Patna HC Penalizes GST Officer Rs 5K for Illegal Recovery

Introduction

The Patna High Court has imposed a penalty of Rs 5,000 on a Goods and Services Tax (GST) officer for engaging in "forcible and illegal recovery" of the entire tax amount from an individual awaiting the statutory remedy of appeal before the non-functional GST tribunal in Bihar. The court, presided over by Chief Justice K Vinod Chandran and Justice Rajiv Roy, issued the order on Thursday while granting relief to the National Insurance Company's Patna regional office. The court further directed the state commercial taxes department to refund the unlawfully recovered tax amount within a fortnight.

Background

In the absence of a functional GST tribunal in Bihar, the Patna High Court has previously granted aggrieved assessees the liberty to pay 20% of the total assessed amount as a goodwill gesture, to be utilized when the GST tribunal becomes operational.

Chronology of Events

1. Assessment Order: On February 17, 2022, the Assistant Commissioner of the Patliputra circle of the commercial taxes department passed an assessment order amounting to Rs 52 crore.
2. Appeal and Dismissal: A first appeal against the excessive assessment was filed, but it was dismissed on September 21, 2022.
3. Statutory Deposit: In anticipation of the functioning GST tribunal, the petitioner company deposited 20% of the assessed amount, following the provision of the GST law.
4. Unjust Demand Notice: Despite the statutory deposit, a new demand notice was issued in January last year, seeking recovery of the entire balance of the assessed amount.
5. Illegal Recovery: In response to the writ application against the fresh demand notice, the department, in retaliation, forcefully recovered the entire balance amount of about Rs 42 crore, using coercive measures.

Court's Decision

The division bench, considering the facts presented, found the GST officer's actions to be "forcible and illegal recovery" and imposed a fine of Rs 5,000. Additionally, the court directed the state commercial taxes department to refund the wrongfully recovered tax amount within two weeks.

Legal Implications

This case highlights the challenges faced by assessees in the absence of a functional GST tribunal and emphasizes the need for fair and lawful procedures in tax recovery. The court's decision sets a precedent for curbing coercive measures by tax officials and underscores the importance of statutory remedies in the absence of a functional appellate forum.

Conclusion

The Patna High Court's order serves as a deterrent against unauthorized tax recoveries and reinforces the principle of fair and lawful proceedings. The case also underscores the urgency of establishing a functional GST tribunal in Bihar to ensure timely and just resolution of appeals.