22.08.2022: No Recovery Of Tax Without Issuance Of Order Under Section 74(9) of CGST Act, 2017 – Calcutta High Court

The Hon’ble High Court of Calcutta vide its order dated 11.08.2022 in the matter of Prasanna Kumar Thakkar Vs. Director, Directorate General of Goods and Service Tax Intelligence, Kolkata Zone Unit & Ors. in M.A.T. No. 677 of 2022 with I.A. No. CAN 1 of 2022, held that recovering tax without issuance of any order under Section 74(9) of the CGST Act, 2017 is not maintainable.  Thus, directed the department not to initiate any coercive action till the adjudication proceedings are completed and an order is passed.

The Appellant/writ petitioner filed the intra-Court appeal against the order dated 16th November, 2021 passed in W.P.A. No. 1474 of 2021, whereby the prayer for grant of an interim order pending disposal of the writ petition has been rejected.

Appellant’s Submissions: –

  • It was submitted on the behalf of the Appellant/writ petitioner that the writ petition itself can be disposed of by the Hon’ble Court and for the time being the Appellant is not pressing the prayer in the writ petition ‘for declaration that the provisions of Section 16(2) (c) and Section 16 (2) (d) of the Goods and Service Tax, 2017 is unconstitutional, irrational and arbitrary’.
  • The Appellant is aggrieved of the actions of the respondents in allegedly recovering the tax without issuance of any order under Section 74(9) of the CGST Act, 2017.
  • That without intimating the appellant, the input tax credit ledger has been blocked. Thus, the action initiated by the respondents is arbitrary, unreasonable and against the provisions of the Act.

Respondents’ submissions: –

  • It was submitted on the behalf of the department that the appellant voluntarily deposited an amount of Rs. 40 lakhs during the course of investigation, therefore, it cannot be contended by the appellant that the department has affected such recovery.
  • Further on instructions, it was submitted that the department is in the process of issuing show cause notice and the same would be issued shortly.

Held: –

  • The Hon’ble Court after considering the submissions made and the facts of the case, directed the department to issue a show cause notice within 15 days of the receipt of the server copy of this order, and to provide not less than 10 days to the appellant for filing the reply to such show cause notice. Thereafter, the show cause notice shall be adjudicated and a speaking order to be passed on merits, in accordance with law.
  • Further, it was directed that the respondent department will not initiate any coercive action against the appellant till the aforementioned exercise is completed. However, the issue with respect to the blocking of input tax credit is an independent issue and cannot be considered in this writ petition.

 The Hon’ble Court with the above findings, disposed of the appeal, connected applications and the writ petition.


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