Time-Barred S.73 GST Demand Challenged: Calcutta HC Grants Recovery Stay on 10% Pre-Deposit [Read Order]

The Calcutta High Court has granted interim relief in a challenge to a time-barred demand made under Section 73 of the West Bengal Goods and Services Tax Act, 2017 (WB GST Act) by temporarily halting the recovery process and requiring the deposit of 10% of the disputed tax amount so that it can fully consider the writ petition.

M/s. Prakriti Eminent Height LLP had petitioned against an order dismissing its statutory appeal against an adjudication order under Section 73 of the WB GST Act for the tax period 2018-19, after the expiry of the limitation period of three years for submitting returns. Even though the limitation period was over, the adjudication authority issued the order on account of notifications issued by the Government of West Bengal as well as the Central Board of Indirect Taxes and Customs purportedly extending the limitation period. The appellate authority upheld the adjudication order, prompting the petitioner to seek redress from the High Court.

Advocates Indranil Banerjee and Subhajit Ray representing the petitioner, argued that the filing of charges under Section 73 of the WB GST Act, 2017 was passed after the expiration of the statutory time limit, rendering it ex-facie illegal. They stated that it was incorrect to use Notification No. 13/2022-CT issued on the 5.06.2022 and Notification No. 1389-FT dated on the 23r.08.2022 as authority under Section 168A of the WB GST Act, could only be used if there were force majeure extraordinary circumstances to justify them being applied. Since, no force majeure situation existed at the time of issuance of the said notifications, rendering the extension of limitation invalid in law.

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The State authorities were represented by N. Chatterjee, Tanoy Chakraborty, and Saptak Sanyal, while the Union of India was represented by Prithu Dudhoria. The respondents sought time to file affidavits and defended the impugned orders on the basis of the notifications issued by the competent authorities, asserting that the proceedings had been lawfully continued in accordance with the extended timelines.

Justice Om Narayan Rai of the Calcutta High Court admitted the writ petition after prima facie considering the challenge to the validity of the proceedings initiated beyond the limitation period. The Bench granted interim protection by directing that if the petitioner deposits a sum equal to 10% of the balance tax in dispute in terms of Section 112(8) of the WB GST Act, 2017 within two weeks.

Pursuant to which the GST authorities shall be restrained from recovering any amount pursuant to the adjudication order dated May 2, 2023 and the appellate order dated August 2, 2024 until further orders.

The Court further clarified that upon such deposit, the recovery notice issued on July 21, 2025 would also remain.

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