Recovery Proceeding Deemed To Be Stayed If Appellant Pays 10% Of Disputed Tax Amount During Pendency Of Appeal: Jharkhand High Court
The Jharkhand High Court bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan has held that upon deposit of 10% of the disputed tax amount during the pendency of appeals, recovery of any remaining balance is deemed to have been stayed in view of Section 107 Sub-section (6) and (7) of the CGST Act, 2017.The notice under Section 79 of the CGST Act, 2017 was issued by...
The Jharkhand High Court bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan has held that upon deposit of 10% of the disputed tax amount during the pendency of appeals, recovery of any remaining balance is deemed to have been stayed in view of Section 107 Sub-section (6) and (7) of the CGST Act, 2017.
The notice under Section 79 of the CGST Act, 2017 was issued by the respondent/department for alleged recovery of government dues amounting to Rs. 4,28,86,464 upon the petitioner's banker, United Bank of India, without any adjudication process under Section 73 and 74 of the Act. The alleged dues relate to Central Goods and Services Tax, pertaining to the period of July, 2017 to March, 2019. However, the dues have been computed only on the basis of one GSTR-1 statement without giving the benefit of the input tax credit admissible to the petitioner as claimed through the GSTR-3B statement.
The petitioner had a credit with ITC to the tune of Rs. 3,04,15,359. The petitioner admitted a tax liability of Rs. 1,14,53,646.91. The petitioner admitted that an amount has been withheld by one MC Nally Bharat Engineering Company even after successful completion of the work awarded to the petitioner. Therefore, the petitioner approached NCLT, Kolkata under Section 9 of the Insolvency and Bankruptcy Code, 2016, which was however, dismissed. The petitioner's appeal was pending before the NCLAT and has been admitted. The petitioner has also made representation to the Deputy Commissioner in reply to the garnishee order passed under Section 79 of the Act, bringing all these facts to his notice. The petitioner contended that without any adjudication, the claim of ITC to the tune of Rs. 3.04 crores could not be denied.
The petitioner challenged the garnishee notice served on the petitioner's bankers in connection with the claimed collection of GST dues. In accordance with Section 107 of the CGST Act of 2017, the petitioner filed appeals and deposited 10% of the amount of demand.
The petitioner contended that if the adjudication ruling was affirmed or even amended after the appeal was resolved, a new demand on Form GST APL-04 would be required. The garnishee notice has become infructuous, and it cannot be enforced due to the stay in place at the appellate stage.
The respondent did not contest the fact that, after filing the appeal and depositing 10% of the disputed tax amount, collection of any remaining money is postponed until the appeal is adjudicated. According to the respondent, depending on the outcome of the appeal, a new demand must be filed in the proper manner. If the assessee fails to pay the amount within the time frame specified, procedures for recovery through special mode might be taken.
"The impugned garnishee proceeding, therefore, cannot be given effect to and, in fact, has become infructuous. Any fresh demand arising out of the decision of the Appellate Authority can be met by the issuance of GST APL-04. As such, there is no purpose in keeping the writ petition pending. It is disposed of as infructuous," the court ordered.
Case Title: M/s Sri Ram Construction Versus UOI
Case No: W.P (T) No. 3402 of 2020
Citation: 2022 LiveLaw (Jha) 58
Dated: 09.06.2022
Counsel For Petitioner: Advocates Sumeet Gadodia, Ranjeet Kushwaha, Aanya
Counsel For Respondent: Advocate Amit Kumar