Patna High Court Awards 9% Simple Interest and Litigation Costs Against Illegal GST Recovery — Great Eastern Hire Purchase Private Limited Vs State of Bihar
Background and Context
The Patna High Court recently concluded proceedings in a significant GST matter involving Great Eastern Hire Purchase Private Limited Vs State of Bihar, addressing the consequential relief of interest and costs following an earlier ruling that had struck down illegal tax recovery actions by state authorities.
The case arose from a chain of administrative actions taken by state tax officials that were ultimately found to be legally untenable. The Court had previously delivered a well-reasoned judgment dated 06.05.2025, which set aside the orders contained in Annexures 'P4' and 'P5' of the writ application. Following that primary ruling, the only matters left for determination were the quantum of interest payable to the assessee on the illegally recovered amount and the question of litigation costs.
The Earlier Judgment — What Was Decided on 06.05.2025
The operative portion of the Court's earlier judgment, as recorded in paragraphs 35 to 37, reads as under:
"35. While setting aside the impugned orders as contained in Annexures 'P4' and 'P5' of the writ application, the consequences shall follow. We issue notice to the Assistant Commissioner of State Tax, Gandhi Maidan Circle, Patna (Respondent No. 5) who passed the impugned order (Annexure 'P4') to show cause as to why this Court should not award interest and cost which would be recovered from her.
We also call upon the Appellate Authority, namely, the Additional Commissioner of State Tax (Appeals), Patna West Division, Patna (Respondent No. 6) to satisfy this Court as to why a proceeding for contempt be not initiated against him for acting in willful disobedience and disregard to the order of this Court passed in the case of SIS Cash Services (supra).
Let both the authorities, namely, Respondent No. 5 and Respondent No. 6 file their response within two weeks from today."
Following these directions, the Court had issued show cause notices to two specific officials:
- Respondent No. 5 — the Assistant Commissioner of State Tax, Gandhi Maidan Circle, Patna, who had passed the order dated 24.08.2023
- Respondent No. 6 — the Additional Commissioner of State Tax (Appeals), Patna West Division, Patna, who was called upon to explain potential contempt of court
Both were directed to respond with respect to the judgment delivered in SIS Cash Services Private Limited vs. Union of India in CWJC No. 6514 of 2021 dated 24.01.2024, which had laid down binding legal precedent that the authorities allegedly failed to follow.
Show Cause Responses by the Respondent Authorities
Respondent No. 5 — Assistant Commissioner's Explanation
Respondent No. 5 submitted that the impugned order dated 24.08.2023 was passed only after due verification from the GST-BO Portal and Back Office. She further stated that the original demand order dated 12.09.2019 had been issued under Section 73 of the Central/Bihar Goods and Services Act, 2017, and that relevant extracts from the portal demand and collection register were annexed in support.