Recovery order passed is not valid when return has been filed post issuance of order under Section 62

The Hon’ble Patna High Court in M/s Great Eastern Hire Purchase Pvt. Ltd. v. State of Bihar [CWJC No. 18049 of 2024] set aside the recovery order, holding that once the assessee had filed Form GSTR-3B and paid tax within 30 days of the assessment order under Section 62 of the of the Central Goods and Services Tax Act, 2017 (“the CGST Act”)/Bihar Goods and Services Tax Act, 2017 (“the BGST Act”), the order stands withdrawn by legal fiction under law. Further, the Hon’ble High Court held that recovery proceedings, initiated despite filing of return is unlawful and further initiated contempt proceedings when the appeal was dismissed on account of limitation without considering relevant precedent established by the Hon’ble High Court.

Facts:

M/s Great Eastern Hire Purchase Pvt. Ltd. (“the Petitioner”) has filed the writ petition against the  recovery order dated August 24, 2023 (“Recovery Order”) and demand order issued in Form GST ASMT-13 dated September 12, 2019 (“the Order”). Also, against the Order passed, appeal was filed, but the same was dismissed on account of limitation.

The Petitioner submitted that he has filed the GSTR3B return on September 19, 2019 and has paid the tax amount within one month of the issuance of the order, thereby, by placing reliance upon the Section 62(2) of the of the CGST Act, wherein the registered person who has furnished a valid return within 30 days of the service of assessment order under Section 62(1) of the CGST Act, the assessment order shall deemed to be withdrawn.

Further, the Petitioner submitted that, despite filing of return, the Revenue Department issued Recovery Order without verification, despite filing of return, thus, the recovery order is completely unlawful, and is malafide in law.

Issue:

Whether recovery order passed is valid when return has been filed post issuance of order under Section 62 of the CGST Act?

Held:

The Hon’ble Patna High Court in CWJC No. 18049 of 2024 held as under:

• Noted that, the Revenue Department has dismissed the appeal filed, failing to take into consideration the judgment passed by the Hon’ble Patna High Court in the case of SIS Cash Services Private Limited v. Union of India [CWJC No. 6514 of 2021 dated January 21, 2024] wherein, the Hon’ble High Court by relying upon the Notification No. 53/2023-Central Tax dated November 2, 2023, held that. an appeal against an order under Section 73 or 74 has to be filed on or before 31.01.2024 and any appeal filed which is pending before the Appellate Authority could also be considered as properly filed, even if there is delay in filing. Thus, the same would also apply to an order passed under Section 62 of the CGST as under Section 62 of the CGST Act, a mode of assessment is provided.
• Further Noted that, on a bare reading of sub-section (2) of Section 62, there is no iota of doubt that the Assessment Order issued under sub-section (1) of Section 62 shall be taken to have been withdrawn by a legal fiction. Once the assessment order lost its existence and efficacy in the eye of law, there was no reason for the Revenue Department to go for recovery of demand.
• Opined that, that grave injustice has been caused to the Petitioner in this case by a completely unlawful recovery of demand. It is an admitted position that the Petitioner had already filed its return in Form GSTR3B and paid due tax on it which was well within the statutory period from the date of the Order.
• Further opined that, the dismissal of the appeal on account limitation is prima facie contemptuous.
• .Held that, the Orders passed are set aside and Hon’ble High Court also issued notice to the Assistant Commissioner who passed the Order to show cause as to why this Court should not award interest and cost which would be recovered from her.

Relevant Provision:

Section 62 of the CGST Act:

Section 62: Assessment of non-filers of returns.

(1) Notwithstanding anything to the contrary contained in section 73 or section 74 or section 74A, where a registered person fails to furnish the return under section 39 or section 45, even after the service of a notice under section 46, the proper officer may proceed to assess the tax liability of the said person to the best of his judgement taking into account all the relevant material which is available or which he has gathered and issue an assessment order within a period of five years from the date specified under section 44 for furnishing of the annual return for the financial year to which the tax not paid relates.

(2) Where the registered person furnishes a valid return within sixty days of the service of the assessment order under sub-section (1), the said assessment order shall be deemed to have been withdrawn but the liability for payment of interest under sub-section (1) of section 50 or for payment of late fee under section 47 shall continue.

Provided that where the registered person fails to furnish a valid return within sixty days of the service of the assessment order under sub-section (1), he may furnish the same within a further period of sixty days on payment of an additional late fee of one hundred rupees for each day of delay beyond sixty days of the service of the said assessment order and in case he furnishes valid return within such extended period, the said assessment order shall be deemed to have been withdrawn, but the liability to pay interest under sub-section (1) of section 50 or to pay late fee under section 47 shall continue.

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