The Madras High Court directed the refund of the recovered amount as the proper officer failed to explain the reason for recovering the amount under Section 78 of Tamil Nadu Goods and Services Tax, 2017 ( TNGST ) before the limitation period of 3 months.
The Petitioner, Cargotec India Private Limited, by this Writ Petition, the petitioner sought a direction for refund of the amounts recovered pursuant to assessment orders pertaining to assessment years 2017-2018, 2018-2019 and 2019-2020.
The petitioner’s counsel argued that the assessment orders, dated 28.12.2022, triggered certain protections under Section 78 of the relevant GST enactments. According to this provision, no recovery measures can be undertaken by the GST authorities for a three-month period following the order, as this time frame allows for the filing of an appeal before the first appellate authority. The counsel emphasised that appeals were duly lodged on 06.04.2023.
Despite this legal safeguard, the counsel pointed out that recovery proceedings were initiated even before the expiration of the three-month period. In fact, funds were debited from the petitioner’s Electronic Cash and Credit Ledgers as early as February 2023. It is in light of these circumstances that the Writ Petition was filed.
Mr.V.Prashanth Kiran, Government Advocate, appeared on behalf of the respondents. He placed reliance on the counter affidavit, particularly paragraphs 6 and 10 thereof. On such a basis, he contended that the action of the respondents in initiating recovery measures is justified.
A single bench of Justice Senthilkumar Ramamoorthy observed that the proviso to Section 78 of the Tamil Nadu Goods and Service Tax Act, 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.
The Madras High Court noted that the respondents have failed to satisfactorily explain the recourse to the proviso to Section 78, the petitioner is entitled to a refund.
Consequently, the writ petition was allowed by directing the first respondent – The Assistant Commissioner (ST) 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.
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