By Alok Mohit
PATNA: The Patna high court, in a recent judgment, ruled that the recovery of taxes from a security firm owner was arbitrary, ordered for refund of the improperly recovered amount and imposed a cost of Rs 5000 on the erring officer.
The court also issued guidelines for tax recoveries, emphasising the need for adherence to due process, reasonable timeframes for recovery, and proper notifications to taxpayers.
A division bench of chief justice K Vinod Chandran and justice Partha Sarthy passed the order while hearing a petition filed by an owner of a security agency, challenging the “hasty recovery” of assessed taxes by tax authorities immediately after the dismissal of her appeal, even though there was a further appeal process available, and the relevant appellate tribunal had not yet been constituted.
The bench said, “ 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 also cited the precedent set in RS Joshi, Sales Tax Officer, Gujarat vs. Ajit Mills Limited and another, stating that tax authorities should not prioritise their former roles over their judicial responsibilities.
The case revolved around whether the services provided by petitioner Sita Pandey’s company, Om Shri Security Service, to government polytechnic institutions should be exempt from certain taxes. The court did not delve into the legal issue of exemption but focused on the improper recovery process.
Pandey’s counsel argued that the recovery was arbitrary and violated statutory provisions, as it was made without proper notice and disregarded notifications extending the limitation period.
The court ruled in favour of Pandey, highlighting that the recovery was high-handed and arbitrary. It ordered the refund of the improperly recovered amounts and specified that if the demand was eventually confirmed, no interest would be claimed for the period during which the state held the funds. The court also directed the tax officer responsible to pay Rs. 5,000 to Pandey as cost, a receipt of which should be filed within two weeks.
(Author Alok Mohit is former senior News Editor of Hindustan Times Patna and Chandigarh editions; can be contacted at mohit.alok19@gmail.com)
