Sita Pandey vs State of Bihar

A cost of Rs. 5,000 was levied by the Hounorable Patna High Court on the Officer who recovered the entire amount (as per the Assessment Order) very next day of rejection of Appeal. 14-Dec-2022: Assessment Order was passed with liability of Rs. 73,66,644 as follows: Tax CGST: Rs. 18,91,609 Tax SGST: Rs. 18,91,609 Interest CGST: Rs. 16,02,552 Interest SGST: Rs. 16,02,552 Penalty CGST: Rs. 1,89,161 Penalty SGST: Rs. 1,89,161 Total: 73,66,644 The Petitioner filed appeal before Appellate Authority (S.107) after payment of Rs 1,89,161 X 2 (10%) 27-Mar-2023: Appeal was rejected 28-Mar-2023: Assessing Officer issued notice to the Branch Managers of the four banks in which the assessee maintained accounts A total amount of Rs. 69,88,322 was sought to be recovered, which included the equal liabilities under the CGST and SGST enactments. Total Liability: Rs. 73,66,644 Less: 10% deposit: Rs. 3,78,322 Net recovered: Rs. 69,88,322 The recovery was challenged in the High Court HELD: What was required to be paid by the assessee, for maintaining an appeal before the Appellate Tribunal, if constituted, was Rs. 7,56,644.00 being the twenty per cent of the tax dues under the BGST and CGST Act. Hence, the balance amounts from the total sums forfeited of Rs. 69,88,322.00 recovered shall be paid over to the assessee within a period of two weeks from today, failing which interest shall run at the rate of 12% per annum. The officer who issued Annexure-3 order, who acted in complete derogation of the statutory provisions and established principles of law, should pay an amount of Rs. 5,000/- as cost to the assessee; a receipt of which shall be filed within two weeks in the instant writ petition. State and its revenues would not collapse if the said amounts were not recovered but there is every chance of a business folding up without liquid funds being available to it, especially a running concern with liabilities to its employees, its other creditors & so on and so forth 

1. “There is a tendency for valiant tax executives clothed with judicial powers to remember their former capacity at the expense of the latter. In a welfare state and in appreciation of the nature of the judicial process, such an attitude, motivated by various reasons, cannot be commended. The penalty for deviance from these norms is the peril to the order passed. The effect of mala fides on exercise of administrative power is well-established.”

[R.S. Joshi, Sales Tax Officer, Gujarat and Others v. Ajit Mills Limited and Another;(1977) 4 SCC 98]

2. This is a classic case of a valorous overreach by a tax executive; recovering the assessed tax due, just after a day of dismissal of the appeal; when there was a further appeal provided and the Tribunal before which such an appeal is to be filed was not constituted.

3. On facts, suffice it to notice that the assessee carries on the business of manpower supply including security and cleaning services to different establishments; in which is included Government Polytechnic Institutions. The issue arose as to whether the services provided to Government Polytechnic Institutes would fall under the exemption stipulated in Entry No. 66(b)(iii) of Notification No. 12/2017 dated 28.06.2017 clarifying it to be services provided by or to Educational Institutions up to Higher Secondary School or equivalent. Reliance was also placed on the memo issued by the Department of Education, Government of Bihar which considered Polytechnics to be equivalent to Intermediate i.e. Senior Secondary.

4. We would not dwell upon the legal issue raised as to exemption since the assessee has an appellate remedy which has not been exhausted and the forum where such appeal is to be instituted has not yet been constituted. We are only concerned with the recovery made, peremptorily and surreptitiously from the bank accounts of the assessee, on the very next day of the rejection of the appeal.

5. Learned counsel for the petitioner Shri Saket Tiwary asserts that the recovery was done in a most arbitrary manner, especially when there was no Appellate Tribunal constituted and there were notifications issued, both by the Central Government and the State Government providing for and extending the period of limitation to commence only from the date of constitution of such Tribunals. It is also pointed out that this Court in such matters have been consistently directing payment of 20 per cent, as provided for in Section 112(8) of the Bihar Goods and Services Tax Act, 2017 (hereinafter referred to as “BGST Act”) and staying recovery till the Tribunal is constituted and the limitation of three months from that date is crossed. In the present case, ignoring the statutory provisions and the notifications issued, the recovery was made arbitrarily and without any notice. Thus, frustrating the appellate remedy of the petitioner assesee and putting the very business of the assessee into jeopardy. The petitioner prays for refund of the amounts recovered and stay of the assessment order confirmed in appeal till the Appellate Tribunal is constituted under Section 109 of the BGST Act. The learned counsel Shri Saket Tiwary also prays for interest on the amounts recovered and exceptional costs for the prejudice caused to the business of the petitioner, by the high-handed act of the tax authority.

6. Learned Government Advocate Shri Vivek Prasad, on the other hand, relies on Section 78 of the BGST Act and its proviso which enables recovery even within the period of three months, if the proper officer considers it expedient in the interest of Revenue. In the present case, there are reasons recorded in writing by the Recovery Officer and hence, the recovery has been made well within the contours of the statute. The decision with respect to stay of recovery on payment of 20 per cent of the tax liability came later to the recovery in the present case. There are absolutely no mala fides in the recovery effected and the same was done only considering the expediency which arose because of the close of the financial year. The learned Government Advocate would seek for dismissal of the writ petition.

7. The assessee was issued with an assessment order dated 14.12.2022 produced as Annexure-2. The tax dues under the BGST and CGST Act were Rs. 18,91,609.00 each. There was also a further liability of interest of Rs. 16,02,552.00 each and a penalty of Rs. 1,89,161.00 each under the two enactments. The total liability came to Rs. 73,66,644.00 which was directed to be paid on or before 14.03.2023 as per Annexure-2. The assessee filed an appeal which did not find favour with the Appellate Authority, who rejected it on 27.03.2023, as is evident from Annexure-1. Immediately on the next day, the Assessing Officer issued Annexure-3 notice to the Branch Managers of the four banks in which the assessee maintained accounts. A total amount of Rs. 69,88,322.00 was sought to be recovered which included the equal liabilities under the CGST and SGST enactments. The 10 per cent deposited under each of the enactments being Rs. 1,89,161.00 at the appellate stage was deducted when the recovery notice was issued. The recovery notice at Annexure-3 is dated 28.03.2023 and the entire amounts have been recovered which resulted in the present challenge before this Court.

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