Non-Functional GSTAT, Patna HC Fines GST Officer INR 5K for Illegal Recovery

In a recent judgment, the Patna High Court fined a Goods and Services Tax (GST) officer Rs 5,000 for engaging in what the court considered as coercive and unlawful attempts to recover the entire tax amount from an individual who was awaiting the statutory right to appeal before the non-functional Goods and Services Tax tribunal in Bihar. The court ordered the department to refund the entire collected tax within a two-week period.

Given the non-operational status of the GST tribunal in Bihar, the high court granted individuals seeking redress the authority to make a genuine payment of 20% of the total assessed amount, pending the resumption of the tribunal’s operations.

The counsel for the petitioner informed the court that on February 17, 2022, the assistant commissioner of the commercial taxes department in the Patliputra circle issued an assessment order amounting to Rs 52 crore.

Despite initiating a first appeal against the inflated assessment, the appeal was dismissed on September 21, 2022. Due to the unavailability of the GST appellate tribunal, the petitioner company complied with the GST law and deposited 20% of the assessed amount, anticipating an appeal once the tribunal becomes operational in Bihar.

The division bench, headed by Chief Justice K Vinod Chandran and Justice Rajiv Roy, rendered a judgment providing relief to the Patna regional office of the National Insurance Company, which had filed a writ application. The court directed the state commercial taxes department to refund the entire forcibly collected tax amount within a specified two-week period.

Read Also:- Patna HC Gives Relief to Assessee for Facing Delay Appeals U/S 73 and 74 of BGST Act

However, despite the department initially acknowledging the statutory deposit, a fresh demand notice was issued in January of the subsequent year, seeking the recovery of the entire remaining assessed amount.

In response to the petitioner’s writ application challenging this latest demand notice, the department allegedly responded by forcefully recovering the outstanding amount of approximately Rs 42 crore, using coercive measures.

The court’s intervention, along with the imposed penalty, aims to rectify what it perceives as an unjust and coercive action by the GST officer.