Patna High Court Cautions Tax Authorities Against Committing Mistakes

Patna High Court Cautions Tax Authorities Against Committing Mistakes

The Court wondered why the officer did not apply his mind at the time of passing of the impugned order

The Patna High Court has set aside an order of the Assistant Commissioner of State Tax on the ground that he committed a mistake in passing the order in Form GST DRC-01.

The matter titled Associated Power Structures Pvt Ltd v The State of Bihar And Ors, was placed before a Division Bench of the High Court of Patna comprising Chief Justice Sanjay Karol and Justice S. Kumar.

The facts leading up to this petition are that the Petitioner – Company received a Show Cause Notice along with Summary of Show Cause Notice in FORM GST DRC-01 dated 14 February 2021 issued by Respondent – Assistant Commissioner of State Tax for the period April 2020 to September 2020 against the procedure as prescribed in Rule 142 of the Central Goods and Service Tax Rules 2017 (CGST Rules) and the Bihar Goods and Service Tax Rules, 2017 (BGST Rules). The Petitioner contended that the summary of the order in FORM GST DRC-07 dated 23 February 2021 was issued by the Respondent for the period April 2020 to September 2020 without issuing the order u/S 73(9) of the Central Goods and Services Tax Act, 2017 (CGST Act) which was in violation of the principles of natural justice.

A summary of the rectification order dated 12 April 2021 was issued later by the Respondent, which was also challenged by the Petitioner in this petition.

The Respondent stated that a mistake was committed in passing all the above-stated orders including the rectification order.

The Court agreed with the stand taken by the Respondent but could not understand why the officer did not apply his mind at the time of passing of the impugned order. It made the following observation regarding such mistakes:

"It is only when this Court pointed out the difference, wide enough for anyone to notice in imposing the amount of penalty, did the officer realizing his mistake agreed to rectify the same. We only caution the officer to be careful in future and not commit such mistake again, for such type of mistake not only causes harassment to the parties but also shatters faith of the people in the system."

The Respondent while illustratively reviewing his own order reduced the original demand of ₹11 crore to ₹18 lakh and in another case from ₹8 crore to ₹2.8 crore.

The Court, thus, quashed the orders of the Respondent with a direction to pass a fresh order in terms of the provisions of the Central Goods and Services Tax Rules 2017 and the Bihar Goods and Service Tax Rules 2017.