This article is based on judgement of the Patna High Court wherein the Hon’ble court imposed cost of Rs.10000 on the officer who issued illegal recovery without following the procedure of law and order to pay the interest to the petitioner from the date of recovery till date of refund. I hope the readers will be benefitted after reading this article to be published in your august site.
ILLEGAL RECOVERY MAY PROVE COSTLY TO THE OFFICER
In the case of M/S GREAT EASTERN HIRE PURCHASE PRIVATE LIMITED (Civil Writ Jurisdiction Case No.18049 of 2024) the Hon’ble Court passed order to recover cost from the Officer against illegal recovery made from the petitioner and directed to pay the interest from the date of recovery till date of refund.
Facts of Case
The matter in the case of M/S GREAT EASTERN HIRE PURCHASE PRIVATE LIMITED (Civil Writ Jurisdiction Case No.18049 of 2024 was that the Company could not furnish the GSTR-3B return for the month of July, 2019 up to 20.08.2019 i.e. due date. The Officer issued a notice in Form GSTR-3A under section 46 read with rule 68 requested the Company to file the return. It was further informed in the notice that it will be assessed according to the section 62 if the Company fails in filing the return.
On 12.09.2019, the Officer passed an order and issued the summary of demand order in the Form DRC-07 which was demanding tax and interest i.e. more than 1.13 crore. The Company furnished the GSTR-3B returns on 19.09.2019 i.e. within statutory period of 30 days (w.e.f. 01-10-2023 30 days read as 60 days) of the date of order i.e. 12.09.2019.
According to sub-section (2) of section 62 CGST Act the order passed on 12.09.2019 was deemed to have been withdrawn because the Company had furnished the return within 30 days of the service of the assessment order. Extract of the provisions of section 62(2) are provided as under:
(2) Where the registered person furnishes a valid return within sixty days (till 30.09.2023 60 days read as 30 days) of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.
ILLEGAL RECOVERY
After about four years the Officer issued recovery notice on 24.08.2023 against order passed on 12.09.2019 without considering the facts that the company had already furnished valid return within statutory period which (return) is available in the record. The Officer recovered of the amount from the credit ledger and account of the Company without verifying the record that no demand was payable by the Company.
The submission made by the Company before the Officer about the unlawful recovery was not succeeded.
APPEAL FILED
When the matter was not resolved before the Officer, the Company approached the Appellate Authority on 30.01.2024 by filing APL-01. The appeal was rejected on the ground of limitation. The Appellate Authority disregarded the judgement of M/S SIS Cash Services Limited wherein the Court has held that an appeal against an order may be filed on or before 31.01.2024.
WRIT FILED
Thus, the matter came before the Hon’ble Court against the unlawful recovery and rejection of the appeal by disobedience and disregard to the judgement of the court.
After considering all facts of the case, the Hon’ble court observed that
It is evident from the facts appearing on the records that the Respondent No. 5(Officer) has acted in complete violation of the established procedure of law. The said authority has misused her power and thereby passed an illegal order for recovery of the amount. The concerned authority did not think it just and proper to even issue a notice to the petitioner prior to passing an order of recovery which she was passing after about five years from the date of demand.
The show cause notice was issued to the State Officer as to why this Court should not award interest and cost which would be recovered from her.
ORDER PASSED
The order was passed by the Hon’ble Court that
the State respondents to pay simple interest at the rate of 9% per annum from the date of recovery of the amount till the date of refund to the petitioner and
the recovery was made illegally and that has resulted in litigation, we direct the respondents to pay cost of Rs.10,000/- (Rupees Ten Thousand Only) to the petitioner.
It is also observed that it is always open to the State Government to recover the interest and cost from the erring officials, if so desire.
Conclusion
The violation in following the procedure of law is punishable.
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Disclaimer: In this article, I have expressed my opinion without challenging anyone or refuting anything. The readers can accept or reject my opinion at their own discussion.
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