Assistant Commissioner Tenders Apology To Patna High Court For Unlawful GST Recovery; Court Accepts [READ ORDER]

The Patna High Court has accepted the unconditional apology filed by the Assistant Commissioner who was responsible for conducting unlawful GST recovery.

The bench of Justice Rajeev Ranjan Prasad and Justice Ashok Kumar Pandey has observed that the recovery has been made in violation of the statutory provision and the procedure established by law, the State cannot be allowed to unduly rich itself by indulging into such kind of the recoveries and retaining the money. The money was recovered as back as on 02.01.2023 and it has remained with the department for over two years four months by now.

The bench while refraining from imposing the cost on the Assistant Commissioner directed that the department shall be liable to pay simple interest at the rate of 6% per annum on the amount recovered from the petitioner from the date of recovery till the date of refund.

The petitioner filed its return in Form GSTR 3B only for March 2020 on 07.12.2020. In its return, the petitioner claimed Input Tax Credit to the extent of Central Goods and Services Tax and State Goods and Services Tax of Rs.24,45,934 and Rs.24,45,934 respectively. 

He was, however, served with an intimation of tax liability in Form GST DRC-01A determined under Section 73(5) of the Central Goods and Services Tax Act, 2017/ Bihar Goods and Services Tax Act, 2017.

The Assistant Commissioner of State Tax, Division Jehanabad issued show cause notice to the petitioner saying that on analysis of the return in Form GSTR-3B of March 2020, it has been found that the return was filed after the due date prescribed under Section 16(4) of the CGST Act, 2017/ BGST Act, 2017. 

The Assistant Commissioner State Tax, therefore, called upon the petitioner to show cause. The petitioner replied to the same and contended that during the relevant period, he was suffering from Covid-19 infection and had acute fever as a result whereof he was put in complete isolation for 21 days. Due to this reason, the petitioner could not file GSTR-3B for the period under question within the time limit prescribed by Section 16(4). 

The plea of the petitioner, however, failed and the Assistant Commissioner of the State Tax, Magadh Division determined the tax liability as mentioned hereinabove and called upon the petitioner to pay a total amount of Rs.55,64,402 which included interest and penalty.

The petitioner filed an appeal before the Additional Commissioner of State Tax (Appeals), however, the Appellate Authority has also rejected the appeal on the solitary ground that he has no power to extend the period for filing of the return. The Appellate Authority has taken a view that in terms of Section 16(4) of the BGST Act, 2017, the claim for ITC is liable to be rejected.

A conjoint reading of Sections 78 and 79 would show that while Section 78 prescribes a period of three months to a taxable person to pay the amount in pursuance of an order passed under this Act from the date of service of the order and then only a recovery proceeding is to be initiated, Section 79 is in consonance with Section 78 but it provides other modes of recovery of the tax amount. It is in the nature of a garnishee proceeding where the tax dues may be recovered by adopting any one or more modes prescribed under sub-Section (1) of Section 79.

The court held that the Recovery Officer had to wait for a period of three months from the date of service of the order for deposit of the payable amount by the petitioner. Only in case of the petitioner failing to deposit the amount within the prescribed period of three months, one of the modes as prescribed under Section 79 of the CGST/BGST Act, 2017 could have been invoked.

The court held that the recovery of Rs.50,75,214 effected from the bill of the petitioner was in haste and in violation of the statutory provision. 

“We take note of the unconditional apology sought by the Assistant Commissioner, State Tax, Jehanabad Circle in paragraph ‘32’ of the counter affidavit. We accept the apology and refrain from imposing any cost,” the court said.

Case Details

Case Title: Kaushlendra Kumar Versus State of Bihar

Case No.: Civil Writ Jurisdiction Case No.17860 of 2024

Date: 01/05/2025

Counsel For Petitioner: Akshansh Ankit

Counsel For Respondent: Vikash Kumar

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