Amounts debited from a taxpayer's electronic cash and credit ledgers before the expiry of statutory period for filing appeal should be returned.

A company (the petitioner) challenged the Goods and Services Tax (GST) department's early recovery of assessed taxes.

Background:

The petitioner faced GST assessments for the years 2017-2018, 2018-2019, and 2019-2020. Assessment orders were issued in December 2022.

Legal Right to Appeal:

Under Section 78 of the GST Act, taxpayers have three months from the order date to file an appeal. This period acts as a stay on recovery actions by the GST department.

The Dispute:

Despite the legal timeframe, the GST department initiated recovery proceedings in February 2023, before the three-month appeal period ended. The petitioner challenged this action through a Writ Petition.

Court's Decision:

The court ruled in favor of the petitioner. Here's why:

• The GST department failed to justify invoking the exception clause (proviso) to Section 78. This clause allows for early recovery only under specific circumstances with documented reasons.
• No such justification was presented by the department.

Outcome:

The court directed the GST department to:

• Refund the recovered amount.
• Or, re-credit the amount to the petitioner's electronic cash and credit ledgers within one month.

Key Takeaways:

• Taxpayers have the right to appeal GST assessments within three months.
• The GST department cannot initiate recovery actions during this period unless justified under the exception clause of Section 78.
• Taxpayers facing similar situations can consider legal recourse through Writ Petitions.

Topic-Tvl.Cargotec India Private Limited Versus The Assistant Commissioner (ST)

Citation-2024 TAXONATION 984 (MADRAS)

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