M/S Manoj Kumar Richharia Contractor vs. State Of U.P. And Another

Facts

The petitioner, M/S Manoj Kumar Richharia Contractor, filed a writ petition challenging the recovery of Rs. 6,12,000/- from its Electronic Cash Ledger on 30/07/2026, under Section 79 of the GST Act, 2017. The petitioner had initially filed a first appeal against an adjudication order confirming the tax demand. This appeal was partly allowed on 10.03.2025, reducing the demand to Rs. 4,72,168/-. The petitioner had pre-deposited an amount exceeding 20% of the reduced demand. Subsequently, a second appeal was filed on 20.06.2026, and further amounts were recovered by deductions from the petitioner's bank account. The High Court had previously granted time to the Standing Counsel for the State to obtain instructions regarding the dates of orders, appeals, tax determination, deposits, and recoveries.

Held

The Court noted that on the last date of hearing, the petitioner had submitted that an amount in excess of the required pre-deposit had already been made, yet further amounts were recovered after filing the second appeal. The Standing Counsel for the State was granted time to obtain clear written instructions. Today, the learned Standing Counsel informed the Court, based on written instructions, that the entire amount of excess deposit has been refunded to the petitioner on 28.09.2026. In view of this statement and the refund, the Court found that the cause of action for the writ petition no longer survived. Therefore, the writ petition was dismissed as infructuous. The Court did not delve into the merits of the original demand or the legality of the recovery process itself, as the refund rendered the petition moot.

Key Issues

1. Whether the recovery from the petitioner's Electronic Cash Ledger dated 30/07/2026, made under Section 79 of the GST Act, 2017, was valid, considering the ongoing appellate proceedings and pre-deposits made by the petitioner? (Question of law) 2. Whether the recovery action violated the principles of natural justice? (Question of mixed law and fact) Petitioner's Arguments: The petitioner argued that the recovery was a gross violation of the principles of natural justice and sought quashing of the recovery and any coercive action. The judgment does not record specific arguments made by the petitioner on the legal validity of the recovery or the specific provisions of the GST Act relied upon, beyond the general challenge to the recovery and demand. Revenue's Arguments: The Standing Counsel for the State sought time to obtain instructions. Subsequently, the State informed the Court that the entire excess deposit had been refunded to the petitioner.