Goods & Services Tax (GST) in IndiaRecovery Proceedings can only be initiated if amount is not paid within 3 Months from date of Service of Order

February 20, 20240

The High Court of Andhra Pradesh, in the case of Penna Cement Industries Ltd. v. State of Andhra Pradesh., [Writ Petition No. 1413 of 2024] decided on 12-01-2024, held that recovery proceedings can be initiated only if amount is not paid within a period of three months from the date of service of order.


An order (hereinafter referred to as the “impugned  order”) under Section 73(9) of Andhra Pradesh Goods and Services Tax Act,2017 (hereinafter referred to as APGST Act) was passed against Penna Cement Industries Ltd. (hereinafter referred to as the “Petitioner”) confirming the liability of the Petitioner with respect to ineligible ITC and interest for delayed payment.

The Petitioner intended to appeal against the impugned order on the ground of  amount of ineligible ITC claimed by Petitioner, which was within the period of limitation. The Petitioner also intended to make the payment for the interest playable  in installments, however, Petitioner’s application electronically for payment was not being accepted and he had to apply for the whole amount, including the amount he wished to appeal against.

Meanwhile, a Notice dated 01.01.2014 (hereinafter referred to as the impugned notice”) was issued with respect to initiation of recovery proceedings against the Petitioner before the ending of the statutory period i.e. of three months.

Hence, the Petitioner is here present before the court against the impugned notice.


  1. Whether the Petitioner is eligible to appeal against the impugned order passed under Section 73 (9) of the APGST Act?
  2. Whether the petitioner be allowed to file application manually for the payment of ineligible ITC and delayed payment in installments?


The  Petitioner contended that, the impugned notice was issued before the completion of three months from the date of passing of the impugned order whereas under Section 78 of the APGST Act recovery proceedings can only be initiated after the completion of three months from the date of service of order.

The  Petitioner, further submitted that the Petitioner is willing to make the payment,  but in installments for which there is provision under Section 80 of the Act. The system, however, was not accepting the Petitioner’s application for the payment electronically and hence the Petitioner was to submit the said application manually.

Whereas, the Respondent submitted that the Petitioner failed to file any proof showing, that the Petitioner has approached the authority under Rule 158 of  Andhra Pradesh Goods and Services Tax Rules,2017 to apply electronically for payment in installments or to show any grievance with respect to the system not accepting the payment .


The Hon’ble High Court in view of Section 78 of the APGST Act observed that, the impugned notice was issued before the completion of statutory period of limitation and even though it was issued it cannot be implemented within the statutory period to make payment.

The Hon’ble High court further observed that the Petitioner be allowed to file appeal against the impugned order within the period of limitation and if the Petitioner fails to file the appeal within the period of limitation, the Respondents would be at liberty to initiate recovery proceedings against the Petitioner.

The Hon’ble High court, with respect to the payment , directed the Petitioner to approach the concerned authority through a manual application as given under Section 80 of the APGST Act to make the payment in installments and the authority shall thereafter consider the Petitioner’s request for fixing the payments in installments as per law.


From the above it can be stipulated that recovery and safeguarding provisions can be initiated for recovery of the amounts due, whereas if an appeal is preferred against the Order passed under the Act, either 10% and/ or 20% of the disputed tax amount is only required to be pre-deposited. Which raises the question as to whether the recovery proceedings should also be restricted to 10% and/ or 20% of the disputed tax amount, as the case may be, particularly when the provisions of Section 107(7) and 112 (9) deems the balance amount payable as stayed till the disposal of the appeal.

From the Appeal provisions, it could be seen that an appeal can be preferred within the maximum allowable period of 4 months or 6 months of the date of communication of the order, depending on the authority before whom the appeal has been preferred. Whereas, as per the provision of Section 78 of the Act, the recovery proceedings can be initiated after the period of 3 months ( or even before that period) of the date of service of the order.

 So, there can occur two situations- One where recovery proceeding is initiated before the appeal has been filed or second where it has been initiated after the appeal period is over during which no appeal has been filed.

– Team AMLEGALS assisted by Ms. Dhwani Tandon

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