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TMI Blog2023 (9) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... her;(1977) 4 SCC 98] 2. This is a classic case of a valorous overreach by a tax executive; recovering the assessed tax due, just after a day of dismissal of the appeal; when there was a further appeal provided and the Tribunal before which such an appeal is to be filed was not constituted. 3. On facts, suffice it to notice that the assessee carries on the business of manpower supply including security and cleaning services to different establishments; in which is included Government Polytechnic Institutions. The issue arose as to whether the services provided to Government Polytechnic Institutes would fall under the exemption stipulated in Entry No. 66(b)(iii) of Notification No. 12/2017 dated 28.06.2017 clarifying it to be services provided by or to Educational Institutions up to Higher Secondary School or equivalent. Reliance was also placed on the memo issued by the Department of Education, Government of Bihar which considered Polytechnics to be equivalent to Intermediate i.e. Senior Secondary. 4. We would not dwell upon the legal issue raised as to exemption since the assessee has an appellate remedy which has not been exhausted and the forum where such appeal is to be insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissal of the writ petition. 7. The assessee was issued with an assessment order dated 14.12.2022 produced as Annexure-2. The tax dues under the BGST and CGST Act were Rs. 18,91,609.00 each. There was also a further liability of interest of Rs. 16,02,552.00 each and a penalty of Rs. 1,89,161.00 each under the two enactments. The total liability came to Rs. 73,66,644.00 which was directed to be paid on or before 14.03.2023 as per Annexure-2. The assessee filed an appeal which did not find favour with the Appellate Authority, who rejected it on 27.03.2023, as is evident from Annexure-1. Immediately on the next day, the Assessing Officer issued Annexure-3 notice to the Branch Managers of the four banks in which the assessee maintained accounts. A total amount of Rs. 69,88,322.00 was sought to be recovered which included the equal liabilities under the CGST and SGST enactments. The 10 per cent deposited under each of the enactments being Rs. 1,89,161.00 at the appellate stage was deducted when the recovery notice was issued. The recovery notice at Annexure-3 is dated 28.03.2023 and the entire amounts have been recovered which resulted in the present challenge before this Court. 8. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 10. The contention of the learned Government Advocate is also that there is no requirement for a notice and reasons alone are to be recorded, which is available in the files, an extract of which is produced as Annexure-D along with the supplementary counter affidavit dated 10.05.2023 filed on behalf of Respondent Nos. 2 and 3. The reasons stated, as evident from the extract of the file which is also dated 27.03.2023 is that the financial year 2022-23 is coming to an end and there are bank holidays on the immediate days following. We cannot but express our deep anguish and dissatisfaction in the reasons recorded by the officer. The imminent bank holidays of 2 or 3 days and the close of the financial year, we are afraid, cannot be termed valid reasons to justify an expedient recovery under the proviso to Section 78 and it is not clear as to how the interest of the revenue would suffer, if the recovery is kept in abeyance for three months or at least a notice is issued to the assessee before the recovery is effectuated from the banks, behind the back of the assessee. The counter affidavit does not speak of any notice having been given to the assessee before recovery. Notices were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the period; less than a period of three months, within which the amounts are to be paid. 13. Section 78 provides that a person against whom an order is passed shall satisfy the amounts payable within a period of three months and the proviso empowers the Assessing Officer to seek satisfaction of such dues even during a period lesser than three months. The provision is worded so:- "78. Initiation of recovery proceedings.- Any amount payable by a taxable person in pursuance of an order passed under this Act shall be paid by such person within a period of three months from the date of service of such order failing which recovery proceedings shall be initiated: Provided that where the proper officer considers it expedient in the interest of revenue, he may, for reasons to be recorded in writing, require the said taxable person to make such payment within such period less than a period of three months as may be specified by him." [underlining by us for emphasis] Hence, when reasons are recorded in writing, there is a duty on the Assessing Officer to specify the time within which the amounts are to be paid which intimation has to go to the assessee. 14. In this context, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns stated are unconvincing and clearly untenable and the approaching closure of the financial year end can only be a motivation to enhance the individual targets assigned by the higher authorities. 16. Following the dictum laid down in UTI Mutual Fund v. Income-Tax Officer and Others; [2012] 345 ITR 71 (Bom), we issue the following guidelines in so far as the recoveries are concerned:- (1). There shall be no recovery of tax within the time limit for filing an appeal and when a stay application is filed in a properly instituted appeal, before the stay application is disposed of by the Appellate Authority; (2) Even when the stay application in the appeal is disposed of, the recovery shall be initiated only after a reasonable period so as to enable the assessee to move a higher forum; (3) However, in cases where the Assessing Officer has reason to believe that the assessee may defeat the demand or that it is expedient in the interest of Revenue, as is provided under the proviso to Section 78, there can be a recovery but with notice to the assessee, which notice shows the reasons for initiating it and specifies the lesser time within which the assessee is directed to satisfy t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 19. As we observed, the Assessing Authority in the scheme of the enactment could not have made recovery of the entire amount. Section 112 provides for twenty per cent of the tax amount due, in addition to the ten per cent amount paid at the first appellate stage, for maintaining a second appeal before the Appellate Tribunal. On such payment being made under Section 112(8), there is also a requirement that the further recovery proceedings would be stayed. Hence, when an Appellate Authority was not constituted even when the Assessing Officer acted under the proviso to Section 78 what could have been recovered is only twenty per cent of the tax amount due in addition to that paid up to institute a first appeal. We see from Annexure-3 order that under both the BGST and CGST Act, the tax amounts due are Rs. 18,91,609.00 and the demand made of Rs. 34,94,161.00 each under CGST and BGST Act is after including the interest and penalty. We also notice that Rs. 1,89,161.00 has been reduced from the total demand raised under Annexure-2 order, presumably, the ten per cent payment made by the assessee at the first appellate stage. 20. Hence, what was required to be paid by the assessee, for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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