GST: Supreme Court stays Coercive Recovery till Multiple SCNs settled

In a significant ruling, the Supreme Court refused to interfere with the HC’s stay order. The case involved multiple show cause notices (SCNs) that covered overlapping tax periods. While the said notices were under challenge before the courts, the tax department proceeded to issue assessment orders and initiated recovery proceedings against the assessee. Aggrieved by orders, the assessee approached the High Court, which granted interim relief by staying any coercive recovery action until the disputes were finally decided by the competent court. Revenue filed a Special Leave Petition before the Supreme Court challenging the interim stay.

Issue Raised: Whether the interim stay order passed by the High Court, restraining the tax authorities/revenue from taking coercive recovery steps against the assessee, was justified during the pendency of overlapping adjudication proceedings as being unjust and premature.

Supreme Court’s Decision: The Hon’ble SC upheld and confirmed the High Court’s order, finding no fault in its reasoning. The Apex Court noted that the HC had correctly exercised its discretion by granting a stay on the recovery proceedings, considering that various overlapping SCNs were still pending a decision. The court had observed that such stay orders ensure fairness and prevent undue hardship to a taxpayer during ongoing adjudication. It is pertinent to mention that the Court found no substantial question of law or jurisdictional error that warranted interference under Article 136 of the Constitution. It dismissed the SLPs and clarified that while coercive recovery steps are stayed, the department may still pursue recovery through other lawful means once proceedings are concluded.

The SC affirmed the High Court’s power to provide interim protection in tax matters where overlapping proceedings are in play.