M/S North Eastern Information Technology Consultancy Services Private Limited vs. Union Of INDIA And 5 Ors.

Held

The Court held that the recovery proceedings initiated against the petitioner ought to be stayed until the appeal pending before the Commissioner (Appeals), Central Goods and Services Tax (Respondent No. 3), is finally disposed of. This decision was based on the undisputed fact that the petitioner had made the required pre-deposit along with its appeal, and considering the language of Clause 4.3 of the Notification dated September 16, 2014. The Court found merit in the submissions of both learned counsel. The operative direction was that no coercive action shall be taken against the petitioner for the recovery of the demanded amount until the disposal of the appeal. No issue was expressly left undecided.

Facts

The writ petitioner, M/s North Eastern Information Technology Consultancy Services Private Limited, which runs a computer institute, was served with a demand notice dated October 31, 2019, by the Assistant Commissioner, Central Goods and Service Tax, Shillong Division-I (Respondent No. 4). This notice demanded Rs. 11,16,914/- along with interest and penalty for alleged unpaid service tax. Subsequently, the Deputy Commissioner, Central Goods and Service Tax, Shillong Division-I (Respondent No. 5) initiated recovery proceedings and attached the petitioner's bank account via a letter dated September 27, 2022. The petitioner appealed this demand to the Commissioner (Appeals), Central Goods and Services Tax (Respondent No. 3), making a pre-deposit of Rs. 83,770/-, which is 7.5% of the disputed amount. However, Respondent No. 3 refused to grant an interim order of stay on recovery, leading to the filing of this writ petition.

Key Issues

1. Whether the recovery action initiated against the petitioner should be stayed pending the disposal of its appeal before the Commissioner (Appeals), Central Goods and Services Tax, in light of Clause 4.3 of the Circular dated September 16, 2014, issued by the Government of India, Ministry of Finance, Department of Revenue. The petitioner argued that Clause 4.3 of the aforementioned circular mandates a stay on recovery actions when an appeal is preferred before the Commissioner (Appeals) or Tribunal. The petitioner contended that despite fulfilling the pre-deposit requirement, the Commissioner (Appeals) incorrectly declined to grant an interim stay on recovery. The respondent (CGST authorities) conceded that coercive action should be stayed pending the appeal's disposal, as per the mandate of the notification dated September 16, 2014, once an appeal is filed with the required pre-deposit.