Case: Bhawya Enterprises & Ors. vs. Assistant Commissioner, State Taxes & Excise Citation: 2025:HHC:24257 | CWPs No. 11694, 11696 & 11697 of 2025 Court: High Court of Himachal Pradesh Bench: Justice Vivek Singh Thakur & Justice Sushil Kukreja Date: 24.07.2025
Facts
An order dated 01.05.2025 confirmed GST demand and penalty against the petitioners under Section 74, CGST Act. Law allows three months to deposit the amount or file an appeal under Section 107. Instead, the department recovered the amount within just five days, without recording any reasons, exceeding 10% of the demand.
This blocked the petitioners from filing an appeal — the portal treated the recovered sum as “admitted tax,” not as the 10% pre-deposit required for appeal, even though more than 10% had already been recovered.
The Assistant Commissioner later admitted (Annexure P-5, dated 19.06.2025) that the amount was debited by mistake, but never reversed it — forcing the petitioners to approach the High Court.
Court’s Findings
- Recovery before expiry of three months is permissible only if reasons are recorded — here, none were.
- Since the officer himself admitted the recovery was a mistake, the amount had to be refunded/reversed, with interest, by 26.07.2025.
- The Court did not comment on the merits of the underlying tax demand.
- If petitioners file an appeal, the demand remains subject to that outcome; if not, the department can still recover the amount as per law.
Outcome
All three petitions were disposed of with directions to refund/reverse the recovered amount with interest, since the grievance stood redressed.
Key Takeaway
Tax authorities cannot recover confirmed GST demands within days of an order, without recorded reasons, in a manner that blocks the taxpayer’s statutory right to appeal. Early recovery is allowed only with recorded justification — and admitted mistakes must be corrected, not litigated.
For informational purposes only; not legal advice.
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