Case Title: M/s Sigma Power Product Pvt. Ltd. & Anr. vs Additional Commissioner of Revenue, Chamdani Chowk, Dharmatola Circle & Anr.
Court: Calcutta High Court
Petition No.: W.P.A. 21723 of 2024
Date of Judgment: 3rd October 2024
Relevant Section: Section 73 and Section 78 of the CGST/WBGST Act, 2017
Category of Dispute: Recovery before appeal period / Refund of recovered amount
Facts (Para 1–4)
The petitioner, M/s Sigma Power Product Pvt. Ltd., challenged an order dated 29 April 2024 passed under Section 73 of the CGST/WBGST Act, 2017 for the tax period April 2018 – March 2019. The grievance arose when the proper officer abridged the statutory period for making payment without assigning any reasons, invoking the proviso to Section 78. Before the expiry of the appeal period, the department recovered nearly 90% of the disputed tax amount (₹ 40,22,170) from the petitioner’s electronic credit ledger. The petitioner contended that such premature recovery prevented them from seeking a stay of demand through appellate remedy, and requested the Court to direct refund of the recovered amount, retaining only 10% as per appeal requirements.
Questions for Consideration
-
Whether the proper officer was justified in abridging the statutory payment time under Section 78 proviso without assigning reasons.
-
Whether recovery of 90% of the disputed demand before expiry of the appeal period was legally sustainable.
-
Whether writ jurisdiction can be invoked despite availability of appellate remedy when the issue involves jurisdictional overreach.
Observations (Para 5–9)
The State argued that the officer rightly invoked Section 78 proviso citing “special circumstances” and initiated recovery through an email communication under Section 79(1)(c), duly informing the taxpayer. It was contended that there was no irregularity in recovery and that the petitioner had an alternative appellate remedy.
However, the Court noted that recovery was made even before the expiry of the statutory period for filing appeal, and that no clear reasoning was recorded to justify the abridgement of time under Section 78. Justice Raja Basu Chowdhury observed that since the issue raised was jurisdictional in nature, it merited judicial review. Directing the petitioner to avail appellate remedy when 90% of the amount had already been recovered would be a travesty of justice.
Judgment (Para 10–12)
The Court admitted the writ petition and restrained the department from recovering any further amount or enforcing the order passed under Section 73 dated 29 April 2024 until disposal of the writ petition or further orders, whichever is earlier. The State was directed to file its affidavit-in-opposition within two weeks after the annual vacation, and the matter was listed for hearing in January 2025.
Summary of Referred Provisions and Case Context
| Relevant Provision | Key Aspect | Court’s View |
|---|---|---|
| Section 73, CGST/WBGST Act | Determination of tax not paid or short paid without fraud | Order under Section 73 must be followed by proper time for payment and right to appeal |
| Section 78 | Time for payment of tax—ordinarily 3 months unless “special circumstances” justify earlier recovery | Abridgement of time requires reasoned justification; arbitrary recovery is unsustainable |
| Section 79(1)(c) | Power to recover from third persons or via other means | Must be exercised post expiry of payment time and with due notice |
Between Fine Lines
This decision reiterates that premature recovery before the expiry of the appeal period, without recorded reasons, violates taxpayers’ statutory right to appeal. Even when the statute allows recovery in “special circumstances,” such power must be exercised judiciously, with proper reasoning. Taxpayers can thus seek relief directly before the High Court where jurisdictional excess and violation of procedural fairness are evident.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
