Heard on IA No.1, application for grant of interim relief.

Learned senior counsel for the petitioner would submit that order in Annexure P-10 under Form GST DRC-13 has been issued without following the procedure prescribed under the Central Goods and Services Tax Act, 2017 (hereinafter shall be referred to “the Act of 2017”).

The respondents have not issued notice as provided under Section 73 (1) of the Act of 2017 nor the order of adjudication determining the GST liability upon the petitioner was served to petitioner. It is mandatory requirement under the Act of 2017 that for initiation of recovery proceedings of tax, there has to be notice under Section 73 (1) of the Act of 2017 and after adjudication, the tax liability is to be determined specifying the actual tax liability, interest thereupon and also penalty for non-payment of tax within the prescribed time limitation. Referring to provision of Section 78 of the Act of 2017, it is argued that the initiation of recovery can only be made after service of the orders passed by the Proper Officer of assessment of the tax liability including interest and the penalty if any on the amount of actual tax liability. It is further submitted that once the provision of Section 78 of the Act of 2017 prescribes for the service of order of assessment then it is the duty casted upon the Proper Officer to serve the order of assessment of the tax upon the petitioner but no such order has been served. Under Section 78 of the Act of 2017,the period for initiation of recovery proceedings is specified as to after three months from the service of the order of assessment. The action of the respondents is arbitrary inasmuch as when in two of the recovery notices, the date of order is mentioned as 18.8.2021 but proceedings have been initiated and order under Section 79 of the Act of 2017 has been issued on 1.10.2021 within less than three months period. Even if under the proviso to Section 79 of the Act of 2017, Proper Officer is vested with the power to pass order under Section 79 of the Act of 2017 before the lapse of period of three months then the proper officer is required to record the reasons in writing which is not appearing in the notice issued under Section 79 (1) (c) for recovery of the amount assessed, from third person. As there was non-compliance of the provision of the Act of 2017, the letter/notice under Section 79 (1) (c) of the Act of 2017 (Annexure P-10) is not sustainable.

Learned counsel appearing for the State opposes the submissions made by learned counsel for the petitioner and submits that vide Annexure P-1, Proper Officer has issued notice under Section 61 of the Act of 2017, thereafter, notice under Section 73 of the Act of 2017 as appearing in Annexure P-2 dated23.3.2021. When the tax assessed was not deposited, proceedings under Section 78 of the Act of 2017 was initiated and only thereafter the notice under Section 79 (1) (c) of the Act was issued. The liability to pay GST is not disputed by the petitioner as appearing from documents annexed along with writ petition i.e. reply to the notice issued by department. Hence the petitioner cannot raise the dispute of initiating proceedings of recovery of tax issued against him. He also pointed out that in Annexure P-9 (filed in WPT No.218 of 2021), details of order is mentioned as – Order No.34 of 2021, dated 18.8.2021. Similarly, in two of the other notices, it is mentioned as the order No.32 of 2021 dated 12.2.2021 and Order No.33 of 2021 dated 12.2.2021. From the aforementioned recovery order/notice dated 12.2.2021,submission of learned counsel for the petitioner is not correct that the three months time has not been provided to the petitioner to make payment of tax and recovery proceedings has been initiated before the prescribed time limitation. He submits that short time may be granted to him to submit detailed reply to writ petition as well as application for grant of interim relief.

At this stage, learned counsel for the petitioner, on instructions, submits that at no point of time, the recovery order as appearing in Annexure P-9 was ever served upon the petitioner. Hence the proceedings under Sections 78 and 79 of the Act of 2017 initiated by respondents are per se illegal, arbitrary in the facts of the case.

I have heard learned counsel for the parties and perused the documents annexed with the record.

Perusal of Notice (Annexure P-10) would show that in two of the notices i.e. Recovery No.34 of 2021 and 35 of 2021, order date is mentioned as 18.8.2021. Under Section 78 of the Act of 2017, the period of three months is provided for making payment of the tax assessed/ascertained by the Proper Officer but the letter/notice Annexure P-10 to third party under Section 79 (1) (c) of the Act of 2017 was issued on 1.10.2021 which is less than three months period from the date of the recovery order No.34 of 2021 and 35 of 2021. It is not disputed by learned counsel for the respondents that no specific reasons have been assigned for issuing notice under Section 79 (1) (c) of the Act of 2017 for initiating proceedings under Section 78 of the Act before lapse of three months period. Learned counsel appearing for the petitioner further submits that the petitioner has already deposited ₹ 50/- lakhs of the total taxable amount as mentioned in Annexure P-1.

Considering the entirety of the facts and circumstances of the case, submission made by learned senior counsel for the petitioner that no order was served upon the petitioner as required under Section 78 of the act of 2017, as an interim measure, it is directed that effect and operation of order /notice dated 01.10.2021(Annexure P-10) shall remain stayed till the next date of hearing subject to petitioner depositing 50% of the total payable tax amount within a period of three weeks from today, adjusting amount which is already paid by the petitioner, pursuance to the notice.

List this case along with WPS 217/2021 & other similar matters.