GST Recovery Without Functional GSTAT Under Question

The Allahabad High Court has raised serious concerns over recovery proceedings initiated by GST authorities when the statutory Goods and Service Tax Appellate Tribunal (GSTAT) is yet to become fully functional, holding that taxpayers cannot be deprived of their right to appeal merely due to administrative delays. The Bench of Justice Saumitra Dayal Singh and Justice Vivek Saran observed that the absence or non-functionality of the GST Appellate Tribunal cannot be attributed to the taxpayer. The bench restrained the State from making further recoveries of disputed tax demand arising out of a GST adjudication order . The case arose from an adjudication order dated 30 December 2023, through which a disputed GST demand of ₹59.07 lakh was created against the petitioner. Aggrieved by the order, the assessee filed a first appeal, which was dismissed on 8 October 2024 by the Additional Commissioner (Appeals), State Tax, Noida. Ordinarily, the next statutory remedy available to the assessee would have been to approach the GST Appellate Tribunal under Section 112 of the U.P. GST Act, 2017. However, due to the Tribunal not being constituted and made functional, the petitioner was unable to file a second appeal The Court emphasized that citizens cannot be penalized for systemic or administrative shortcomings, especially when statutory rights are involved. The Bench noted that once the law provides a right of appeal, the State is duty-bound to ensure that such a remedy is meaningful and accessible before initiating coercive recovery proceedings The Court took note of Notification S.O. 4220(E) dated 17 September 2025 issued by the Central Government, which extended the time limit for filing appeals before the GST Appellate Tribunal up to 30 June 2026 in cases where the impugned orders were communicated prior to 1 April 2026. In light of this notification, the petitioner was clearly within the permissible window to file a second appeal once the Tribunal becomes operational The Court also relied upon a user advisory issued by the Central Board of Indirect Taxes and Customs (CBIC), which laid down a staggered schedule for e-filing of second appeals before the GST Appellate Tribunal. As per the advisory, appeals arising from first appellate orders passed during specific periods could be filed between January 2026 and June 2026, depending on the date of the original appeal. The Bench observed that these administrative measures further reinforced the position that taxpayers must be protected from recovery actions until their appellate remedies are exhausted The Court expressed strong prima facie doubt over the legality of initiating recoveries when the statutory right of appeal is effectively unavailable. It held that allowing such recoveries would be contrary to both the statutory scheme of the GST law and the constitutional principles of fairness and equity. The Bench remarked that forcibly recovering tax dues without providing an effective appellate forum would amount to gross unfairness on the part of the State. During the hearing, it was noted that the petitioner had already deposited Rs. 9.44 lakh against the mandatory pre-deposit of ₹11.81 lakh required under Section 112(8) of the U.P. GST Act. Taking this into account, the Court directed that subject to the petitioner depositing the remaining amount before 30 June 2026 or before filing the second appeal, whichever is earlier, no further recovery proceedings shall be undertaken pursuant to the adjudication order. The Court also ordered that garnishee proceedings initiated against the petitioner’s bank account shall remain in abeyance The Bench granted two weeks’ time to the Standing Counsel to obtain clear written instructions from the Commissioner, State Tax, regarding the State’s stand on recovery proceedings in such cases. The Court expressed an expectation that appropriate administrative instructions would be issued to ensure that no recoveries are initiated before the expiry of the appeal-filing period as prescribed under the notification and CBIC advisory. If the State intended to take a contrary position, it was directed to file a short counter affidavit explaining the reasons The court directed the writ petition h to be listed again on 12 January 2026 among the top ten cases. Case Details Case Title: M/S C.K. Constructions Versus State of UP Case No.: WRIT TAX No. - 7370 of 2025 Date: 09/12/2025 Counsel For Petitioner: Nishant Mishra, Vedika Nath Counsel For Respondent: C.S.C. Click Here To Read Order Read More: Vande Mataram Par Sabse Bada Bawaal! Special Session Mein History Change?

GST Recovery Without Functional GSTAT Under Question, Allahabad HC Stays Coercive Action

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