Great Eastern Hire Purchase Pvt. Ltd. Vs State of Bihar (Patna High Court)
Patna HC issues SCN to proper officer for recovery of interest and cost from officer and awarding it to petitioner
Patna High Court has set aside a tax recovery order against Great Eastern Hire Purchase Pvt. Ltd., ruling that the underlying tax assessment was deemed withdrawn under Section 62(2) of the Bihar/Central Goods and Services Tax (BGST/CGST) Act, 2017. The court also issued show cause notices to two tax officials, questioning the unlawful recovery and the dismissal of the petitioner’s appeal on limitation grounds despite a relevant court judgment.
The case, heard by Mr. Bijay Kumar Gupta for the petitioner and Mr. Vivek Prasad for the State, centered on a demand and subsequent recovery of over Rs. 1.12 crore in GST from Great Eastern Hire Purchase Pvt. Ltd.
According to the petitioner, the issue began when the company failed to file its GSTR-3B return for July 2019 by the due date. This led to the issuance of a notice under Section 46 read with Rule 68 on August 21, 2019, followed by a summary of demand in Form DRC-07 dated September 12, 2019, totalling Rs. 1,13,84,183.12 (including BGST and CGST).
The petitioner contended that while a demand was raised, the formal assessment order in Form GST ASMT-13 was never served upon them. Crucially, the company filed its GSTR-3B return and paid the due tax on September 19, 2019, which was within 30 days of the summary demand order date.
The core of the petitioner’s argument rested on Section 62(2) of the BGST/CGST Act. This provision stipulates that if a registered person furnishes a valid return within 30 days of the service of the assessment order under Section 62(1), the said assessment order shall be deemed to have been withdrawn. The petitioner argued that by filing the return on September 19, 2019, the assessment order, even if assumed to have been issued, was automatically withdrawn by operation of law.
Despite this, on August 24, 2023, the Assistant Commissioner of State Tax (Respondent No. 5) proceeded to recover the demanded amount by debiting the petitioner’s credit and cash ledgers. The petitioner argued that this recovery was unlawful and demonstrated a lack of application of mind by the authority, who failed to verify if the return had been filed.
Facing financial difficulties due to the recovery, the petitioner filed an appeal before the Additional Commissioner of State Tax (Appeals) (Respondent No. 6) on January 30, 2024. However, the appeal was dismissed on July 11, 2024, solely on the ground of limitation.
The petitioner highlighted that the Appellate Authority’s decision disregarded the Patna High Court’s own judgment in the case of SIS Cash Services Private Limited vs. Union of India (CWJC No. 6514 of 2021), delivered on January 24, 2024. In SIS Cash Services, the court had held that appeals against orders under Sections 73 or 74 could be filed on or before January 31, 2024, and that this principle would also apply to orders passed under Section 62. The court in SIS Cash Services stated that a pending appeal could be considered properly filed even with a delay, as Section 62 also provides a mode of assessment.
The petitioner further relied on the principle laid down in K. Pathak vs. Ravi Shankar Prasad & Ors. (2019 (1) PLJR 1051), a learned Single Judge decision of the Patna High Court, which was upheld by the Supreme Court. This judgment held that if the State is burdened with costs due to an officer’s misuse of executive power causing harassment, such costs should be recovered from the erring officer. The petitioner contended that the actions of the tax authorities in this case warranted the application of this principle.
During the High Court proceedings, the state counsel initially asserted that the assessment order had been served via email. However, the court, after reviewing the records, found that the statement in the counter affidavit regarding the enclosure of the served ASMT-13 order was unsubstantiated. The court’s order dated May 1, 2025, noted that paragraph 12 of the counter affidavit appeared to be a “cut, copy and paste” without the necessary annexures. While emails from August and September 2019 were on record, the attachment to the September 12, 2019 email, claimed to be the assessment order, was not definitively identified by the state counsel.
Crucially, the state counsel, Mr. Vivek Prasad, did not contest the petitioner’s submission that the GSTR-3B return and payment were made on September 19, 2019, within the one-month period from the summary demand order date. He conceded that by virtue of Section 62(2), the assessment order should be deemed to have been withdrawn. His only point was that the petitioner had not informed the authorities about the filing.
The High Court, upon considering the submissions and records, found that “grave injustice” had been caused to the petitioner by the “completely unlawful recovery.” The court reiterated that with the filing of the return within the statutory period, the assessment order stood withdrawn by a legal fiction under Section 62(2), rendering the subsequent recovery baseless.
The court also expressed disturbance at the Appellate Authority’s dismissal of the appeal on limitation grounds, especially as it occurred after the SIS Cash Services judgment. The court remarked that the Appellate Authority’s act was “prima-facie contemptuous.”
Consequently, the Patna High Court set aside both the recovery order dated August 24, 2023 (Annexure P-4) and the Appellate Authority’s order dated July 11, 2024 (Annexure P-5A). The court issued show cause notices to the Assistant Commissioner of State Tax, Gandhi Maidan Circle, Patna (Respondent No. 5), asking why interest and costs, recoverable from her, should not be awarded for the unlawful recovery. A separate show cause notice was issued to the Additional Commissioner of State Tax (Appeals), Patna West Division, Patna (Respondent No. 6), to explain why contempt proceedings should not be initiated for willful disobedience of the SIS Cash Services judgment.
The court has listed the case for further hearing on June 17, 2025, for the responses from the concerned officials.
Judicial Precedents:
