S.A.B. Engg Works Vs State of U.P. and another (Allahabad High Court)
Court Quashes Swift GST Recovery, Cites Procedural Breach and Circular Violation’ Under provisions of Section 112of CHST Act, 2017 on deposit of 10% of the demand, the rest of the demand gets stayed under sub-section (9) of Section 112 of the Act and the limitation for filing appeal is three months.
In a significant ruling, the Punjab and Haryana High Court has set aside a recovery action initiated by the tax authorities under Section 79 of the Goods and Services Tax Act, 2017 (GST Act), finding it premature and contrary to the legislative scheme and the department’s own circular. The case, stemming from a writ petition filed against the recovery of funds from a taxpayer’s electronic credit and cash ledgers, highlights the procedural safeguards intended for taxpayers pursuing appellate remedies under the GST regime.
The petitioner challenged the recovery of ₹1,55,079 effected by the respondents on January 29, 2025, just four days after the rejection of their appeal under Section 107 of the GST Act on January 24, 2025. The initial demand against the petitioner was raised on April 29, 2024.
Central to the petitioner’s argument was the contention that they were deprived of the opportunity to file a second appeal before theGSTAT (Goods and Services Tax Appellate Tribunal) under Section 112 of the Act. Section 112 provides for a three-month limitation period for filing an appeal before the tribunal and stipulates that upon a pre-deposit of 10% of the remaining disputed tax amount, the recovery of the balance demand shall be stayed.
