The Bombay High Court addressed a case involving SVS Aqua Technologies LLP and the Superintendent, Range IV, Division I, CGST Pune II Commissionerate, concerning the procedural requirements for tax recovery under the CGST Act, 2017. SVS Aqua Technologies underwent a GST audit under Section 65 and received audit findings through Form GST ADT-02 as per Rule 101(5). The petitioner feared that the authorities might initiate direct recovery based on these findings without formal proceedings.
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The core issue was whether the authorities could enforce recovery solely based on audit findings without adjudication under Section 73 or Section 74 of the CGST Act. The Court clarified that the communication of audit findings in Form GST ADT-02 is an administrative step under Section 65(6) and Rule 101(5), which should lead to formal adjudication through a show-cause notice before any recovery action.
The Court concluded that SVS Aqua Technologies' concern over direct recovery was unfounded, as due process must be followed. The department assured the Court that recovery would not proceed without the proper adjudication process. Consequently, the High Court dismissed the petition, as no immediate recovery action was being pursued against the petitioner.
Order Date - 31 August, 2026
Parties: SVS Aqua Technologies LLP vs. Superintendent, Range IV, Division I (Shivajinagar), CGST Pune II Commissionerate & Ors.
Facts -
- M/s. SVS Aqua Technologies LLP underwent a GST audit conducted by the tax department under Section 65 of the CGST Act, 2017.
- Following the audit, the tax officer issued a communication informing the petitioner of the findings in Form GST ADT-02 as per Rule 101(5) of the CGST Rules.
- M/s. SVS Aqua Technologies LLP grew anxious that the GST authorities would directly enforce recovery proceedings based on this audit finding without formal proceedings.
- Seeking to prevent direct monetary recovery, M/s. SVS Aqua Technologies LLP approached the Bombay High Court by filing a writ petition against the department.
Issue -
- Whether tax authorities can directly effect recovery of dues based on audit findings in Form GST ADT-02 without initiating adjudication proceedings under Section 73 or Section 74 of the CGST Act?
Order -
- The Court noted that the department's communication was merely an administrative step issuing audit findings in Form GST ADT-02 under Section 65(6) read with Rule 101(5).
- The Court held that the petitioner’s fear of direct recovery was completely misconceived, as audit findings must naturally lead to formal adjudication via a show-cause notice before recovery can be made.
- Accepting the department's confirmation that due process under the CGST Act will be followed, the High Court disposed of the petition since no immediate adverse recovery action was being executed.
