Stay order on recovery proceedings based on Rule 96(10) pending further orders

Stay order on recovery proceedings based on Rule 96(10) pending further orders

Summary in Key Points:

• Issue: Whether recovery proceedings based on Rule 96(10) of the CGST Rules can be stayed considering the Kerala High Court’s decision in Sance Laboratories (P.) Ltd. v. Union of India and the subsequent amendment to Rule 86(4B)(b).
• Facts: The assessee challenged an order passed based on Rule 96(10), arguing that the provision was struck down by the Kerala High Court. The assessee also pointed out that the Central Government had subsequently amended Rule 86(4B)(b) by omitting the reference to Rule 96(10).
• Decision: The High Court stayed the recovery proceedings pending further orders and issued a notice to the respondents.

Analysis:

The High Court granted partial relief to the assessee by staying the recovery proceedings initiated based on the impugned order. The court acknowledged the following:

• Kerala High Court Decision: The Kerala High Court had struck down Rule 96(10) in Sance Laboratories (P.) Ltd. v. Union of India.
• Amendment to Rule 86(4B)(b): The Central Government had amended Rule 86(4B)(b) by removing the reference to Rule 96(10), indicating a change in the legal position.
• Stay of Recovery: To prevent prejudice to the assessee, the court stayed the recovery proceedings until further orders.

Important Note: This case highlights the impact of judicial pronouncements and legislative amendments on the validity and enforceability of GST provisions. The High Court’s decision to stay the recovery proceedings reflects a cautious approach, considering the conflicting legal positions arising from the Kerala High Court’s judgment and the subsequent amendment to the CGST Rules. This case underscores the dynamic nature of GST law and the need for taxpayers and tax authorities to stay updated on the latest legal developments.