In a recent decision by the Chhattisgarh High Court dated October 6, 2025, a case involving Shivam Metallurgicals Pvt. Ltd. and the Assistant Commissioner of State GST, Raipur, was resolved regarding the recovery of tax dues from the company's Electronic Credit Ledger. The petitioner contested the recovery of ₹2,87,914, arguing it was unauthorized and violated principles of natural justice. This recovery followed an assessment order dated February 25, 2025, which demanded ₹10,32,672, to be paid within 30 days.
The central issue was whether the recovery of dues without a separate proceeding was permissible under Section 79(1)(a) of the CGST Act, 2017. The court examined this provision, which allows tax recovery from any funds controlled by the tax officer, including balances in the Electronic Credit Ledger. Given that the petitioner neither paid the dues within the stipulated period nor secured a stay, the court found the recovery justified under this section.
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The court concluded that the subsequent rectification appeal by the petitioner did not affect the legality of the recovery, as it occurred before any stay was granted. With no evidence of illegality or procedural error in the recovery process, the court dismissed the petition at the initial stage, instructing each party to cover their own legal costs.
Order Date: 06 October 2025
Case Title: Shivam Metallurgicals Pvt. Ltd. & Anr. v. Assistant Commissioner, Circle-9, Division-II, State GST, Raipur & Ors.
Facts:
- The petitioner challenged the recovery of ₹2,87,914 made from its Electronic Credit Ledger by the Assistant Commissioner, State GST, Raipur.
- The petitioner’s assessment order dated 25.02.2025 had created a demand of ₹10,32,672 with 30 days allowed for payment.
- The petitioner neither paid the amount within the stipulated time nor obtained any stay, following which the department deducted the said sum from its credit ledger.
- The petitioner contended that such recovery was unauthorised and violative of natural justice, and sought refund along with interest.
Issue:
- Whether recovery of dues from the taxpayer’s Electronic Credit Ledger without a separate recovery proceeding is permissible under Section 79(1)(a) of the CGST Act, 2017.
Order:
- The Court examined Section 79(1)(a) and held that it empowers the proper officer to recover tax dues from any money owing to the taxpayer under the officer’s control, which includes balances in the Electronic Credit Ledger.
- The assessment order had granted 30 days for payment, but since the petitioner failed to deposit the amount and no stay order was operative, recovery under Section 79(1)(a) was legally justified.
- The petitioner’s subsequent rectification plea and appeal did not invalidate the earlier recovery, as the deduction occurred before any stay was granted.
- The Court found no illegality or perversity in the recovery action and dismissed the writ petition at the motion stage, directing parties to bear their own costs.
