Facts of the Case:

The petitioner challenged the coercive recovery actions initiated by the State Tax Department under Section 79 of the Uttar Pradesh Goods and Services Tax Act, 2017 (UPGST Act). The recovery was made in respect of demands arising from best judgment assessment orders passed under Section 62(1) of the Act for delayed filing of returns. Pursuant to such assessment orders, the petitioner filed all pending returns (GSTR-3B) and paid the entire tax dues within the prescribed time period of 60 days from the date of service of the assessment order.

Despite such compliance, the respondent authorities proceeded to recover ₹4,79,811.55 from the petitioner’s bank account and further directed the bank to mark a lien of ₹2,36,32,250 across multiple accounts through orders dated 14.07.2025, 15.09.2025, and 19.09.2025, invoking Section 79 of the Act.

The petitioner contended that once the returns were filed and taxes paid within the prescribed period, the best judgment assessments under Section 62(1) stood “deemed withdrawn” by operation of Section 62(2). Hence, there was no subsisting demand to justify coercive recovery under Section 79.

Issue:

Whether recovery proceedings initiated under Section 79 of the UPGST Act can be sustained when the best judgment assessment orders under Section 62(1) stand deemed withdrawn in terms of Section 62(2) after the filing of belated returns and payment of tax by the assessee.

Held that:

The High Court held that once the taxpayer files the pending returns and pays the tax within 60 days from the date of issuance of the best judgment assessment order under Section 62(1), the said order “shall be deemed to have been withdrawn” in accordance with Section 62(2). Consequently, any demand arising therefrom cannot be recovered by invoking Section 79.

The Court found that in the present case, the petitioner had duly filed returns and paid taxes in the year 2023–2024, whereas the liens on the bank accounts were created more than a year later, in July and September 2025, which was arbitrary and contrary to law. 

The Court clarified that if any separate or additional demand (e.g., interest or penalty) remains unpaid, the Department is at liberty to raise such demand by issuing a fresh show cause notice in accordance with law.

Case Name:  M/s Smm Infratech Private Limited Thru. Authorized Representative, Mr. Amit Kumar Maurya Versus State Of U.P. Thru. Prin. Secy. Institutional Finance Govt. Of U.P. Lko. And 2 Others dated 16.10.2025

To read the complete judgement 2025 Taxo.online 2645