Illegal GST Recovery for Best Judgment Order Refunded With Interest and Costs Recoverable From Erring Officers

By | August 17, 2026
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Illegal GST Recovery for Best Judgment Order Refunded With Interest and Costs Recoverable From Erring Officers

Illegal GST Recovery for Best Judgment Order Refunded With Interest and Costs Recoverable From Erring Officers

Issue

Whether the tax authorities’ rejection of an appeal under the Amnesty Scheme and unauthorized recovery of GST dues under Section 62—in disregard of binding judicial precedent—warrants refund with interest, costs, and disciplinary recovery from the erring officers.

Facts

  • Best Judgment Assessment: An assessment order under Section 62 was passed against the petitioner for non-filing of returns.
  • Appeal Rejection under Amnesty Scheme: The petitioner sought to file an appeal under Notification No. 53/2023-Central Tax (Amnesty Scheme). Respondent No. 6 rejected the appeal, holding that the notification applies only to orders under Sections 73 and 74, and not Section 62.
  • Violation of Precedent: The rejection disregarded the binding precedent in SIS Cash Services Pvt. Ltd. v. Union of India, which held that the remedy of appeal against Section 62 best judgment assessments remains available when returns are filed and taxes paid.
  • Unauthorized Recovery: Disregarding the precedent, tax authorities forcibly recovered GST dues from the petitioner.
  • Prior High Court Directions: The High Court quashed the orders of Respondent Nos. 5 and 6, issued show-cause notices to the officials, and reserved judgment on consequential relief (interest and costs).
  • Officer Defense: Both officers tendered unconditional apologies, stating that the SIS Cash Services judgment had not been brought to their notice.

Decision

  • Apologies Accepted: The High Court accepted the unconditional apologies submitted by the erring tax officials.
  • Interest & Costs Awarded: The State Government was directed to pay simple interest at 9% per annum on the illegally recovered amount from the date of recovery until refund, along with costs of ₹10,000 to the petitioner.
  • Recovery From Officers Permitted: The State Government was granted liberty to recover the interest and cost amounts directly from the personal accounts/pay of the erring officials responsible for the illegal action.

Key Takeaways

  • Binding Precedents Are Mandatory: Tax authorities cannot ignore binding High Court decisions when evaluating appeal maintainability or enforcing recoveries.
  • Financial Accountability for Officers: Officers making unauthorized or illegal tax recoveries in defiance of established judicial precedents face personal financial liability for interest and litigation costs.
  • Appeals Against Section 62 Orders Valid: Assessees retain the statutory right to appeal best judgment assessment orders passed under Section 62, including under relevant amnesty schemes.
HIGH COURT OF PATNA
Great Eastern Hire Purchase (P.) Ltd.
v.
State of Bihar
Rajeev Ranjan Prasad and Ashok Kumar Pandey, JJ.
Civil Writ Jurisdiction Case No. 18049 of 2024
JUNE  25, 2025
Bijay Kumar Gupta, Manish Kumar and Alok Swaroop, Advs. for the Petitioner. P.K. Shahi, AG, Vivek Prasad, GP-7, Anshuman Singh, Sr. SC, Sanjeev Kumar Mishra, Sr. Adv., Shivaditya Dhani Sinha, Ms. Manini Jaiswal and Shubham Kumar Upadhyay, Advs. for the Respondent.
ORDER
Rajeev Ranjan Prasad, J.- Heard Mr. Bijay Kumar Gupta, learned counsel assisted by Mr. Alok Swaroop, learned counsel for the petitioner and Mr. P.K. Shashi, learned Advocate General assisted by Mr. Vivek Prasad, learned GP-7 for the State Respondents. Respondent no. 5 has entered appearance through Mr. Sanjeev Kumar Mishra, learned Senior Counsel assisted by Ms. Manini Jaiswal, learned Advocate.
2. This Court has considered the writ application and has passed a reasoned judgment dated 06.05.2025 as regards the legality and validity of Annexure ‘P4’ and ‘P5′ of the writ application. The operative part of the judgment dated 06.05.2025 as contained in paragraph ’35’ to ’37’ read as under:-
“35. While setting aside the impugned orders as contained in Annexures ‘P4’ and ‘P5’ of the writ application, the consequences shall follow. We issue notice to the Assistant Commissioner of State Tax, Gandhi Maidan Circle, Patna (Respondent No. 5) who passed the impugned order (Annexure ‘P4’) to show cause as to why this Court should not award interest and cost which would be recovered from her.
36. We also call upon the Appellate Authority, namely, the Additional 15-18049Commissioner of State Tax (Appeals), Patna West Division, Patna (Respondent No. 6) to satisfy this Court as to why a proceeding for contempt be not initiated against him for acting in willful disobedience and disregard to the order of this Court passed in the case of SIS Cash Services (supra).
37. Let both the authorities, namely, Respondent No. 5 and Respondent No. 6 file their response within two weeks from today.”
3. After the aforesaid judgment/order passed by this Court, the consideration remained only with respect to the award of interest and cost which may be allowed to the petitioner.
4. Pursuant to the notices issued to respondent no. 5 and respondent no. 6 calling upon them to show cause as to why appropriate proceeding be not initiated against them for their willful disobedience and disregard shown to the order of this Court passed in the case of SIS Cash Services (P.) Ltd. v. Union of India [CWJC No. 6514 of 2021, dated 24-1-2024].
5. Respondent no. 5 and respondent no. 6 have filed their respective show cause. Respondent no. 5 has taken a plea that the order dated 24.08.2023 was passed by her after verifying from the GST—BO Portal, Back office and the order dated 12.09.2019 has been passed in terms of Section 73 of the Central/Bihar Goods and Services Act, 2017. Relevant extract of the portal demand and collection register has been annexed as Annexure ‘R5/5’ to the show cause.
6. It is submitted by learned Senior Counsel for the respondent no. 5 that in fact the judgment of this Court in the case of SIS Cash Services (P.) Ltd. (supra) was not brought to the notice of Respondent no. 5. This Court, however, finds that what is being sought to be submitted orally has not been stated on affidavit in the show cause filed on behalf of respondent no. 5.
7. The show cause filed on behalf of respondent no. 6, however, contains an avernment in paragraph ’12’ of the show cause that the law laid down by the Hon’ble Court in SIS Cash Services (P.) Ltd. (supra) was never brought to the knowledge of the said respondent by the petitioner or by any other person. It is submitted that respondent no. 6 being Appellate Authority had no knowledge of any such law having been laid down by the Hon’ble Court. It is his submission that the petitioner had preferred statutory appeal on 30.01.2024 challenging the order dated 12.09.2019 whereby the impugned demand had been created. The petitioner prayed that the appeal be admitted in terms of the appeal amnesty scheme brought about by Notification No. 53 of 2023 CGST dated 02.11.2023. Respondent no. 6 rejected the appeal because the Notification No. 53 of 2023 covers only the order passed under Sections 73 and 74 and not those passed under Section 62.
8. Learned senior counsel for respondent no. 5 and respondent no. 6 submits that both the respondents have sought unconditional apology and at the same time, they have disclosed the reason for passing of the impugned orders.
9. No rejoinder to the show cause filed on behalf of respondent no. 5 and respondent no. 6 has been filed by the petitioner, therefore, the statements made therein remained uncontroverted. In the circumstances, this Court accepts the reasons shown by respondent nos. 5 and 6. The notice for initiation of contempt is not required to be proceeded with.
10. Now, the issue remained with respect to interest and cost to the petitioner. The matter was heard and learned Advocate General sought time to seek instruction.
11. Today, when the matter has been called out, learned Advocate General submits on instruction that the State respondents shall pay simple interest at the rate of 9% per annum from the date of recovery of the amount till the date of refund.
12. Mr. Bijay Kumar Gupta, learned counsel for the petitioner accepts the offer made by learned Advocate General.
13. Accordingly, this Court directs the State respondents to pay simple interest at the rate of 9% per annum from the date of recovery of the amount till the date of refund to the petitioner. The said payment shall be made within a period of six weeks from today.
14. In the facts and circumstances of the case, since we have noticed that the recovery was made illegally and that has resulted in litigation, we direct the respondents to pay cost of Rs.10,000/- (Rupees Ten Thousand Only) to the petitioner within the same period.
15. It is always open to the State Government to recover the interest and cost from the erring officials, if so desire.
16. This writ application stands disposed of accordingly.