Kbs Electricals vs. The Commissioner Of Central Excise And GST

Held

The Court found no prima facie illegality in the respondent's action of issuing the impugned recovery notices under Section 79(1)(c) of the CGST Act, 2017, as the petitioner had not disputed its tax liability or the delay in its discharge. However, acknowledging the petitioner's difficulties, the Court disposed of the petition by directing the concerned authority to provide an opportunity for the petitioner to present a payment plan for resolving the impasse. The petitioner was granted liberty to approach the Court again if a voluntary solution could not be reached. The Court did not grant the specific relief of withdrawing the notices or automatically granting a 90-day period.

Facts

The petitioner, KBS Electricals, filed a writ petition seeking to withdraw GST recovery notices (Forms GST DRC-13 dated 30.11.2022 and an office letter dated 12.04.2023) issued under Section 79(1)(c) of the CGST Act, 2017, to its clients (third parties). The petitioner sought a period of 90 days to discharge its GST liability. The petitioner admitted to delays in payment but attributed them to its GST registration being cancelled, disrupting its working capital. Although revoked, it claimed it wasn't provided sufficient time to recover dues from clients and deposit its own statutory obligations like EPF and ESI. The petitioner highlighted that it had already paid ₹47,47,361/- between November 2022 and April 2023, and listed amounts due from four Public Sector Undertakings (PSUs).

Key Issues

1. Whether the respondent department's action in issuing recovery notices under Section 79(1)(c) of the CGST Act, 2017, to the petitioner's clients is legally tenable, considering the petitioner's admitted delay in payment and its request for a 90-day period to discharge its liability? Petitioner's arguments: The petitioner contended that the recovery notices issued to its clients were inappropriate, especially given its bona fide efforts to pay dues, as evidenced by substantial payments made. It argued that the disruption caused by GST registration cancellation and the inability to recover amounts from PSUs necessitated a reasonable payment plan. The petitioner sought a direction to withdraw the notices and grant at least 90 days to clear its GST dues. Respondent's arguments: The respondent did not explicitly record arguments in the judgment. However, the Court noted that there was no dispute regarding the petitioner's liability or the delay in discharging it.