GST Officer’s Dilemma: Court Slams Unjustified Demands While Seniors Blame for Dropping Them

In a troubling reflection of the internal tensions within the Goods and Services Tax (GST) administration, officers find themselves caught in a no-win situation — facing judicial rebuke for raising unreasonable demands, often resulting in cost impositions, while simultaneously fearing career repercussions, including diminished promotion prospects, for dropping such demands.

The conflicting expectations from the judiciary and departmental superiors have left officers navigating a precarious path.

Recently, the SGST Lucknow HQ Prepares chargesheets against additional commissioner (appeals) over pro-assessee orders on legal grounds. The chargesheets have been ordered against certain appellate officers solely for passing orders in favour of assessees on legal grounds—raising serious concerns about institutional overreach, erosion of judicial independence, and the chilling effect on fair adjudication.

On the other hand there are plethora of judgements where cost has been imposed by the High Courts for raising unreasonable demands without considering the reply/instance of the assessees. These judgements includes:

GST Dept. Raises Demand Despite Rectification Of Mismatch Between GSTR-3-1 and GSTR-3B: Gujarat High Court Imposes Cost Rs. 1 Lakh on Dept.

The Gujarat High Court has imposed the cost of Rs. 1 Lakh on the GST department as it raised the demand despite of rectification of mismatch between GSTR-3-1 and GSTR-3B.

Allahabad High Court Imposes Rs. 20,000 Cost On Joint Commissioner SGST For Not Giving Opportunity Of Hearing

The Allahabad High Court has imposed Rs. 20,000 Cost on Joint Commissioner, SGST for passing the order passed without giving hearing opportunity to assessee.

The bench of Chief Justice Arun Bhansali and Kshitij Shailendra has observed that conduct on the part of the officers of the State wherein besides denying opportunity of personal hearing in the show cause notice by indicating ‘NA’ in the column pertaining to date of personal hearing, despite specific prayer made for providing opportunity of hearing in reply, the order has been passed without affording any opportunity of hearing.

Solutions to Resolve the GST Officer’s Dilemma

1. Clearer Departmental Guidelines with Legal Backing

Issue binding SOPs (Standard Operating Procedures) aligned with judicial precedents and CBIC circulars for initiating demands. Include threshold tests for prima facie evidence, reasonable cause, and proportionality. Officers who follow SOPs in good faith must be protected from adverse service implications, even if courts later dismiss the case.

2. Promotion Criteria Reform

Revamp performance appraisal to reward quality over quantity. Avoid using the number or quantum of tax demands raised as a Key Performance Indicator (KPI).

Introduce “legal quality metrics” — e.g., ratio of demands sustained in appellate forums, or judicial appreciation of reasoning.

Ensure ACRs (Annual Confidential Reports) recognize officers who act responsibly, even if it means dropping flawed demands.

3. Independent Internal Legal Vetting Cell

Before a demand is raised or pursued, route it through a legal vetting unit within the department comprising senior officers and legal experts. This acts as both a check on frivolous demands and a protection mechanism for junior officers.

4. Training and Capacity Building

Regular capacity-building programs in tax jurisprudence and judicial reasoning to help officers understand evolving legal thresholds. Collaborate with judicial academies or NLU professors to create GST-focused legal modules.

5. Judicial Feedback Loop with the Department

Set up a mechanism to aggregate and communicate court observations (especially cost orders) back to the CBIC for internal policy changes.

Courts may also recommend systemic changes in judgments rather than penalizing individual officers unless there’s mala fide conduct.

6. Whistleblower-type Protection for Ethical Conduct

Officers who refuse to pursue unsustainable demands under pressure from seniors should have access to confidential grievance redressal or internal review.

7. CBIC Standing Orders on Cost Imposition Cases

CBIC should issue standing orders or circulars analyzing past cases where courts imposed costs, instructing officers on what to avoid — and assuring that those who drop cases based on merit won’t face consequences.