Recovery Proceedings Stayed; Reply to Demand for Interest Must Be Considered

Case Title: M/s. Indera Motors, Sundargarh v. Commissioner of Commercial Taxes, CT and GST, Odisha
Court Name: High Court of Orissa at Cuttack
Petition Number: W.P.(C) No. 30592 of 2024
Category of Dispute: Interest Demand Recovery under GST
Date of Judgement: 17.12.2024
Relevant Sections: Section 50 of CGST Act, 2017 (Interest on delayed payment of tax)
Coram: Hon’ble Mr. Justice Arindam Sinha and Hon’ble Mr. Justice M.S. Sahoo

Facts of the Case [¶1–2]

• The petitioner, M/s. Indera Motors, received a notice dated 25th June 2024 demanding ₹64,56,777 towards interest under GST and requiring reply by 9th July 2024.

• Though the petitioner appeared on the due date and sought time, the reply was eventually submitted on 11th November 2024 and acknowledged by the department on 13th November 2024.

• The department had not yet initiated any recovery proceedings as confirmed by the Standing Counsel.

Questions in Consideration [¶3]

• Whether the late reply submitted by the petitioner should be considered by the authority before initiating recovery proceedings?

• Can recovery proceedings be deferred until the petitioner’s reply is duly considered?

Observations of the Court [¶3]

• The Court noted that the petitioner’s reply, though delayed, was on record and deserved consideration by the appropriate authority.

• Since the recovery process had not yet commenced, there was no prejudice in directing the authorities to consider the petitioner’s representation before taking coercive steps.

Judgement of the Court [¶3–4]

• The Hon’ble High Court directed the respondent authorities to consider the petitioner’s reply dated 11th November 2024 and pass an order on the contentions raised.

• It was further ordered that no recovery proceedings should be initiated until the order on the petitioner’s reply is communicated.

• The writ petition was accordingly disposed of.

Between Fine Lines

• Taxpayers must be given an opportunity to explain their position, even if there’s a delay in filing replies.

• Authorities should not resort to coercive recovery before considering the taxpayer’s representations.

• Natural justice demands that submissions be acknowledged before taking action.

• Courts are inclined to protect taxpayers against premature recovery actions.

• Even procedural delays can be condoned when recovery hasn’t begun.

Summary of Referred Cases

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