Introduction
In a landmark ruling, the Patna High Court has decisively quashed an unlawful GST recovery of ₹1.12 crore, ordering the State’s GST department to refund the amount with 9% simple interest and pay ₹10,000 in litigation costs to the taxpayer. This verdict emphasises the sanctity of procedural fairness and judicial precedent in tax administration—a key win for businesses across India
🧾 Case Background: Great Eastern Hire Purchase vs. State of Bihar
| Detail | Description |
|---|---|
| Petitioner | M/s Great Eastern Hire Purchase Pvt Ltd, Patna |
| Recovery Initiation Date | 24 Aug 2023 |
| Tax Demand Order Date | 12 Sep 2019 |
| Return Filed (GSTR‑3B) | 19 Sep 2019 |
| Amount Recovered | ₹1.12 Cr (from credit + cash ledger) |
| Bench | Justices Rajeev Ranjan Prasad & Ashok Kumar Pandey |
| Judgment Date | 6 May 2025 |
Core Issue: Tax law under Section 62(2) of the CGST/BGST Act clearly states that if a taxpayer files a valid return within 30 days of a levy order, that order is deemed withdrawn. Despite this, the GST department illegally enforced recovery after a four‑year delay .
🔍 Legal Findings
-
Section 62(2) Invoked
The High Court found that Great Eastern’s return, filed on time, legally nullified the tax demand. Proceeding with recovery was therefore illegal -
Violation of Natural Justice
The department bypassed proper notice or hearing under Form DRC-07. This was a gross procedural lapse taxguru.in. -
Disregard of Precedent
Officials ignored binding SIS Cash Services (2021) guidance and circulars on amnesty schemes, leading to wrongful denial -
Official Accountability
Patna HC issued show-cause notices to the Assistant Commissioner and Appellate Authority and granted the State leave to recover the payout from errant officers
👨⚖️ Court Directives
-
Refund ₹1.12 Crore with 9% simple interest from recovery date till payout.
-
Award ₹10,000 in litigation costs to the petitioner.
-
Permit the State Government to recover the refunded amount from violating officers jurishour.in.
-
Initiate disciplinary action or contempt proceedings if past orders were intentionally breached
⚖️ Why This Ruling Matters
-
Sets a strong precedent for businesses compliant with Section 62(2) on timely return filing.
-
Promotes adherence to procedure, reinforcing the principle of natural justice in tax law.
-
Establishes officer accountability, confirming that mills can’t shield negligent bureaucrats.
-
Clarifies amnesty scheme rights, ensuring taxpayers understand and benefit from new notifications.
✅ Practical Tips for Businesses
-
Track GSTR‑3B Filing Dates
Retain ARN and timestamp, especially when filing close to the 30-day deadline. -
Act Quickly on Notices
Don’t ignore Form GSTR-3A or DRC-07 notices. Respond promptly to avoid illegal recovery. -
File Appeals Timely
Adhere to appeal timelines and reference relevant circulars (e.g., Notification 53/2023). -
Monitor Refund Process
Refunds must include 9% interest—escalate if there's undue delay. -
Use Legal Remedies
File writ petitions when recovery violates statutory provisions or judicial directions.
🔚 Conclusion
The Patna HC’s ruling is a pivotal moment reinforcing taxpayer rights, procedural propriety, and bureaucratic accountability. For GST-registered businesses, it serves as a reminder to meticulously follow compliance timelines and legal protocols. Officers must respect legal safeguards—failure to do so can result in both departmental and personal liabilities.
Frequently Asked Questions (FAQs)
Q1. What triggers Section 62(2)?
When a valid GSTR-3B is filed within 30 days of an assessment order, the order is considered withdrawn.
Q2. What relief does the judgment offer?
The taxpayer gets a full refund plus 9% annual interest and ₹10,000 in litigation costs.
Q3. Can officials be penalised personally?
Yes. The Court allowed recovery from negligent officers and issued show‑cause notices. Contempt action can follow.
Q4. Does this apply to all GST assessments?
It specifically covers cases under Section 62. Other assessments (Sections 73/74) may follow similar principles but require case‑by‑case review.
Q5. What if the department delays the refund?
Pressure the authority citing this judgment. If delays persist, file a contempt petition or writ.
Keywords: Patna High Court, unlawful GST recovery, GST refund, Section 62(2), 9% interest, ₹10,000 costs, Great Eastern Hire Purchase, procedural justice, taxpayer rights.
