GST Officer Apologizes for Illegal GST Recovery: Read to know more

The Patna High Court has accepted the unreserved apology presented by an Assistant Commissioner who is answerable for an illegal GST recovery. The recovery, carried out in breach of statutory rules and set rules, was an amount of Rs. 50.75 lakh. The tax was recovered on January 2, 2023, and has been held by the department for more than two years.

The court, which included Justice Rajeev Ranjan Prasad and Justice Ashok Kumar Pandey, said the government cannot avail itself of illegal recoveries and has to return the amount along with interest. They did not impose any charges on the Assistant Commissioner but instructed that the department should pay 6% per annum simple interest on the amount recovered until returned.

The case arose out of a petitioner who submitted a GST return for the month of March 2020 with a claim of input tax credit (ITC) of Rs. 24,45,934 under the CGST and SGST Acts. The petitioner was, however, served with a notice of tax liability in terms of Section 73(5) of the CGST and BGST Acts, alleging that the return was submitted beyond the stipulated timeline.

The Assistant Commissioner of State Tax, Jehanabad, served a show cause notice stating that the delay in filing the return was not reasonable, although the petitioner had explained the delay due to illness because of Covid-19. Still, the Assistant Commissioner held the tax liability of Rs. 55,64,402 along with interest and penalty.

An appeal was made to the Additional Commissioner of State Tax (Appeals), but the appeal was dismissed since the Appellate Authority held it had no jurisdiction to grant an extension of time for filing the return. The Appellate Authority’s ruling also resulted in the rejection of the claim of ITC under Section 16(4) of the BGST Act.

The court examined the statutory provisions and noted that, as per Sections 78 and 79 of the CGST/BGST Acts, the Recovery Officer had to wait for three months from the date of service of the order before proceeding with recovery. The recovery action initiated by the Assistant Commissioner prior to this period was held to be illegal and against the law.

The court accepted the apology made by the Assistant Commissioner for illegal recovery and, deviating from awarding penalties, preferred to lay emphasis on the liability of the department to repay the amount along with interest.

This case emphasizes the need to adhere to statutory requirements in tax recovery proceedings and is a reminder that illegal activities can result in financial costs to the tax department.