#Tax Recovery

The Andhra Pradesh High Court has ruled that where ineligible Input Tax Credit was availed but not utilized, the tax authorities cannot impose interest under Section 50(3) or penalty under Section 74 of the CGST Act. This clarifies that mere availing of ineligible ITC, without actual benefit or misuse, does not trigger punitive liability - a critical safeguard for businesses facing retrospective tax demands.

The ITAT Bangalore granted a stay on tax recovery after the revenue admitted a clerical error in the Section 156 notice of demand, which incorrectly showed Rs. 0 demand despite a substantial disputed amount. This reinforces that procedural inaccuracies in demand notices do not extinguish tax liability but may justify interim relief when deposit requirements are met, offering clarity to corporates facing technical mismatches in tax notices.

The Calcutta High Court has ruled that adjusting a tax refund beyond 20% of a disputed demand without giving the assessee a prior opportunity to be heard violates the principles of natural justice. This sets a critical precedent for all taxpayers facing refund adjustments under Section 245, mandating procedural fairness even in recovery actions by the Income Tax Department.

The Madhya Pradesh High Court has ruled that seizing a vehicle for tax dues without a prior assessment order under Section 16(3) of the M.P. Motoryan Karadhan Adhiniyam, 1991 is illegal. Authorities may only seize the Registration Certificate under Section 207 of the Motor Vehicles Act, not the vehicle itself, reinforcing that procedural fairness trumps coercive recovery in transport taxation.

Uttarakhand High Court rules that GST registration revocation must be reconsidered if a taxpayer deposits wrongly availed Input Tax Credit (ITC) with proof. The tax authority is directed to decide afresh within four weeks of representation, ensuring procedural fairness in GST compliance.

ITAT Delhi ruled that where a High Court has already upheld the assessee’s transfer pricing methodology for royalty and business support service fees in a prior year, the revenue cannot re-agitate the same factual matrix. The Tribunal granted an absolute stay on recovery, reinforcing judicial consistency in transfer pricing disputes and protecting taxpayers from arbitrary reassessments.

Andhra Pradesh High Court holds that freezing bank accounts during pending VAT appeal violates natural justice; mandates disposal of appeal within one month.

Bombay High Court holds that prior registered security interest under SARFAESI Act overrides GST recovery notices, affirming priority of secured creditors.

Madras High Court holds that directors cannot be held personally liable for company's GST dues during liquidation unless gross neglect, misfeasance, or breach of duty is established under Section 88(3).