LI Network
Published on: January 24, 2024 at 11:00 IST
In a recent judicial decision, the Patna High Court imposed a fine of Rs. 5,000 on a Goods and Services Tax (GST) officer for the forcible and illegal recovery of the entire tax amount from an individual awaiting the statutory appeal remedy before the non-functional GST tribunal in Bihar.
The Court, led by Chief Justice K Vinod Chandran and Justice Rajiv Roy, directed the department to refund the entire collected tax within a two-week period. This ruling brings relief to the Patna regional office of the National Insurance Company.
The Court noted, “In the present case, we direct the entire amounts recovered as of 07.01.2023, be refunded to the assessee within two weeks from today. If the amounts are not satisfied within two weeks, interest shall accrue at the rate of 12 per cent per annum. If the liability is eventually set aside, the petitioner shall be entitled to claim interest from the department for the period the amounts were peremptorily recovered.”
The Court also imposed a cost of Rs. 5,000 on the officer responsible for the demand and appropriation, emphasizing the need for fair and lawful proceedings.
Responding to the writ application filed by the insurance company, the court directed the state commercial taxes department to refund the forcefully recovered tax amount within the specified two-week timeframe.
Due to the non-operational status of the GST tribunal in Bihar, the high court allowed individuals seeking recourse to make a bona fide payment of 20% of the total assessed amount, pending the tribunal’s resumption.
Gautam Kejariwal, the petitioner’s counsel, informed the court that the assistant commissioner of the Patliputra circle of the commercial taxes department had issued an assessment order of Rs. 52 crore on February 17, 2022. Despite a first appeal against the excessive assessment being dismissed, the petitioner company deposited 20% of the assessed amount, as required by GST law, in anticipation of filing an appeal once the tribunal becomes operational.
The Court’s judgment provided relief to the National Insurance Company’s Patna regional office, instructing the state commercial taxes department to reimburse the entire forcibly collected tax amount within two weeks.
However, despite the department initially acknowledging the statutory deposit, a fresh demand notice was issued in January of the following year, seeking recovery of the remaining assessed amount.
In response to the petitioner’s writ application challenging this demand notice, the department allegedly retaliated by forcibly 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.
Case Title: National Insurance Co. Ltd vs The State of Bihar and Ors