The Madras High Court in the case of Tvl. Maxtile AAC Block v. State Tax Officer vide W.P. NO. 10670 OF 2024 and W.M.P. NO. 11757 OF 2024 dated 23.04.2024, has held that recovery measures should not be undertaken for a period of three months after the order in original is issued so as to enable the tax payer to file a statutory appeal. The department  without waiting for statutory period of three months, had attached immovable property of the petitioner.  Therefore, it was held that the attachment was contrary to the statutory prescription and the department was directed to release the attachment over the immovable property. The Court's decision underscores the importance of adhering to statutory timelines and procedures in recovery actions under GST laws. By acknowledging the petitioner's timely appeal and pre-deposit, the court ensured the protection of the taxpayer's rights during the pendency of the appeal process. This judgment reinforces the legal safeguards against premature recovery measures, thereby ensuring fairness in tax administration.

Facts of the Case:-  The petitioner filed a writ petition seeking the release of attachment of specific immovable properties. The attachment was executed due to a discrepancy between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A, as per an order dated 30.05.2023.

The petitioner appealed the order on 24.08.2023 and made the requisite pre-deposit as per Section 107 of the applicable GST enactments. The petitioner argued that recovery measures should not commence for three months post the issuance of the order in original, to allow time for filing an appeal. However, in this case, the respondent authorities effected an attachment of the Petitioner's immovable property without waiting for the statutory period of three months required for filing an appeal.

Since the attachment order was issued within this three-month period, it was contended to be unsustainable.

Held:-  The court noted that the attachment was executed without waiting for the statutory period of three months post the order in original, which was contrary to statutory prescriptions. Therefore, the attachment of the property was premature. As per Section 107(7) of the GST enactments, recovery proceedings are stayed once the pre-deposit is made.

The court acknowledged the filing of the appeal within the prescribed period and the completion of the requisite pre-deposit of 10% of the disputed tax amount by the petitioner. 

The court allowed the petition, directing the respondent authority to Release the attachment over the petitioner’s immovable property, and delete the entry pertaining to the attachment from the encumbrance certificate relating to the property.

The judgment emphasized adherence to statutory procedures and timelines, protecting the taxpayer's rights by ensuring that premature recovery actions are not taken before the statutory period for appeal elapses. The court's directives ensured the fair treatment of the petitioner and upheld the provisions under Section 107 of the GST enactments.

To read the complete judgment 2024 Taxo.online 1005