Patna High Court
Ascend Telecom Infrastructure Pvt. Ltd vs The State Of Bihar on 25 January, 2024
Bench: Chief Justice, Rajiv Roy
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.10373 of 2023
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Ascend Telecom Infrastructure Pvt. Ltd. 202, 2nd floor, Kousaiya Apartment,
Fraser Road, Patna, Bihar - 800001 through its authorised representative
namely Sanjay Kumar male, aged about 54 years son of Shri Shiv Chandra
Mishra resident of Flat No. 203, Majestic Heritage, Near Alpna Market, New
Patliputra Colony, Patliputra, Patna, Bihar-800013.
... ... Petitioner/s
Versus
1. The State of Bihar through the Principal Secretary cum Commissioner,
Department of State Taxes, Government of Bihar, Patna.
2. Joint Commissioner of State Tax, Patna West Circle, Patna, Bihar.
3. Assistant Commissioner of State Tax, Patna West Circle, Patna, Bihar.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Alok Kumar Jha, Advocate
Mr. Saket Tiwary, Advocate
For the Respondent/s : Mr. Vikash Kumar (Sc11)
======================================================
CORAM: HONOURABLE THE CHIEF JUSTICE
and
HONOURABLE MR. JUSTICE RAJIV ROY
ORAL JUDGMENT
(Per: HONOURABLE THE CHIEF JUSTICE)
Date : 25-01-2024
We had in two instances found excessive action
on the part of Departmental Officers in expediting recovery of
tax assessed, frustrating the remedy of appeal before the
Goods and Sales Tax Appellate Tribunal, as constituted under
the BGST Act, which in effect has not been constituted till
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date.
2. We had dealt with the matter in C.W.J.C. No.
5407 of 2021 titled as Sita Pandey v. The State of Bihar and
Others, from which we extract paragraphs 11 to 15:-
11. As far as the statutory provision not
requiring a notice to the assessee, we need only refer to
the Constitution Bench decision of the Hon'ble
Supreme Court in Mohinder Singh Gill and another v.
The Chief Election Commissioner, New Delhi and
others; AIR 1978 Supreme Court 851 from which we
extract hereunder Paragraphs 75 and 76:-
"75. Fair hearing is thus a
postulate of decision-making cancelling a
poll, although fair abridgement of that
process is permissible. It can be fair
without the rules of evidence or forms of
trial. It cannot be fair if apprising the
affected and appraising the
representations is absent. The philosophy
behind natural justice is, in one sense,
participatory justice in the process of
democratic rule of law.
76. We have been told that
wherever the Parliament has intended a
hearing it has said so in the Act and the
rules and inferentially where it has not
specificated it is otiose. There is no such
sequatur. The silence of a statute has no
exclusionary effect except where it flows
from necessary implication. Article 324
vests a wide power and where some direct
consequence on candidates emanates from
its exercise we must read this functional
obligation."
[underlining by us for emphasis]
12. The aforesaid declaration of law made with
Patna High Court CWJC No.10373 of 2023 dt.25-01-2024
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respect to a decision cancelling a poll, applies across
the board to every judicial and quasi-judicial order and
action taken. The principles of natural justice stand
embedded in every coercive action taken by a statutory
authority, even within the four corners of the law; when
it could, in the normal circumstances cause prejudice to
the person against whom such proceedings are levelled.
The recording of reasons as coming forth in the
provision to Section 78 are not to be recorded
surreptitiously and kept in the files, but to be informed
to the assessee and a time specified within three months
for the payment to be made. In fact, on a reading of the
proviso we are of the definite opinion that there is a
requirement of notice, if not prior to the recording of
reasons; at least intimation of the reasons which
motivates the proper officer to recover the amounts
due, considering such recovery to be expedient in the
interest of revenue with clear specification of the
period; less than a period of three months, within which
the amounts are to be paid.
13. Section 78 provides that a person against
whom an order is passed shall satisfy the amounts
payable within a period of three months and the proviso
empowers the Assessing Officer to seek satisfaction of
such dues even during a period lesser than three
months. The provision is worded so:-
"78. Initiation of recovery
proceedings.- Any amount payable by a
taxable person in pursuance of an order
passed under this Act shall be paid by
such person within a period of three
months from the date of service of such
order failing which recovery proceedings
shall be initiated:
Provided that where the proper
officer considers it expedient in the
interest of revenue, he may, for reasons to
be recorded in writing, require the said
taxable person to make such payment
within such period less than a period of
three months as may be specified by him."
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[underlining by us for emphasis]
Hence, when reasons are recorded in writing, there is a
duty on the Assessing Officer to specify the time within
which the amounts are to be paid which intimation has
to go to the assessee.
14. In this context, we also have to notice that
the Appellate Tribunal under Section 109 of the CGST
Act has not yet been constituted. We would not rely at
all on the equitable directions issued by this Court in
various petitions staying recovery on payment of
twenty per cent of the balance tax due as provided
under Section 112(8). However, it is very evident that
even the Central Government and the State
Government was conscious of the fact of the Tribunal
having not yet been constituted. Two notifications, one
of the Central Government and the other of the State
Government, are produced as Annexure 8 and 9 along
with the writ petition. Both these notifications invoke
the power conferred respectively under Section 172 of
the CGST and BGST Act. For removal of difficulties,
presumably for reason of the non-constitution of the
Tribunal, the three months limitation period stipulated
under sub-section (1) of Section 112 of both the
enactments are extended to the latter of the following
dates; (i) of communication of order or (ii) the date on
which the President or the State President, as the case
may be, of the Appellate Tribunal after its constitution
under Section 109, enters office. It is also stipulated
that the six month period provided under Section
112(3) shall also stand extended by the very same
period from the aforesaid dates; whichever date falls
later. Hence, there could not have been a recovery
surreptitiously, by issuing notices to the banks and
coercing them to pay the amounts, that too the entire
due amounts, including the tax, interest and penalty.
15. The Legislature had, in the event of an
appeal filed to the Tribunal, only intended twenty
percent of the tax dues alone to be paid; on which
payment the entire demand was liable to be stayed till
the disposal of the appeal. However, admitted tax;
interest, fine and penalty also have to be satisfied.
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Hence even if coercive action could have been taken
the tax officer should have confined it to the twenty
percent of the total amounts assessed, in addition to the
ten percent paid at the first appellate stage and any
admitted tax, if remaining unpaid. The tax officer had
definitely erred, that too egregiously, to the extent of
his action being termed high-handed, in surreptitiously
making the recovery of the entire amounts due as tax,
interest and penalty, even contrary to the legislative
mandate. As we found, the reasons stated are
unconvincing and clearly untenable and the
approaching closure of the financial year end can only
be a motivation to enhance the individual targets
assigned by the higher authorities.
3. Again another matter of similar nature came
up before us in C.W.J.C. No.777 of 2023 titled as National
Insurance Co. Ltd. v. The State of Bihar and Others. In both
the writ petitions, despite 20% of the amounts due having
been paid up, recovery was effected against the statutory
provisions which provided a stay of such recovery, if an
appeal has been filed before the Tribunal; which Tribunal has
not yet been constituted. We found a definite over reach on
the part of the Tax Officers and relied on R.S. Joshi, Sales
Tax, Gujarat and Others v. Ajit Mills Ltd. and Another
reported in (1977) 4 SCC 98, wherein the Hon'ble Supreme
Court deprecated "a tendency for valiant tax executives
clothed with judicial powers to remember their former
capacity at the expense of the latter"(sic). We also imposed a
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cost of Rs.5000/- on the Officers, who peremptorily carried
out the recovery from the bank account of the assessee.
4. In this case, we find the very same
arbitrariness having been exercised by another Officer;
according to us to a larger extent.
5. The assessment order dated 05.02.2021 is
produced as Annexure-3. A first appeal was filed as
Annexure-5 after remitting 10% of the tax amounts due,
which appeal was disposed of by Annexure-7 on 16.06.2023.
Soon thereafter, a notice for recovery was issued as per
Annexure-8 dated 26.06.2023 to the Branch Managers of
various banks seeking payment of a sum of Rs. 1,07,04,546/-.
On 30.06.2023, the assessee shot off an e-mail to the Assistant
Commissioner of State Tax, as is produced at Annexure-9.
The assessee expressed its desire to file an appeal before the
Appellate Tribunal and also specifically brought to the notice
of the Officer, Section 112 of the BGST Act wherein a pre-
deposit of 20% of the disputed tax amount was also provided.
The Appellate Tribunal having not been constituted; it was
requested that the recovery by way of attachment of bank
accounts of the assessee would be in violation of the
provisions of the GST Act. A decision of the High Court was
Patna High Court CWJC No.10373 of 2023 dt.25-01-2024
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proffered along with the e-mail, which directed payment of
20%, pending constitution of the Appellate Tribunal and stay
of recovery in the meanwhile. A circular of the Central Board
of Indirect Taxes and Customs dated 18.03.2023 was also
annexed with the communication.
6. We, further, notice that the State Government
had brought out S.O. 399, dated 11 th December, 2019 titled as
'Removal of Difficulty Order No.9/19-State Tax' produced at
Annexure-12 series, specifically extending the period of filing
of an appeal to the Tribunal from the 3 months provided in the
statute, from the date of order, to 6 months from the date of
communication of order or the date on which the President or
the State President, as the case maybe, of the Appellate
Tribunal after its constitution under Section 109, enters office;
whichever is later. The notice herein was issued on
26.06.2023
in flagrant violation of the circular issued and the
statutory provisions.
7. More disturbing is the fact that the assessee
deposited 20% on 04.07.2023 and on 05.07.2023, the Bank
transferred the amounts demanded as per Annexure-8 to the
Department. As is evident from Annexure-7 produced along
with I.A No.1 of 2023, the Bank had informed that they had
Patna High Court CWJC No.10373 of 2023 dt.25-01-2024
subsequently received a letter from the Department returning
the demand draft of Rs.1,07,04,546/- and directing payment
of only Rs.85,61,192/- reckoning the 20% payment made. We
find the above actions to be quite contrary to the statutory
provisions and in disobedience of the circulars issued by the
State Government.
8. We also extract paragraphs 17 & 18 from
C.W.J.C. No.5407 of 2023 hereunder:-
17. We cannot but find a definite overreach
by the tax authority, the officer who issued Annexure-3
order, to surreptitiously recover the amounts due as per
the assessment order passed, from the bank accounts of
the assessee, without proper intimation being given to
the assessee or a time specified for the assessee to
satisfy the demands; even if the action was motivated
by expediency and in the interest of the Revenue,
which we have found is not discernible from the
reasons recorded in the instant case. The reasons stated
by the officer were kept hidden within the folds of the
files; at the risk of repetition, were also not convincing.
The close of the assessment year and one or two days
of bank holidays, we are not convinced are sufficient
reasons to forfeit the amounts kept in the account of a
running business. The 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 and so on and so forth.
18. The actions of the Tax Authorities, under
the taxing statute should be tempered with good
conscience and judicious reasoning, which in the
instant case was in complete derogation of the
established principles of rule of law; reigning supreme
Patna High Court CWJC No.10373 of 2023 dt.25-01-2024
even when there is a compulsory extraction of money
for the larger good and welfare, which a levy of tax
always is. The tax authority should also act as a
facilitator of business and economy and not merely as
an extortionist, always looking to have the pound of
flesh, to satisfy his hierarchical superiors to push
his/her personal agendas. We have no doubt that the
action complained of, was high handed and arbitrary.
9. We, hence, direct the Assessing Officer to
immediately return the amount of Rs.85,61,192/- to the
respondent. It is made clear that there shall be no recovery
conducted till the constitution of the Tribunal and the appeal
period expires; and in the event of an appeal proffered till it is
disposed off.
10. If eventually the appeal is allowed in favor of
the assessee, then the amounts now refunded or to the extent
the claim is allowed in the appeal, shall carry interest at the
rate provided under the BGST Act, from the date of its debit
from the account of the assessee and the payment back as
directed hereinabove. If the appeal of the assessee goes
against it, then necessarily the assessee shall be liable to
interest only from the date of the re-payment by the
Department and to the extent the assessee is mulcted with the
liability. There shall be no interest levied by the Department
for the period in which it had the benefit of the 80% amounts.
Patna High Court CWJC No.10373 of 2023 dt.25-01-2024
11. We, especially noticing the callous manner in
which the recovery was carried out, after instructions were
issued by the State not to do so, the Officer is imposed with a
cost of Rs. 5,000/- to be paid from his pocket to the assessee.
(K. Vinod Chandran, CJ)
( Rajiv Roy, J)
sharun/-
AFR/NAFR
CAV DATE
Uploading Date 02.02.2024
Transmission Date
