The Madras High Court in the case of Tvl. Cargotec India (P.) Ltd. v. Assistant Commissioner (ST) vide W.P. NO. 13104 OF 2023 and W.M.P. NO. 12870 OF 2023 dated 23.04.2024, has acknowledged the early recovery from the petitioner's ledgers before the expiry of the 90 days and mentioned the readiness to issue a refund if the petitioner applied for it through the GST portal. The proviso to Section 78 can be invoked only if the proper officer records reasons in writing for requiring payment before the three-month period. In this case, the respondents failed to justify the early recovery actions as required by the proviso to Section 78. Directed the respondent to refund the recovered amount or recredit it to the petitioner's Electronic Cash or Credit Ledgers within one month from the date of receipt of this order.

Facts of the Case:- The petitioner challenged the assessment orders for the years 2017-2018, 2018-2019, and 2019-2020, issued on 28.12.2022. The petitioner argued that per Section 78 of the GST Act, no recovery actions should occur within three months from the date of the order to allow for the filing of an appeal. The recovery actions were premature and violated Section 78 of the GST Act, as the three-month period for filing an appeal had not expired. The proper officer did not provide any written reasons for invoking the proviso to Section 78, which allows for expedited recovery in the interest of revenue.

Section 78 of the applicable GST enactments prescribes a three-month period during which no recovery measures shall be undertaken by GST authorities, as this is the period allowed for filing an appeal before the first appellate authority.

Appeals were lodged on 06.04.2023, but recovery proceedings were initiated before the expiry of the three-month period, with amounts debited from the petitioner's Electronic Cash and Credit Ledgers in February 2023. 

The petitioner seeks a direction for recredit or refund of the amounts recovered pursuant to assessment orders for the years 2017-2018, 2018-2019, and 2019-2020.

Held:- The Court held as under:- 

• The proviso to Section 78 can be invoked only if the proper officer provides written reasons for early recovery.
• In this case, no such written justification was provided by the proper officer.
• The respondents acknowledged early recovery actions but failed to satisfactorily justify invoking the proviso to Section 78.
• The recovery actions taken before the expiry of the three-month statutory period are set aside.
• The respondent authority is directed to either refund the recovered amount or recredit it to the petitioner's Electronic Cash or Credit Ledgers within one month from the date of this order.

Legal provisions:

Section 78 of the Tamil Nadu Goods and Services Tax Act, 2017:

• States that recovery proceedings for any amount payable by a taxable person shall not be initiated within three months from the date of the order.
• The proviso allows for earlier recovery if the proper officer records reasons in writing, explaining why such action is necessary in the interest of revenue.

To read the complete judgment 2024 Taxo.online 910