Judicial Corner: Matter remanded as appellate order lacked clarity on adjustment of recovered amount against principal tax demand – Calcutta High Court (14.07.2025)

Daily Updates / By

Matter remanded as appellate order lacked clarity on adjustment of recovered amount against principal tax demand – Calcutta High Court{ Mahesh Kumar Mishra V/s Union of India – (2025) 31 Centax 422 (Cal.)}

Issue :
Whether recovery made from the credit ledger pursuant to a demand should have been adjusted against the principal tax demand, and whether the appellate order lacking clarity on such adjustment is sustainable.

Facts:

  • The petitioner was issued a tax demand for the period April 2018 to November 2019, reflected in Form GST DRC-07, with tax demand of Rs.1,14,736.
  • In the interim, the Department recovered Rs.1,45,188 from the petitioner’s credit ledger against this demand.
  • The petitioner later filed an appeal under the amnesty scheme allowing delayed appeals, upon depositing 12.5% of the disputed tax.
  • However, the amount already recovered (Rs.1,45,188) was not accounted for or adjusted properly in Form GST APL-04, creating ambiguity in the appellate order.

Held:

  • The amount recovered by the Department should have been adjusted first against the principal tax demand as per Form GST DRC-07.
  • Since the appellate order lacked clarity on this adjustment, it was unsustainable.
  • The matter was remanded back to the appellate authority for proper consideration under Section 107 read with Section 74 of the CGST Act, 2017.