GST Demand Invalid Where Similar Issue Already Withdrawn in Past: HC

The Patna High Court quashed the GST demand, holding that since a similar later assessment was withdrawn, authorities must refund any recovered amount, ensuring no unjust taxation persists where the issue has already been resolved.

Asma Automobiles Private Limited (petitioner) had filed a writ petition before the Patna High Court, challenging an assessment order dated December 12, 2019, passed by the GST authorities under Section 73 of the Bihar Goods and Services Tax Act, 2017, for the month of October 2019 falling in the Financial Year 2019-20 in Form GST DRC-07. The impugned order had raised an aggregate tax amounting to Rs 1.03 crore (Rs 43.68 lakh each under CGST and SGST, and a cess of Rs 15.94 lakh) on the grounds of non-filing of return in GSTR 3B and payment of tax and late fee within the allowed time limit.

The petitioner argued that he was served with the impugned order only on the GST portal and not by any other mode of service, as prescribed under section 169 of the Act. Ultimately, a huge demand was imposed even though all compliance filings and dues were paid within the permitted time limit. Further claimed that the impugned tax demand is a result of double taxation and is contrary to the principles of the constitution; hence, it should be quashed. Additionally, the company sought a refund of the amount that had been recovered by the authorities.

During the hearing before the High Court, the petitioner informed that court that a later assessment order dated January 12, 2021, passed by the Deputy/Assistant Commissioner of State Tax, Purnea Circle, Purnea, relating to the issue has already been withdrawn by the tax authorities and, consequently, the amount collected during the tax proceedings was directed to be refunded back if it had not already been returned.

When the court analysed the case, it held that if a case based on a similar issue has already been withdrawn in the past, then the tax authorities must ensure that the recovered amount is refunded to the petitioner, provided it has not already been credited back.