2024, the Injunction and Stay Petitions respectively are closed.
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