Facts of the Case

The petitioner, Munna Kumar Sharma, filed the writ petition challenging the recovery of a demand arising from Form GST APL-04 dated 4 December 2025, passed under Section 107 of the WBGST/CGST Act, 2017.

The appellate order arose from an original order dated 29 August 2024 passed under Section 73 of the CGST/WBGST Act for the tax period from April 2019 to March 2020.

The petitioner’s grievance was that the respondents had proceeded to recover the disputed demand from the petitioner’s bank account and electronic ledger even though the statutory framework provided a right to prefer a further appeal before the GST Appellate Tribunal under Section 112 of the Act.

Although the GST Appellate Tribunal had been constituted, it was yet to become functional. The petitioner relied upon Sections 112 and 78 of the Act and the notification dated 17 September 2025 to contend that the recovery could not lawfully have been made before expiry of the relevant statutory period.

According to the petitioner, in view of the applicable notification and the extended time available for filing an appeal before the Appellate Tribunal, the demand could not have been recovered prior to 30 June 2026.

Despite this position, recovery was made from the petitioner’s bank account maintained with the State Bank of India and amounts were also debited from the petitioner’s electronic cash/credit ledger.

Issues Involved

The principal issues before the Calcutta High Court were:

  1. Whether the GST authorities could recover the demand confirmed through Form GST APL-04 before expiry of the statutory three-month period contemplated under Section 78 of the CGST/WBGST Act.
  2. Whether recovery could be initiated within the three-month period without recording and communicating reasons in writing for requiring payment within a shorter period.
  3. Whether recovery from the petitioner’s bank account and electronic cash/credit ledger during the protected statutory period was sustainable in law.
  4. Whether the extended time for filing an appeal before the GST Appellate Tribunal, in light of Notification S.O. 4220(E) dated 17 September 2025, restricted the authorities from ordinarily making recovery before expiry of the time available for filing such appeal.
  5. Whether the amount already recovered from the petitioner’s bank account and debited from the electronic ledger was liable to be refunded and re-credited.

Petitioner’s Arguments

The petitioner submitted that the statutory scheme expressly recognizes a right to prefer an appeal against the appellate order before the GST Appellate Tribunal under Section 112 of the CGST/WBGST Act.

It was argued that although the Appellate Tribunal had been constituted, it had not yet become functional. Therefore, the petitioner’s statutory appellate remedy remained relevant and could not effectively be defeated through premature coercive recovery.

By relying upon Sections 112 and 78 of the Act, the petitioner contended that the respondents were not entitled to recover the demand raised through Form GST APL-04 dated 4 December 2025 before expiry of the permissible period.

The petitioner further relied upon the notification dated 17 September 2025 and argued that recovery could not have been undertaken prior to 30 June 2026.

Accordingly, the petitioner contended that the recovery action was contrary to the statutory framework and could not be sustained.

The petitioner sought:

  • Setting aside of the recovery action;
  • Re-credit of the amount recovered from the bank account;
  • Restoration of the amount debited from the electronic cash/credit ledger; and
  • Appropriate protection against recovery during the period available for pursuing the statutory appellate remedy.

Respondent’s Arguments

The State authorities opposed the writ petition.

The respondents relied upon Section 78 of the CGST/WBGST Act and contended that the statutory provision conferred power and authority upon the department to make recovery even before expiry of the three-month period.

On that basis, the respondents argued that there was no irregularity in the recovery action and that the recovery was legally sustainable.

Court Order / Findings

The Calcutta High Court examined the rival submissions and noted that the determination made under Section 73 of the Act had been confirmed through the appellate order in Form GST APL-04 dated 4 December 2025.

The Court held that, ordinarily, no recovery could have been made before expiry of three months from such demand.

The Court specifically found that recovery had been made from:

  • The petitioner’s bank account; and
  • The petitioner’s electronic ledger,

within the aforesaid three-month period.

Significantly, the Court observed that the respondents had not provided reasons in writing explaining why such recovery was required to be made within the three-month period.

The High Court characterized the recovery as appearing to be an “extra-judicial recovery” and contrary to the statute.

Having regard to Section 78 of the Act, the Court held that the recovery made from the petitioner’s bank account maintained with the State Bank of India could not be sustained.

Accordingly, the recovery was set aside.

Directions Issued by the High Court

The Calcutta High Court directed the respondents to:

  1. Refund the entire amount recovered from the petitioner’s bank account maintained with the State Bank of India.
  2. Forthwith re-credit the amount debited from the petitioner’s electronic cash/credit ledger.
  3. Complete the refund and re-credit exercise within three working days from the date of receipt of the Court’s order.

The Court further took into consideration Notification S.O. 4220(E) [F. No. A-50/7/2025-GSTAT-DoR] dated 17 September 2025.

Since the time for preferring an appeal before the GST Appellate Tribunal had been extended, the Court observed that, ordinarily, no recovery should be made until the time available for filing the appeal expires, contrary to Section 78 of the Act.

With these observations and directions, the writ petition was disposed of.

Important Clarification

The judgment provides an important clarification regarding premature GST recovery under Section 78 of the CGST/WBGST Act.

Section 78 contemplates that an amount payable pursuant to an order should ordinarily be paid within three months from the date of service of the order. Where the proper officer considers it expedient in the interest of revenue to require payment within a shorter period, the statutory mechanism requires reasons to be recorded in writing.

Therefore, the decision clarifies that:

  • Recovery should ordinarily not be initiated before expiry of the statutory three-month period.
  • If the department seeks recovery within a shorter period, the statutory requirements of Section 78 must be complied with.
  • Reasons in writing assume crucial importance for an accelerated recovery action.
  • Recovery from a bank account or electronic ledger within the protected period, without written reasons justifying early recovery, may be contrary to the statute.
  • The availability and extended timeline of the appellate remedy before the GST Appellate Tribunal are relevant considerations.
  • Ordinarily, recovery should not be undertaken before expiry of the time available for filing the appeal, particularly where the appeal timeline has been extended by a relevant notification.
  • A statutory appellate remedy should not ordinarily be rendered ineffective through premature recovery action contrary to Section 78.

Section Involved

·         Section 73 of the CGST Act, 2017 / WBGST Act, 2017

·         Section 78 of the CGST Act, 2017 / WBGST Act, 2017

·         Section 107 of the CGST Act, 2017 / WBGST Act, 2017

·         Section 112 of the CGST Act, 2017 / WBGST Act, 2017

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783503090_1475compressed.pdf

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