M/S Bhawya Enterprises vs. The Assistant Commissioner State Taxes And Excise And Another

Held

The Court held that since the Assistant Commissioner admitted that the recovery was made by mistake, the amount so recovered had to be refunded or reversed to the account from which it was recovered, along with permissible interest. The Court directed the respondent No.1 (Assistant Commissioner) to take necessary action for rectification and refund/reversal of the amount by 26.07.2025. The Court explicitly stated that it was not expressing any opinion on the merit of the demand raised by the Assistant Commissioner in the order dated 01.05.2025. It clarified that if any appeal or other statutory remedy was filed by the petitioners, the demand would be subject to the final outcome of those proceedings. In the absence of any appeal or statutory remedy being availed, the Assistant Commissioner would be entitled to recover the amount as permissible under law. As the petitioners' grievance was redressed by the direction for refund/reversal, the petitions were disposed of.

Facts

The petitioners, M/s Bhawya Enterprises, M/s Sohan Singh Meet Singh & Sons, and M/s Jalam Singh Fauji Sons, filed writ petitions before the Himachal Pradesh High Court. They were aggrieved by the recovery of demanded CGST from their accounts by the Assistant Commissioner, State Taxes & Excise, before the expiry of the three-month period allowed for filing an appeal under Section 107 of the CGST Act. The recovery was made within five days of the order dated 01.05.2025, passed under Section 74 of the CGST Act, which confirmed the demand and imposed penalty. The petitioners intended to file an appeal, but the recovery of over 10% of the demand prevented them from doing so as the department's portal required at least 10% of the demand to be deposited before filing an appeal. The Assistant Commissioner later admitted in a certificate dated 19.06.2025 that the amount was recovered inadvertently.

Key Issues

1. Whether the recovery of demanded CGST by the Assistant Commissioner before the expiry of the three-month period for filing an appeal under Section 107 of the CGST Act, and without recording reasons, prejudiced the petitioners' right to avail statutory remedy? 2. Whether the recovery of more than 10% of the demanded amount, which is a precondition for filing an appeal, prevented the petitioners from filing their appeal, despite the department admitting the recovery was made inadvertently? Petitioner's Arguments: The petitioners argued that the recovery was premature and made without proper justification, hindering their statutory right to appeal. They contended that the recovery of over 10% of the demand, while being a prerequisite for appeal, was made inadvertently, and the department's failure to reverse this amount prevented them from filing their appeal within the stipulated time, which was set to expire on 31.07.2025. They relied on the admission of mistake by the Assistant Commissioner. Revenue's Arguments: The revenue, through the Additional Advocate General, sought time to obtain instructions. The Assistant Commissioner, present in person, admitted that the recovery was made by mistake.