Facts of the Case: The petitioner, a supplier of services and works contractor, had duly paid taxes pertaining to the financial year 2020–21. The department levied interest under section 50(1) of the CGST/OGST Act and raised a demand by issuing an assessment order dated 29.04.2025 followed by Form GST DRC-07.

Finding apparent mistakes in the order, the petitioner filed a rectification petition under section 161 of the Act on 14.03.2025. However, without disposing of the rectification petition, the authority issued a notice in Form GST DRC-13 under section 79(1)(c) to a third person for recovery.

The petitioner contended that initiation of recovery proceedings was without jurisdiction since the rectification petition was still pending.

Issue: Whether recovery proceedings under section 79(1)(c) can be validly initiated against a third person when a rectification petition under section 161 is pending and undisposed of?

Held that: The Court noted that the rectification petition dated 14.03.2025 had admittedly not been disposed of. Recovery proceedings under section 79 cannot be sustained without first considering and deciding the rectification petition, since the outcome of rectification could impact the demand itself.

It was therefore directed that the authority afford an opportunity of hearing to the petitioner and dispose of the pending rectification petition within four weeks from receipt of the order. Accordingly, the writ petition was disposed of with directions, in favour of the assessee.

Case Name: Niranjan Sahu vs. Additional State Tax Officer, Jagatsinghpur Circle, Jagatsinghpur and others dated 05.08.2025

To read the complete judgment 2025 Taxo.online 1758