The Madhya Pradesh High Court has disposed of a petition challenging recovery of ₹21.54 lakh in GST interest, referring to an earlier appellate direction requiring the department to follow the principles of natural justice in any independent recovery proceedings.
The Division Bench of Chief Justice Alpesh Y. Kogje and Justice Vivek Jain did not quash the recovery intimation or conclusively determine whether the disputed interest was recoverable.
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The petitioner/assessee challenged an intimation issued in Form GST DRC-01D under Section 75(12), read with Section 79, of the Central Goods and Services Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017.
The intimation concerned interest of ₹21,54,964 for July 2017 to March 2018.
The company contended that adjudication of the interest demand stood deemed concluded under Section 75(10), following an appellate order dated July 15, 2026. It argued that the amount could consequently not be recovered through Section 75(12), read with Section 79.
It sought quashing of the intimation and consequential recovery proceedings, together with an order restraining the authorities from recovering the amount by any mode.
Alternatively, the company requested that its objection dated October 22, 2026—including the issues of limitation, Section 75(10) and the scope of Section 75(12)—be decided through a reasoned order after a personal hearing. It also sought refund, with applicable interest, of any amount recovered or adjusted pursuant to the intimation, if any.
The High Court reproduced the operative portion of the appellate authority’s order dated July 15, 2026.
The appellate authority had accepted an additional ground raised under Section 107(10), holding that the adjudication order dated February 1, 2025 had been passed beyond the statutory time limit prescribed under Section 73(10).
Consequently, the adjudication order was set aside as time-barred and without jurisdiction, and the appeal was allowed on the issue of limitation.
However, the appellate authority expressly clarified that it was not deciding the statutory liability to interest under Section 50(1). It also left undecided the department’s claimed independent statutory right to recover self-assessed interest that was admitted and undisputed by the appellant under Section 75(12), read with Section 79.
The appellate order further preserved the adjudicating authority’s power to initiate independent proceedings for recovery of interest under Section 50 in accordance with the applicable statutory provisions.
These included Section 75(12), Rule 142B and Section 79, along with other applicable provisions of the GST law.
Crucially, the appellate authority stipulated that any such proceedings must comply with the principles of natural justice.
Thus, while the earlier adjudication order had been set aside on limitation, the appellate authority had left the substantive interest question open and preserved the possibility of separate proceedings in accordance with law.
Before the High Court, the petitioner complained that the authorities had already reached a conclusion and that the recovery intimation was merely an empty formality.
The Bench noted that the appellate order appeared not to have been challenged by the petitioner. It also observed that the impugned intimation appeared to have arisen from paragraph 6 of the appellate order’s operative portion, which preserved the possibility of independent recovery proceedings.
Addressing the allegation of predetermination, the Court referred again to the appellate authority’s express stipulation requiring compliance with natural justice.
The High Court expressed its expectation that the relevant direction concerning natural justice would be considered when the impugned intimation was taken up.
With these observations, the Bench disposed of the writ petition.
The Court did not record a direction quashing the intimation, granting a refund or prohibiting recovery altogether. It also did not expressly grant the alternative request for a reasoned order following a personal hearing in those terms. Its approach was to draw attention to the procedural safeguard already contained in the appellate order.
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