Court Directed the State Commercial Taxes Department to Refund the Forcibly Collected Tax Within a Two-week Period
Patna High Court Order: In a landmark ruling on January 15, 2024, the Patna High Court slapped a Rs 5,000 fine on a Goods and Services Tax (GST) officer for employing coercive and unlawful methods to recover taxes from an assessee. The case in question, involving National Insurance Co Ltd (Case No. 777/2023), highlighted the court’s displeasure with the officer’s actions, compelling the department to refund the entire collected tax within a strict two-week timeframe.
The backdrop to this legal battle stems from the non-functional status of the GST tribunal in Bihar, prompting the high court to grant individuals seeking redress the authority to make a genuine payment of 20% of the total assessed amount. This temporary measure remains in effect until the tribunal resumes operations.
The petitioner, represented by their counsel, 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 a staggering Rs 52 crore. Despite initiating a first appeal, which was dismissed on September 21, 2022, the petitioner complied with the GST law by depositing 20% of the assessed amount, anticipating an appeal once the tribunal becomes operational.
The division bench, headed by Chief Justice K Vinod Chandran and Justice Rajiv Roy, delivered a judgment favouring the Patna regional office of the National Insurance Company, directing the state commercial taxes department to refund the forcibly collected tax amount within a specific two-week period.
However, despite the department acknowledging the statutory deposit initially, a fresh demand notice was issued in January of the subsequent year, seeking recovery of the entire remaining assessed amount. In response to the petitioner’s writ application challenging this notice, the department allegedly resorted to forceful recovery measures, reclaiming approximately Rs 42 crore.
The court’s intervention, accompanied by the imposed penalty on the GST officer, serves to rectify what it deems an unjust and coercive action. This ruling underscore the importance of fair and lawful tax recovery practices and sets a precedent for similar cases in the future.
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