No Recovery Proceedings Shall Be Initiated Within Three Months Following the Issuance of an Order

Introduction

In the realm of tax law, the timing of recovery proceedings can significantly impact businesses. A recent ruling by the Hon’ble Madras High Court sheds light on the timeline within which recovery measures can be initiated by GST authorities following the issuance of an order. This article delves into the case of Tvl. Cargotec India (P.) Ltd. v. Assistant Commissioner (ST), outlining the facts, the core issue, and the court’s decision.

Facts of the Case

M/s Tvl. Cargotec India (P.) Ltd. (“the Petitioner”) received an Assessment Order dated December 28, 2022, from the Assistant Commissioner (“the Respondent”). Despite lodging an appeal on April 06, 2023, recovery proceedings commenced before the expiration of three months. Subsequently, the amount was debited from the Petitioner’s Electronic Cash and Credit Ledger in February 2023. Aggrieved by this, the Petitioner filed a writ petition seeking redressal.

Issue

The central question in this case revolves around the initiation of recovery proceedings within three months of issuing an order.

Held

The Hon’ble Madras High Court, in Writ Petitioner No. 13104 of 2023, emphasized that recovery measures cannot be undertaken by GST authorities for three months from the date of the order, provided the GST authority justifies it in writing. The court highlighted the necessity for the proper officer to record the reasons for requiring payment before the prescribed period. As the respondents failed to provide satisfactory justification, the court directed either the refund or recrediting of the recovered amount within one month from receiving the order copy. Consequently, the writ petition was allowed, ensuring fairness and procedural adherence.