Case Law Details
Parvinder Singh Vs State of Bihar (Patna High Court)
The case of Parvinder Singh vs. State of Bihar at the Patna High Court addresses the issue of a show-cause notice issued under Section 74 of the GST Act, despite the petitioner having already filed their tax return. The petitioner, Parvinder Singh, a contractor, had been regularly filing his GST returns. The dispute arose when the GST authorities alleged that he had not disclosed supplies made to the Local Area Engineering Organisation, Katihar, during a specific period. Based on this, a show-cause notice in Form DRC-01 was issued under Section 74 of the Central Goods and Services Tax/Bihar Goods and Services Tax Act, 2017.
The petitioner argued that he had, in fact, filed the GST return for the period in question on December 7, 2020. However, the show-cause notice was issued on December 10, 2020, just three days later. The petitioner claimed the notice was uploaded to the GST portal under “Additional Notices” and not served via email or SMS, which is why he was unaware of it and failed to respond. He further contended that the authorities could have easily verified his return filing status on the common portal.
Conversely, the state defended the GST department’s actions. The state’s counsel acknowledged that the petitioner had filed the return, but argued that he had failed to inform the adjudicating authority of this filing via Form DRC-01B, as required. The state’s counter-affidavit stated that had the petitioner intimated the department of the return filing, no further proceedings under Section 73 and 74 would have been initiated. The department also noted that the petitioner had not paid the interest due on a delayed tax payment.
The Patna High Court found the state’s argument and the ensuing proceedings to be flawed. The court noted that it was an “admitted position” that the petitioner had filed the return on December 7, 2020, as evidenced by an annexure provided. The court concluded that the entire proceeding, including the show-cause notice and the subsequent assessment and appellate orders, was a result of the petitioner’s non-communication of the return filing to the authorities. Based on the state’s own admission, the court determined that the proceedings should not have been initiated in the first place. Consequently, the Patna High Court set aside both the assessment order and the appellate order, along with the demand raised in DRC-07. The court did not find any judicial precedent to be directly applicable to this specific set of facts. This ruling highlights the importance of timely communication and verification within the GST system and emphasizes that proceedings should not be initiated when a return has already been filed, even if procedural steps for intimation have been missed.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
Heard learned counsel for the petitioner and learned SC-11 for the State.
2. The petitioner in this case is praying for the following reliefs:-
“A) For setting aside the assessment order dated 15.01.2021 passed by the adjudicating authority and the appellate order dated 25.03.2025 passed by respondent number 3.
B) For setting aside the demand as DRC-07 dated 15.01.2021.
C) Issue a writ of Mandamus directing the Respondents to refrain from taking any coercive action against the Petitioner concerning the impugned tax liability;
D) Pass any such other and further orders as may be deemed just and proper in the facts and circumstances of the case.”
3. Learned counsel for the petitioner submits that the petitioner is doing contractual work and has been filing regularly his GST returns. On comparison of GSTR-1/GSTR-3B/GSTR-2A available on GST portal by the competent authority, it was found that the petitioner had made supplies of Rs.10,25,422/- in Local Area Engineering Organisation, Works Division-1, Katihar in the month under review and as per return GSTR-7 filed by the supplier, CGST of Rs.10,254.00/-, SGST of Rs.10,254.00/- had been deducted as tax at source on the transaction but the supplies made by the appellant were not disclosed in the month under review. The competent authority alleged that it was deliberately not disclosed. In the order of the adjudicating authority, it was mentioned that DRC-01 was sent to the appellant through e-mail under Section 74 of the Central Goods and Services Tax/Bihar Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘CGST/BGST Act, 2017’) but in compliance with the notice, neither any action was taken by the petitioner nor the amount payable was paid. Therefore, the competent authority has imposed tax, penalty and interest under Section 74(9) of the CGST/BGST Act, 2017 read with Rule 142(5) of the Rules. Accordingly, DRC-07 was issued and demand has been raised by the respondent as per the assessment order dated 15.01.2021.
4. Learned counsel submits that on perusal of Annexure ‘P/4 Series’, it would appear that for the month of March during the financial year 2019-20, the petitioner filed his return and paid the taxes vide ARN dated 07.12.2020.
5. Attention of this Court has been drawn towards Form GSTR-3B with reference to Rule 61(5) of the BGST Rules, 2017. It is submitted that even though the return had been filed by the petitioner on 07.12.2020, the respondent authority issued a show cause notice under Section 74 of the BGST Act, 2017 on 10.12.2020 taking as if the petitioner had not submitted its return and paid the taxes. The petitioner was given time to file a response. It is submitted that this notice was uploaded under the heading ‘Additional Notices’ on the portal and the same was not served upon the petitioner through any other mode either on e-mail or through SMS as a result whereof no response to this show cause notice was submitted by the petitioner. It is, however, submitted that the respondent authority could have easily found from the common portal that the petitioner had already submitted its return and paid the taxes due thereon. This was not done by the respondent authority.
6. It is submitted that the Assistant Commissioner, GST took a view that the petitioner had not paid taxes on the taxable supply of goods/services to Local Area Engineering Organisation, Works Division, Katihar which is an erroneous assumption of facts on the part of the Assistant Commissioner. It is submitted that the petitioner’s business was closed on 30.09.2021 vide order passed by Respondent No. 2 and the respondent has certified that there is no tax dues on the petitioner on 30.09.2021. In this connection, Annexure ‘P/5’ has been brought on record with the rejoinder filed on behalf of the petitioner.
7. Mr. Vikash Kumar, learned SC-11 representing the State has, however, defended the action of the Assistant Commissioner, BGST. It is submitted that though the petitioner filed the return for March, 2020 on 07.12.2020 in response to the intimation in DRC-01A, it failed to intimate the same to the respondent adjudicating authority in the prescribed Form DRC-01B.
8. Learned SC-11 submits that the petitioner did not pay any interest on delayed tax payment of admitted tax. As such, notice in Form GST DRC-01 dated 10.12.2020 was served on the petitioner asking it to show cause as to why tax, interest and penalty should not be imposed on it as the petitioner had concealed its turnover and tax liability.
9. Attention of this Court has been drawn towards the statements made in paragraph ‘22’ of the counter affidavit in which these facts have been reiterated. It is, however, admitted in paragraph ‘22’ that had the petitioner intimated the respondent authority through Form DRC-01B that it had filed the return on 07.12.2020, no further proceeding would have been initiated against it under Sections 73 and 74 of the CGST/BGST Act, 2017.
10. This Court finds that this writ application is required to be disposed of by setting aside the impugned orders keeping in view the specific statements made in paragraph ‘22’ of the counter affidavit. The admitted position is that the petitioner had filed the return on 07.12.2020 (Annexure ‘P/4’).
11. In such circumstance as per the averments of the respondent in paragraph ‘22’ of the counter affidavit, the proceeding initiated against the petitioner under Sections 73 and 74 of the CGST/BGST Act, 2017 is only a result of non-communication of the filing of return by the petitioner to the respondent authority.
12. The impugned orders are set aside.
13. This writ application is allowed.
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