Revenue’s SLP Dismissed: Coercive Measures Restrained Due to Multiple Overlapping SCNs and Orders During Pendency of Challenge

Revenue’s SLP Dismissed: Coercive Measures Restrained Due to Multiple Overlapping SCNs and Orders During Pendency of Challenge

Issue:

Whether revenue authorities can adopt coercive measures for demand and recovery under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act), when the assessee has faced multiple show cause notices (SCNs) pertaining to overlapping periods, and assessment orders were passed during the pendency of the assessee’s challenge to such proceedings, and whether the High Court’s order restraining such measures should be upheld.

Facts:

The revenue filed a Special Leave Petition (SLP) against an order and judgment of the High Court. The High Court had ruled in favor of the assessee, holding that since the assessee had been subjected to multiple show cause notices covering overlapping periods, and assessment orders were passed even while the assessee’s challenge to these proceedings was pending, the authorities were restrained from adopting coercive measures for demand and recovery until the final disposal of the assessee’s petition. The case primarily involved Section 73 of the CGST Act, which deals with demands not involving fraud, willful misstatement, or suppression of facts.

Decision:

The Supreme Court held that no case for interference was made out in the exercise of its jurisdiction under Article 136 of the Constitution of India. Therefore, the Special Leave Petition (SLP) was dismissed. This effectively upholds the High Court’s order restraining coercive measures.

Key Takeaways:

• Protection Against Harassment: The High Court’s order, upheld by the Supreme Court, underscores the principle that taxpayers should not be subjected to undue harassment or coercive recovery actions when the legitimacy or procedure of multiple, overlapping demands is under judicial scrutiny.
• Preventing Multiplicity of Proceedings: Issuing multiple SCNs for overlapping periods, especially when a challenge is pending, can lead to confusion, administrative burden on the assessee, and potentially conflicting demands. Courts often intervene to streamline such processes.
• Interim Relief for Assessee: The High Court’s direction to restrain coercive measures serves as an interim relief, protecting the assessee until the underlying legal challenge to the demands is finally adjudicated.
• Supreme Court’s Discretion in SLP (Article 136): The Supreme Court’s dismissal of the SLP signifies that it found no substantial question of law or grave injustice that warranted its intervention in the High Court’s discretionary order to protect the assessee from coercive action.
• No Interference with Discretionary Orders: Courts are generally reluctant to interfere with High Court orders that grant interim relief (like restraint from coercive measures) to balance the rights of the assessee and the revenue, especially when the main legal issues are yet to be definitively resolved.
• In Favour of Assessee: The decision is in favor of the assessee as the protective order against coercive recovery measures remains in force.