Recovery Proceedings initiated under CGST Act During Pendency of Investigation stating ‘Self Ascertainment of Tax’ is Violative of Art. 265: Karnataka HC

The Karnataka High Court ruled that recovery proceedings initiated under the CGST Act during the pendency of an investigation, based on self-ascertainment of tax, violate Article 265 of the Constitution. The court emphasized that tax can only be levied and collected by authority of law, and any recovery without proper adjudication is unconstitutional. The court clarified that if authorities believe the self-ascertained amount is insufficient, they must issue a notice under Section 74(1) for a fresh adjudication. This decision reinforces the need for due process in tax recovery and protects taxpayers from arbitrary demands during ongoing investigations.