Hon’ble High Court Patna in case of M/s Sita Pandey Vs State of Bihar (Patna High Court) Date of Judgement 23-08-2023 held that the tax authority should also act as a facilitator of business and economy and not merely as an extortionist, always looking to have the pound of flesh, to satisfy his hierarchical superiors to push his/her personal agendas. We have no doubt that the action complained of, was high handed and arbitrary.
The relevant portion of Judgement is as follows:
18. The actions of the Tax Authorities, under the taxing statute should be tempered with good conscience and judicious reasoning, which in the instant case was in complete derogation of the established principles of rule of law; reigning supreme even when there is a compulsory extraction of money for the larger good and welfare, which a levy of tax always is. The tax authority should also act as a facilitator of business and economy and not merely as an extortionist, always looking to have the pound of flesh, to satisfy his hierarchical superiors to push his/her personal agendas. We have no doubt that the action complained of, was high handed and arbitrary.
19. As we observed, the Assessing Authority in the scheme of the enactment could not have made recovery of the entire amount. Section 112 provides for twenty per cent of the tax amount due, in addition to the ten per cent amount paid at the first appellate stage, for maintaining a second appeal before the Appellate Tribunal. On such payment being made under Section 112(8), there is also a requirement that the further recovery proceedings would be stayed. Hence, when an Appellate Authority was not constituted even when the Assessing Officer acted under the proviso to Section 78 what could have been recovered is only twenty per cent of the tax amount due in addition to that paid up to institute a first appeal. We see from Annexure-3 order that under both the BGST and CGST Act, the tax amounts due are Rs. 18,91,609.00 and the demand made of Rs. 34,94,161.00 each under CGST and BGST Act is after including the interest and penalty. We also notice that Rs. 1,89,161.00 has been reduced from the total demand raised under Annexure-2 order, presumably, the ten per cent payment made by the assessee at the first appellate stage. 4
20. Hence, what was required to be paid by the assessee, for maintaining an appeal before the Appellate Tribunal, if constituted, was Rs. 7,56,644.00 being the twenty per cent of the tax dues under the BGST and CGST Act. Hence, the balance amounts from the total sums forfeited of Rs. 69,88,322.00 recovered shall be paid over to the assessee within a period of two weeks from today, failing which interest shall run at the rate of 12 per cent per annum. If the amounts are satisfied within two weeks, as directed hereinabove, it is made clear that if eventually the demand is confirmed against the assessee, there shall not be any interest claimed under the statute between the date on which the amounts were credited by the banks as per Annexure-3 order and the date of refund as directed hereinabove; since the State had the benefit of the amounts in its coffers. If the liability is set aside then for the periods the assessee was deprived of the amounts recovered, she shall be entitled to claim interest from the department.
21. We are also of the opinion that the officer who issued Annexure-3 order, who acted in complete derogation of the statutory provisions and established principles of law, should pay an amount of Rs. 5,000/- (five thousand) as cost to the assessee; a receipt of which shall be filed within two weeks in the instant writ petition.
22. The writ petition is allowed with the above directions and the guidelines as laid down by us here in above.
