No recovery under section 78 of the CGST Act can be initiated before expiry of limitation for filing appeal.

The Petitioner filed the present writ petition challenging the impugned action of recovery of demand arising out of adjudication order dated 14.12.2021 by debiting its electronic credit ledger.

Held: –

• The Hon’ble Court after considering the submissions from the both sides and facts of the case, found that recovery for the demand arising out of adjudication order dated 14.12.2021, was initiated by debiting the electronic credit ledger on 01.02.2022, was in violation of Section 78 of WBGST Act, 2017.
• That the said recovery was initiated without giving the petitioner three months’ time for filing the statutory appeal, which is mandatory to be given before initiating any recovery proceeding under the Act.
• It was found that the adjudication order was passed on 14.12.2021 and the recovery proceeding was initiated within just 49 days of the order, by the respondent authorities, is clearly in violation Section 78 of the Act.

The Hon’ble High Court with the above findings and without going in to the merits of the case, disposed of the writ petition directing the respondent authorities to refund the amount collected, in excess of 10% of the demand in question, which is required to be deposited as pre-deposit for filing the appeal against the adjudication order, however on a condition that the petitioner will file an appeal against the adjudication order within 15 days and the appellate authority will take a lenient view with respect to issue of limitation.  Further, if the appeal is not filed within the stipulated time herein, the respondent authorities will be free to take action to recover the demand in question.  Liberty is given to the petitioner to file appeal offline since the time to file appeal online has already expired.

To read the complete judgment 2022 Taxo.online 712