M/S Royal Enterprises vs. The Union Of INDIA

Held

The Court disposed of the petition on mutually agreeable terms between the petitioner and the State. The Court noted that the petitioner was liable to pay Rs. 1,33,53,723/- as per the demand order dated December 31, 2021, after accounting for payments made. The petitioner agreed to pay this amount along with statutory interest from December 31, 2021, in six equal installments, commencing from November 1, 2022. Additionally, the petitioner undertook to deposit Rs. 20,00,000/- on or before October 31, 2022. In light of this agreement, the recovery notices dated August 23, 2022, including the attachment of the petitioner's bank account and the binding effect on third parties, were suspended until the complete payment was made. The Court did not expressly leave any issue undecided, as the matter was resolved by consent.

Facts

The petitioner, M/s Royal Enterprises, through its proprietor Pawan Kumar Mishra, filed a writ petition challenging recovery notices (DRC-13) dated August 23, 2022, issued to the State Bank of India and various government departments. These notices sought to recover Rs. 1,33,53,723/- based on a demand notice (DRC-07) dated December 31, 2021, for the tax period April 2018 to March 2019. The petitioner sought to quash these recovery notices, prevent recovery from third parties, and be allowed to pay the demand in installments under Section 80 of the GST Act, 2017. The petitioner also sought the release of its bank account, which had been attached. The Court had previously directed the State to obtain instructions on whether the petitioner could pay the amount in installments, clarifying that the petitioner did not intend to challenge the impugned order itself.

Key Issues

1. Whether the recovery proceedings initiated through DRC-13 notices dated August 23, 2022, for an amount of Rs. 1,33,53,723/- are valid, considering the petitioner's prayer to pay the demand in installments? 2. Whether the petitioner is entitled to an opportunity to pay the demanded tax, interest, and penalty in installments under Section 80 of the GST Act, 2017, after accounting for excess payments? Petitioner's arguments: The petitioner contended that the recovery through third-party notices (DRC-13) was in violation of natural justice and sought an opportunity to pay the demand, including interest and penalty, in installments after deducting an excess payment of Rs. 25,70,729/-. They also sought the release of their attached bank account. Revenue/State's arguments: Initially, the State resisted the petitioner's request. However, upon the petitioner's undertaking to pay interest on the outstanding amount, the State agreed in principle to the petitioner's proposal for installment payments.