HC Grants Interim Relief to Reliance Infra; Bars Recovery Pending Decision on Pre-Deposit Issue

The petitioner, Reliance Infrastructure Limited, challenged recovery actions initiated by the State authorities pursuant to an assessment order. The dispute arose after the department adjusted a refund amount of approximately Rs. 4.98 crore against alleged dues, despite the petitioner having already filed an appeal along with a stay application before the Joint Commissioner (Appeals).

The petitioner contended that the amount already recovered ought to be treated as sufficient compliance with the statutory pre-deposit requirement under Section 26(6A) of the MVAT Act. It was argued that despite this, the appellate authority had not admitted the appeal and recovery proceedings were being pursued without deciding the pending application on pre-deposit compliance.

Issue Before Court: Whether recovery proceedings can continue when the assessee’s application regarding compliance with statutory pre-deposit is pending before the appellate authority.

HC’s Order: The High Court held that since the petitioner’s application regarding pre-deposit compliance was pending before the appellate authority, it ought to be decided expeditiously before any coercive recovery action is taken.

The Court directed the appellate authority to decide the petitioner’s application within two weeks. It further restrained the Revenue from taking any coercive recovery steps until such application is decided. The Court also provided that if any adverse order is passed, a prior notice of seven working days must be given before initiating recovery.

The writ petition was disposed of with all contentions kept open.

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