Facts of the Case:

In this case, the petitioner challenged challenged validity of Notification dated 28.12.2023 issued under Section 168A of the CGST Act, which extended time limits for passing orders. The petitioner also challenged the consequential appellate order dated 05.02.2026, pursuant to which recovery proceedings were initiated.

It was contended that similar issues were already pending before the Court in Shyam Udyog vs. Union of India and Rite Equipments Pvt. Ltd. vs. State of Maharashtra, where interim relief had been granted. The petitioner argued that the impugned notifications were issued without proper recommendation of the GST Council, rendering them ultra vires. Additionally, the petitioner raised a grievance that within 12 days of the appellate order, the department initiated recovery proceedings and debited ₹1.10 crore from the electronic credit ledger, even though the statutory period for filing appeal had not expired. Reliance was also placed on a notification dated 17.09.2025, which extended the time limit for filing appeals up to 30.06.2026.

Issue:

Whether recovery proceedings, including debit of electronic credit ledger, can be initiated before expiry of the statutory appeal period under Section 78 of the CGST Act.

Held that:

It held that the action of the department in debiting the electronic credit ledger before expiry of the appeal period was prima facie unsustainable. The Court observed that under Section 78 of the CGST Act, recovery proceedings can be initiated only after expiry of three months from the date of service of the order, unless specific reasons are recorded for earlier action. In the present case, no such reasons were demonstrated.

The Court granted interim relief in favour of the petitioner by following its earlier decisions in Shyam Udyog and Rite Equipments Pvt. Ltd., noting that identical issues were already under consideration.

Further, the Court took note of the notification dated 17.09.2025 extending the time limit for filing appeals, and held that recovery action prior to expiry of such extended period was unjustified.

Accordingly, the Court stayed the operation of the impugned appellate order and directed grant of interim relief, including re-credit of the amount debited from the electronic credit ledger and restraint on further recovery proceedings. The matter was tagged with pending petitions involving similar legal issues.

Case Name: Refex Industries Limited Versus State of Maharashtra and Ors. dated 25.03.2026

To read the complete judgement 2026 Taxo.online 748