Section 75(12) Can Be Invoked Only for Admitted Self-Assessed Return Liabilities

The Hon’ble Andhra Pradesh High Court in the case of M/s. Sona Enterprises v. Assistant Commissioner of Central Tax & Anr. [Writ Petition No: 15151/2023, order dated January 19, 2026] held that recovery under Section 75(12) read with Section 79 of the CGST Act is permissible only where the registered person has clearly disclosed a tax liability in returns filed under Section 39 and such admitted liability remains unpaid, and that the said recovery mechanism cannot be invoked where the Revenue alleges wrong usage of Input tax credit, which must be addressed only through adjudication under Sections 73 or 74.

Facts:

Sona Enterprises (“the Petitioner”) is a sole proprietorship engaged in the business of trading in iron and steel scrap and purchases scrap from Indian Railways, on which GST is payable by the Petitioner under the reverse charge mechanism, requiring payment of tax by cash and not by utilisation of input tax credit.

Assistant Commissioner of Central Tax & Anr. (“the Respondent”) issued notices and initiated recovery proceedings under Section 79(1)(c) of the CGST Act on the basis of alleged wrongful utilisation of input tax credit reflected in the Petitioner’s GSTR-3B returns for the period July 2017 to March 2021 and proceeded to recover interest amounts by attaching the Petitioner’s bank account.

The Petitioner contended that recovery of interest was effected without any adjudication and without any adjudicatory order setting out the manner in which the interest was calculated, and that coercive recovery was initiated without completing the adjudicatory process.

The Respondent contended that the tax liability was an admitted liability and that late payment of such amounts would automatically attract Section 75(12) of the CGST Act, thereby permitting recovery without an adjudicatory order.

Aggrieved by the recovery of interest from its bank account without adjudication and the invocation of Section 75(12) read with Section 79, the Petitioner approached the High Court by way of a writ petition seeking quashing of the recovery notices and refund of the interest recovered.

Issue:

Whether recovery proceedings under Section 75(12) read with Section 79 of the CGST Act can be initiated without adjudication where the Revenue alleges wrongful utilisation of input tax credit?

Held:

The Hon’ble Andhra Pradesh High Court in Writ Petition No: 15151/2023 held as under:

• Observed that, the scheme of the Act requires issuance of notices, grant of opportunity of hearing, and passing of adjudicatory orders quantifying tax, late fee, penalty and interest under Sections 56, 73 or 74 before initiating coercive recovery under Section 79.
• Noted that, Section 75(12) applies only where the registered person has filed a declaration under Section 39 clearly disclosing a tax liability and such liability remains unpaid.
• Noted that, where the allegation is of wrong usage of input tax credit or otherwise, the authorities are entitled only to initiate proceedings under Sections 73 and 74.
• Observed that, the coercive process under Section 75(12) of the GST Act, cannot be used in such situations.
• Held that, the defence of the respondents invoking Section 75(12) for recovery without adjudication was liable to be rejected.
• Directed that, the recovery process initiated under Section 79(1)(c) be set aside and the Respondents refund the interest recovered from the Petitioner’s bank account, while reserving liberty to initiate appropriate proceedings in accordance with law.

Our Comments:

The High Court analysed the scope of Section 75(12) of the CGST Act and held that it operates notwithstanding Sections 73 and 74 only in cases of admitted self-assessed tax disclosed in returns filed under Section 39 which remains unpaid. The Court categorically rejected the Revenue’s contention that Section 75(12) could be invoked where the allegation is wrongful utilisation of input tax credit, holding that such disputes necessarily require adjudication under Sections 73 or 74.

The Court emphasised that the statutory scheme contemplates completion of the adjudicatory process to quantify tax, penalty and interest before resorting to coercive recovery under Section 79, and that bypassing this process renders the recovery unsustainable.

The Calcutta High Court disposes Assessee’s writ petition in Kuddus Ali, Proprietor of M/s. Kuddus Ali Construction. v. The Assisstant Commissioner of Central Tax, Maldah CGST & CX Division, Siliguri Commissionerate. & Ors [WPA 6004 of 2025, order dated April 28, 2025] challenging the recovery of ‘self-assessed-tax’ made through Section-75(12) of the WBGST Act, 2017 by-passing the recovery procedure mandated through Section-73 and 74 of the WBGST Act, 2017. It held that having regard to the explanation provided under Section 75(12) of the said Act, the expression “self-assessed tax” shall include tax payable in respect of the details of outward supplies furnished under Section 37 of the said Act which are not included in the return furnished under Section 39 of the said Act.

Relevant Provisions:

Section 75(12) of the CGST Act, 2017

“75. General provisions relating to determination of tax.-

(12) Notwithstanding anything contained in section 73 or section 74 or section 74A, where any amount of self-assessed tax in accordance with a return furnished under section 39 remains unpaid, either wholly or partly, or any amount of interest payable on such tax remains unpaid, the same shall be recovered under the provisions of section 79.

Explanation.-For the purposes of this sub-section, the expression “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.”

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