GST Officer Tenders Unconditional Apology to HC for Hasty & Illegal Recovery

It is not uncommon to see tax officials, particularly GST officers, stepping beyond the boundaries of the law (Act). Often, such actions force taxpayers to approach the Hon’ble High Courts by filing writ petitions, seeking relief from arbitrary and high-handed departmental actions. Not only do taxpayers end up spending their time, energy, and money on litigation, but it also burdens the already overworked judiciary, diverting precious judicial time that could be used for more significant matters. In this context, a recent judgment from the Patna High Court has sent a strong signal to overzealous tax officers.

Background of the case:

In the case of Kaushlendra Kumar v. State of Bihar & Ors. (CWJC No. 17860 of 2024), the taxpayer, a works contractor for the Government of Bihar, had filed his GSTR-3B return for March 2020 belatedly. The tax officer has confirmed the demand of Rs. 55 lakhs denying ITC on the ground of limitation of time prescribed under Section 16(4) and the same demand was also confirmed in the first appeal. However, the taxpayer was contemplating further legal remedies i.e. preparing to file appeal before the next forum which is GST Appellate Tribunal (GSTAT). In the meanwhile, department hastily recovered the demand amount from the client of the taxpayer i.e. Bihar State Building Construction Corporation, even before expiry of appeal period and also without even issuing a notice to the taxpayer. This recovery was made in complete disregard of Section 78 of the CGST Act, which mandates a waiting period of three months for recovery.