Patna High Court
Kaushlendra Kumar vs The State Of Bihar on 1 May, 2025
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad, Ashok Kumar Pandey
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.17860 of 2024
======================================================
Kaushlendra Kumar, a Proprietorship firm having its Office at Bazar Samiti,
Raja Bajar, Jehanabad, Bihar-804408 through its Proprietor Kaushlendra
Kumar, an adult Male, aged about 39 Years, Son of Madan Sharma, Bazar
Samiti Raja Bazar, Jehanabad, Bihar- 804408.
... ... Petitioner
Versus
1. The State of Bihar through the Commissioner of State Tax, Patna.
2. The Assistant Commissioner of State Tax, Jehanabad, Magadh, Bihar.
3. The Additional Commissioner of State Tax, Magadh Division, Gaya, Bihar.
4. The Deputy General Manager of Bihar State Building Construction
Corporation Limited, PIU, Gaya.
... ... Respondents
======================================================
Appearance :
For the Petitioner : Mr. Akshansh Ankit, Advocate
Mr. Rudra Pratap Singh, Advocate
Mr. Aditya Prakash, Advocate
Mr. Prakash Kumar, Advocate
For the Resp Nos. 1 to 3 : Mr. Vikash Kumar, SC-11
For the Resp No. 4 : Ms. Rushali, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE ASHOK KUMAR PANDEY
ORAL JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 01-05-2025
Heard learned counsel for the petitioner and Mr. Vikash
Kumar, learned SC-11 for the Respondent Nos. 1 to 3. Learned
counsel for Respondent No. 4 is present.
2. This writ application has been filed seeking the
following reliefs:-
"a) For quashing of order dated 30.11.2022 passed by
the Additional Commissioner of State Tax (Appeal),
Magadh Division, Gaya in Appeal Case No. JB/GST-
45/2020-21
by which the order dated 09.02.2021
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
passed by the Assistant Commissioner of State Tax,
Jehanabad was upheld and the petitioner was directed
to pay the amount of Rs.48,91,868 [Rs. 24,45,934/- of
CGST + Rs.24,45,934/- of SGST] along with interest
and penalty totally Rs.6,72,534/-.
b) For quashing of order dated 09.02.2021 having
Reference No. ZD1002210074748 passed by the
Assistant Commissioner of State Tax, Jehanabad by
which the petitioner was directed to pay total amount
of Rs.55,64,402/- [including tax + penalty + interest]
failing which a recovery proceeding was to directed to
be initiated.
c) For quashing of notice having Reference No.-
ZD101220030391G dated 31.12.2020 issued by the
Assistant Commissioner of State Tax, Jehanabad by
which the petitioner was asked to show cause as to
why CGST and SGST of Rs.24,45,934/- each totally
Rs.48,91,868/- should not be recovered from him.
d) For issuance of writ or direction to refund the
amount of Rs.50,75,214/- deducted from the
beneficiary account of the petitioner bearing account
no. PLA-238 available with the Bihar State Building
Construction Corporation Limited with penal interest.
e) During the pendency of the writ application stay the
operation of impugned orders.
f) And for any other relief/reliefs that your lordships
may deem fit and proper in the interest of justice."
Brief Facts of the Case
3. The petitioner is a proprietorship firm engaged in
providing works contract services to the Government of Bihar. It is
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
engaged in construction of buildings for the Government. The
petitioner is registered with the GST, Jehanabad Circle.
4. The petitioner filed its return in Form GSTR 3B only
for March 2020 on 07.12.2020. In its return, the petitioner claimed
Input Tax Credit (in short 'ITC') to the extent of Central Goods
and Services Tax and State Goods and Services Tax of
Rs.24,45,934.00/- and Rs.24,45,934.00/- respectively. He was,
however, served with an intimation of tax liability in Form GST
DRC-01A determined under Section 73(5) of the Central Goods
and Services Tax Act, 2017/ Bihar Goods and Services Tax Act,
2017 (hereinafter referred to as the 'CGST/BGST Act, 2017')
dated 22.12.2020.
5. The respondent Assistant Commissioner of State Tax,
Division Jehanabad issued show cause notice to the petitioner
saying that on analysis of the return in Form GSTR-3B of March
2020, it has been found that the return was filed after the due date
prescribed under Section 16(4) of the CGST Act, 2017/ BGST Act,
2017. The Assistant Commissioner State Tax, therefore, called
upon the petitioner to show cause. The petitioner replied to the
same and contended that during the relevant period, he was
suffering from Covid-19 infection and had acute fever as a result
whereof he was put in complete isolation for 21 days. Due to this
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
reason, the petitioner could not file GSTR-3B for the period under
question within the time limit prescribed by Section 16(4). The
plea of the petitioner, however, failed and the Assistant
Commissioner of the State Tax, Magadh Division determined the
tax liability as mentioned hereinabove and called upon the
petitioner to pay a total amount of Rs.55,64,402/- which included
interest and penalty.
6. The petitioner filed an appeal before the Additional
Commissioner of State Tax (Appeals), however, the Appellate
Authority has also rejected the appeal on the solitary ground that
he has no power to extend the period for filing of the return. The
Appellate Authority has taken a view that in terms of Section 16(4)
of the BGST Act, 2017, the claim for ITC is liable to be rejected.
Submissions on behalf of the Petitioner
7. Before this Court, learned counsel for assessee-
petitioner has placed sub-Section (5) of Section 16 of the
CGST/BGST Act, 2017. It is submitted that sub-Section (5) has
been inserted by the Finance Act No. 2 of 2024 with retrospective
effect from 01.07.2017 vide Notification No. 17/2024 (S.O. 4253
(E)) - Central Tax, dated 27.09.2024.
8. It is submitted that by virtue of sub-Section (5) of
Section 16, the return for the period from financial year 2017-18 to
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
the financial year 2020-21 may be filed up to 30th day of
November, 2021 and the registered person shall be entitled to take
ITC in any return under Section 39 which would be filed up to this
date.
Submissions on behalf of the State
9. Mr. Vikash Kumar, learned SC-11 has though initially
opposed the writ application but after going through sub-Section
(5) of Section 16 of the CGST/BGST Act, 2017, learned counsel
submits that in view of the insertion of a new provision which
starts with a non-obstante clause, it would be appropriate to
remand the matter to the Appellate Authority for a fresh
consideration.
Consideration
10. Having heard learned counsel for the petitioner and
learned SC-11 for the State, this Court would reproduce sub-Section
(5) of Section 16 of the CGST/BGST Act, 2017 as under:-
"116 Eligibility and conditions for taking input tax
credit
[(5) Notwithstanding anything contained in sub-section
(4), in respect of an invoice or debit note for supply of
goods or services or both pertaining to the Financial
Years 2017-18, 2018-19, 2019-20 and 2020-21, the
registered person shall be entitled to take input tax
credit in any return under section 39 which is filed upto
the thirtieth day of November, 2021.]"
1. Enforced w.e.f. 1-7-2017 vide Noti. No. 9/2017-Central Tax, dt. 28-6-2017.
2. Inserted by Finance (No. 2) Act, 2024 (15 of 2024), dt. 16-8-2024, w.e.f. 27-9-
2024 vide S.O. 4253 (E), dt. w.r.e.f. 01-07-2017.
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
11. On a bare reading of the aforesaid provision, it
appears that the legislature had extended the date for claiming ITC
and they were made entitled to have credit in any return under
Section 39 which is filed up to 30th Day of November, 2021.
12. Apparently, it appears that sub-Section (5) of Section
16 has been inserted recently and much after the impugned order
of the Appellate Authority. The Appellate Authority had no
occasion to consider sub-Section (5) of Section 16 of the
CGST/BGST Act, 2017.
13. In view of the developments noted hereinabove, we
set aside the impugned order as contained in Annexure 'P1' to the
writ application and the consequential recovery. The matter is
remanded to the Appellate Authority for a fresh consideration.
14. At this stage, learned counsel for the petitioner has
pointed out that in this case, the appeal of the petitioner was
dismissed on 30.11.2022. Thereafter, no notice was issued to the
petitioner calling upon him to pay the amount in question but a
notice was directly sent to the employer of the petitioner on
28.12.2022 i.e. within 28 days of the passing of the impugned
order and the Department recovered the amount on 02.01.2023.
Referring to Section 78 of the CGST/BGST Act, 2017, learned
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
counsel submits that the recovery is in violation of the statutory
provision.
15. It is submitted that the statute provided for three
months' time to the petitioner after service of a copy of the order to
pay the amount but in this case, the Recovery Officer did not wait
for the same and for no reason recorded by him in writing,
recovery was effected by directly writing to the employer.
16. Learned counsel has relied upon a judgment of
learned Co-ordinate Bench of this Court in the case of Sita
Pandey versus the State of Bihar and Others reported in (2024)
128 GSTR 137 : 2023 SCC OnLine Pat 2827. It is submitted that
in the said case, the recovery was effected only on the next day of
the dismissal of the appeal. The learned Co-ordinate Bench has
considered Section 78 of the CGST/BGST Act, 2017 and has
quoted the guidelines with regard to the recoveries as laid down in
UTI Mutual Fund versus Income-Tax Officer and Others
reported in (2012) 345 ITR 71 (Bom) : (2012) SCC OnLine Bom
390.
17. In the case of Sita Pandey (supra), the learned Co-
ordinate Bench directed for refund of Rs.69,88,322/- after
deducting Rs.7,56,644/- out of the total amount recovered by the
Recovery Officer. The learned Co-ordinate Bench held that for
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
maintaining an appeal before the Appellate Tribunal, if constituted,
the appellant could have been obliged to pay Rs.7,56,644/- i.e.
20% of the tax dues. A cost of Rs.5,000/- was also imposed upon
the Officer who issued Annexure '3' (order in the said case) in
complete derogation of the statutory provisions and established
principles of law. It is submitted that the ratio of the said judgment
would equally apply in the present case.
18. Mr. Vikash Kumar, learned SC-11 has submitted that
the notice given by the Recovery Officer to the employer of the
petitioner was in accordance with Section 79 of the CGST/BGST
Act, 2017 as it permits recovery of the amount by following one or
more modes provided under sub-Section (1) of Section 79.
Consideration - Recovery held Illegal
19. This Court has considered the rival submissions on
this point. What is finally culled out from the submissions of the
parties is that once the appeal of the petitioner was dismissed by
the Appellate Authority, the petitioner had three months' time to
prefer a second appeal under Section 112 of the CGST/BGST Act,
2017. It is an admitted position that the second appeal could not
have been preferred by the petitioner because the Tribunal where
the second appeal was to be presented had not been constituted.
Till date, it has not been constituted.
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
20. In the case of Sita Pandey (supra), the learned Co-
ordinate Bench has taken note of it that for purpose of filing of
second appeal, 20% of the tax dues was to be deposited by the
petitioner in the said case.
21. Section 78 of the CGST/BGST Act, 2017 reads as
under:-
"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."
22. So far as the application of Section 79 of the
CGST/BGST Act, 2017 is concerned, in order to appreciate the
said provision, we would take note of Section 79 hereunder:-
"79. Recovery of Tax
(1) Where any amount payable by a person to the
Government under any of the provisions of this Act
or the rules made thereunder is not paid, the proper
officer shall proceed to recover the amount by one or
more of the following modes, namely:--
(a) the proper officer may deduct or may require any
other specified officer to deduct the amount so
payable from any money owing to such person
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
which may be under the control of the proper
officer or such other specified officer;
(b) the proper officer may recover or may require any
other specified officer to recover the amount so
payable by detaining and selling any goods
belonging to such person which are under the
control of the proper officer or such other
specified officer;
(c) (i) the proper officer may, by a notice in writing,
require any other person from whom money is
due or may become due to such person or who
holds or may subsequently hold money for or on
account of such person, to pay to the Government
either forthwith upon the money becoming due or
being held, or within the time specified in the
notice not being before the money becomes due
or is held, so much of the money as is sufficient
to pay the amount due from such person or the
whole of the money when it is equal to or less
than that amount;
(ii) every person to whom the notice is issued under
sub-clause (i) shall be bound to comply with such
notice, and in particular, where any such notice is
issued to a post office, banking company or an
insurer, it shall not be necessary to produce any
pass book, deposit receipt, policy or any other
document for the purpose of any entry,
endorsement or the like being made before
payment is made, notwithstanding any rule,
practice or requirement to the contrary;
(iii) in case the person to whom a notice under sub-
clause (i) has been issued, fails to make the
payment in pursuance thereof to the Government,
he shall be deemed to be a defaulter in respect of
the amount specified in the notice and all the
consequences of this Act or the rules made
thereunder shall follow;
(iv) the officer issuing a notice under sub-clause (i)
may, at any time, amend or revoke such notice or
extend the time for making any payment in
pursuance of the notice;
(v) any person making any payment in compliance
with a notice issued under sub-clause (i) shall be
deemed to have made the payment under the
authority of the person in default and such
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
payment being credited to the Government shall
be deemed to constitute a good and sufficient
discharge of the liability of such person to the
person in default to the extent of the amount
specified in the receipt;
(vi) any person discharging any liability to the person
in default after service on him of the notice issued
under sub-clause (i) shall be personally liable to
the Government to the extent of the liability
discharged or to the extent of the liability of the
person in default for tax, interest and penalty,
whichever is less;
(vii) where a person on whom a notice is served under
sub-clause (i) proves to the satisfaction of the
officer issuing the notice that the money
demanded or any part thereof was not due to the
person in default or that he did not hold any
money for or on account of the person in default,
at the time the notice was served on him, nor is
the money demanded or any part thereof, likely to
become due to the said person or be held for or on
account of such person, nothing contained in this
section shall be deemed to require the person on
whom the notice has been served to pay to the
Government any such money or part thereof;
(d) the proper officer may, in accordance with the
rules to be made in this behalf, distrain any
movable or immovable property belonging to or
under the control of such person, and detain the
same until the amount payable is paid; and in
case, any part of the said amount payable or of
the cost of the distress or keeping of the property,
remains unpaid for a period of thirty days next
after any such distress, may cause the said
property to be sold and with the proceeds of such
sale, may satisfy the amount payable and the
costs including cost of sale remaining unpaid and
shall render the surplus amount, if any, to such
person;
(e) the proper officer may prepare a certificate signed
by him specifying the amount due from such
person and send it to the Collector of the district
in which such person owns any property or
resides or carries on his business or to any officer
authorised by the Government and the said
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
Collector or the said officer, on receipt of such
certificate, shall proceed to recover from such
person the amount specified thereunder as if it
were an arrear of land revenue;
(f) Notwithstanding anything contained in the Code
of Criminal Procedure, 1973 (2 of 1974), the
proper officer may file an application to the
appropriate Magistrate and such Magistrate
shall proceed to recover from such person the
amount specified thereunder as if it were a fine
imposed by him.
(2) Where the terms of any bond or other
instrument executed under this Act or any rules or
regulations made thereunder provide that any
amount due under such instrument may be
recovered in the manner laid down in sub-section
(1), the amount may, without prejudice to any other
mode of recovery, be recovered in accordance with
the provisions of that sub-section.
(3) Where any amount of tax, interest or penalty is
payable by a person to the Government under any
of the provisions of this Act or the rules made
thereunder and which remains unpaid, the proper
officer of State tax or Union territory tax, during
the course of recovery of said tax arrears, may
recover the amount from the said person as if it
were an arrear of State tax or Union territory tax
and credit the amount so recovered to the account
of the Government.
(4) Where the amount recovered under sub-section
(3) is less than the amount due to the Central
Government and State Government, the amount to
be credited to the account of the respective
Governments shall be in proportion to the amount
due to each such Government.
1[Explanation.--For the purposes of this section,
the word person shall include "distinct persons" as
referred to in sub-section (4) or, as the case may be,
sub-section (5) of section 25.]"
1. Inserted by the CGST (Amdt.) Act, 2018 (31 of 2018), dt. 30-8-2018,
w.e.f. 1-2-2019 vide Noti. No.02/2019-Central Tax, dt. 29-1-2019
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
23. On a bare reading of the aforementioned provision, it
would appear that it talks of taking a step towards the recovery of
amount by the Proper Officer but only where any tax amount
payable by a person to the Government is not paid within the
stipulated period under Section 78. A conjoint reading of Sections
78 and 79 would show that while Section 78 prescribes a period of
three months to a taxable person to pay the amount in pursuance of
an order passed under this Act from the date of service of the order
and then only a recovery proceeding is to be initiated, Section 79
is in consonance with Section 78 but it provides other modes of
recovery of the tax amount. It is in the nature of a garnishee
proceeding where the tax dues may be recovered by adopting any
one or more modes prescribed under sub-Section (1) of Section 79.
24. This Court has no iota of doubt that the Recovery
Officer had to wait for a period of three months from the date of
service of the order for deposit of the payable amount by the
petitioner. Only in case of the petitioner failing to deposit the
amount within the prescribed period of three months, one of the
modes as prescribed under Section 79 of the CGST/BGST Act,
2017 could have been invoked.
25. In course of submissions, learned SC-11 for the State
has though initially attempted to justify the recovery but when this
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
Court called upon him to take a view as an Officer of the Court
and to assist this Court in rendering justice with a correct
interpretation of the two provisions i.e. Sections 78 and 79 of the
CGST/BGST Act, 2017, Mr. Vikash Kumar, learned SC-11 has
fairly submitted that a conjoint reading of both the provisions
would give one and only one interpretation that the Taxing
Authority has to wait for three months after service of the order
before initiation of the recovery proceeding.
26. In view of the discussions made hereinabove, we
find that the recovery of Rs.50,75,214/- effected from the bill of
the petitioner through Respondent No. 4 was in haste and in
violation of the statutory provision. We deprecate such approach
on the part of the Taxing Authority. We are once against tempted to
quote what has been observed in the case of R.S. Joshi, Sales Tax
Officer, Gujarat versus Ajit Mills Limited reported in (1977) 40
STC 497 : (1977) 4 SCC 98 :-
"38. ......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."
27. In the case of Sita Pandey (supra), the learned Co-
ordinate Bench of this Court has relied upon the Constitution
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
Bench judgment of the Hon'ble Supreme Court in the case of
Mohinder Singh Gill and Anr. versus Chief Election
Commissioner, New Delhi and Others reported in (1978) 1 SCC
405. Paragraphs '75 and '76' of the judgment in the case of
Mohinder Singh Gill (supra) has been quoted and we reproduce
the same hereunder:-
"75. Moreover Sri Rao's plea that when the
Commission cancels viz., declares the poll void it is
performing more than an administrative function
merits attention, although we do not pause to decide it.
We consider that in the vital area of elections where
the people's faith in the democratic process is hyper-
sensitive it is republican realism to keep alive audi
alteram even in emergencies, 'even amidst the clash
of arms'. Its protean shades apart we recognise that
'hearing' need not be an elaborate ritual and may, in
situations of quick despatch, be minimal, even formal,
nevertheless real. In this light, the Election Court will
approach the problem. To scuttle the ship is not to
save the cargo; to jettison may be.
76. 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 form 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."
28. In paragraph '16' of its judgment, the learned Co-
ordinate Bench in the case of Sita Pandey (supra) has taken note
of the judgment of Hon'ble Bombay High Court in the case of
UTI Mutual Fund (supra) and issued guidelines for the
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
recoveries. We reproduce paragraph '16' of the judgment in Sita
Pandey (supra) hereunder:-
"16. Following the dictum laid down in UTI Mutual
Fund v. Income-tax Officer1, we issue the following
guidelines in so far as the recoveries are concerned:
(1) There shall be no recovery of tax within the
time limit for filing an appeal and when a stay
application is filed in a properly instituted appeal,
before the stay application is disposed of by the
appellate authority;
(2) Even when the stay application in the appeal
is disposed of, the recovery shall be initiated only
after a reasonable period so as to enable the
assessee to move a higher forum;
(3) However, in cases where the assessing officer
has reason to believe that the assessee may defeat
the demand or that it is expedient in the interest
of revenue, as is provided under the proviso to
section 78, there can be a recovery but with
notice to the assessee, which notice shows the
reasons for initiating it and specifies the lesser
time within which the assessee is directed to
satisfy the dues;
(4) Though a bank account could be attached;
before withdrawing the amount, reasonable prior
notice should be furnished to the assessee to
enable the assessee to make a representation or
seek recourse to a remedy in law;
(5) We also remind the tax authorities, as was
done in the UTI Mutual Fund 1 that the
"authorities under the tax enactment shall not act
as a mere tax gatherer but act as a quasi-judicial
authority vested with the public duty of protecting
the interest of the Revenue while at the same time
balancing the need to mitigate the hardship to the
assessee" (sic-UTI Mutual Fund)."
1. [2012] 345 ITR 71 (Bom); 2012 SCC OnLine Bom 390.
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
29. The present case would be covered by the judgment
of the learned Co-ordinate Bench in case of Sita Pandey (supra).
We are required to take a similar view of the matter. The recovery
made by the Respondent Authorities in this case is against the
statutory mandate and the judicial pronouncement on the subject.
30. In result, we direct the Respondent Authorities to
refund the recovered amount i.e. Rs.50,75,214/- within a period of
two weeks from today, failing which interest shall run at the rate of
12% per annum.
31. We have been informed that the petitioner has
already deposited 10% of the tax dues with the Appellate Authority
and the same is still lying with the said Authority.
32. Since we have held that the recovery has been made
in violation of the statutory provision and the procedure
established by law, the State cannot be allowed to unduly rich
itself by indulging into such kind of the recoveries and retaining
the money. In this case, the money was recovered as back as on
02.01.2023 and it has remained with the Respondents for over two
years four months by now.
33. This Court is of the considered opinion that in such
circumstance, the respondent shall be liable to pay simple interest
at the rate of 6% per annum on the amount recovered from the
Patna High Court CWJC No.17860 of 2024 dt.01-05-2025
petitioner from the date of recovery till the date of refund. Such
payment shall also be made simultaneously within two weeks.
34. We take note of the unconditional apology sought by
the Assistant Commissioner, State Tax, Jehanabad Circle in
paragraph '32' of the counter affidavit. We accept the apology and
refrain from imposing any cost.
35. This writ application is allowed to the extent
indicated hereinabove.
(Rajeev Ranjan Prasad, J)
( Ashok Kumar Pandey, J)
SUSHMA2/-
AFR/NAFR AFR
CAV DATE
Uploading Date 02.05.2025
Transmission Date
