The Patna High Court recently delivered a significant judgment in the case of Parvinder Singh v. State of Bihar (Civil Writ Jurisdiction Case No. 6949 of 2025), bringing relief to assessees facing demands under Section 74 of the GST Act. The Court ruled that where an assessee has duly filed GST returns and discharged tax liabilities, demands for tax, interest, and penalties cannot be sustained merely because of a lapse in communication with the revenue authorities.
Background of the Case
The assessee, engaged in contractual operations, had been regularly filing GST returns and paying applicable taxes. However, due to a procedural lapse, the filing was not formally communicated to the concerned revenue authority. Based on this, proceedings under Section 74 were initiated, alleging concealment of supplies made to a government department.
The department subsequently raised a demand for tax, interest, and penalties. Importantly, the demand was not based on deliberate omission or fraud but solely on a technical communication gap.
Court’s Observations
The High Court examined the records and found that the assessee had in fact already filed the requisite GST returns within time. Since the tax liabilities were discharged, the Court held that Section 74 proceedings were unwarranted and unsustainable.
The judges emphasized that revenue authorities could have easily verified the assessee’s compliance by checking the GST portal, instead of assuming concealment. This verification would have prevented the need for coercive proceedings.
Decision of the Court
The Court concluded that the Section 74 action was not valid as it arose purely from a procedural lapse rather than fraudulent intent. It set aside the impugned orders imposing tax, penalty, and interest, and allowed the writ petition in favor of the assessee.
Why This Judgment Matters
This ruling is an important precedent for businesses and taxpayers.
- Distinction between fraud and procedural lapses: The Court clarified that Section 74 is meant for cases involving fraud, wilful misstatement, or suppression of facts, not for minor communication lapses.
- Relief for compliant taxpayers: Taxpayers who have duly filed returns and discharged liabilities should not face demands merely because of procedural errors.
- Accountability of revenue authorities: The judgment highlights that authorities must verify records on the GST portal before initiating penal proceedings.
Key Takeaway for Taxpayers
The case highlights the importance of maintaining proper GST compliance and documentation. While taxpayers should ensure accurate and timely communication with authorities, this judgment provides protection against undue penal demands when compliance has already been met in substance.
For businesses, this decision reaffirms that genuine taxpayers cannot be penalized for technical lapses as long as their GST returns and tax payments are in order.