Bhawya Enterprises Vs Assistant Commissioner State Taxes & Excise (GST/Allied Taxes) & another (Himachal Pradesh High court)
Violation of Section 78 of CGST Act – High Court Directs Immediate Refund of Illegally Recovered GST with Interest, Upholds Right to Appeal
In a significant ruling, Bhawya Enterprises vs. Assistant Commissioner [CWP-11694-2025], the Division Bench of the Hon’ble Himachal Pradesh High Court, comprising Justice Vivek Singh Thakur and Justice Sushil Kukreja, has directed the Assistant Commissioner, State Taxes & Excise, Sataun, to refund or reverse Goods and Services Tax (GST) amounts illegally recovered from petitioners, along with applicable interest. The order, issued on July 24, 2025, underscores the importance of adhering to legal provisions regarding recovery procedures and safeguarding the taxpayer’s right to appeal.
The case involved three petitions, all aggrieved by the premature recovery of demanded GST from their Electronic Credit Ledgers (in the form of ITC). The recovery was made in violation of Section 78, before the expiry of the three-month period allowed for filing an appeal under Section 107, against a demand raised under Section 74 of the CGST Act.
Background of the Case:
The petitioners contended that an adjudication order dated May 1, 2025, was passed by the Assistant Commissioner (CGST), confirming a GST demand and imposing a penalty. According to Section 107 of the CGST Act, they had a three-month window to either deposit the demanded amount or file an appeal. However, the recoveries were effected by Assistant Commissioner (SGST) within just five days of the order, and critically, without recording any reasons for such an expedited recovery in terms of proviso to Section 78.
