Patna High Court
Manju Devi AgarwalversusCentral Board of Indirect Taxes and Customs
- Decided
- Disposal
- DISMISSED
Holding
The Court held that the petitioner is estopped from contesting the interest and penalty imposed under Section 74 of the CGST Act, having admitted liability before the competent authority and failed to file a timely appeal.
Summary
The petitioner, a fertilizer and cement dealer, filed a writ seeking quashing of show‑cause notices and penalties issued under Section 74 of the Central Goods and Services Tax Act, 2017, alleging that tax had already been paid and that the notices were issued without basis. The tax department had issued multiple notices alleging short payment, excess input tax credit and willful suppression, and had levied interest under Section 50 and penalty under Section 74. The petitioner did not contest the notices before the Assistant Commissioner, admitted liability, and paid the tax, interest and partial penalty, stating the remaining amounts would be paid later. The petitioner did not file an appeal within the prescribed period and later approached the High Court. The Court held that the petitioner is estopped from challenging the interest and penalty because she had already admitted liability before the authority, and the SCN under Section 74 was valid. Consequently, the writ application was dismissed.
Issues considered
- Can a show‑cause notice under Section 74 of the CGST Act be issued after the tax has been voluntarily paid?
- Is the levy of penalty under Section 74 permissible when the notice does not expressly mention a penalty?
- Does the petitioner’s admission of liability before the competent authority estop her from challenging the interest and penalty in a writ petition?
- Can the High Court entertain a writ petition when the statutory appeal under Section 107 is time‑barred?
- Is the CBIC circular superseding judicial pronouncements valid under the GST law?
Legislation cited
- Central Goods and Services Tax Act, 2017 — s. 107, 168, 50, 73, 74, 75(7)
- Constitution of India — s. 226
Subjects
- GST
- CGST Act
- Section 74
- Penalty
- Interest
- Show cause notice
- Estoppel
- Writ jurisdiction
- Tax assessment
- Input tax credit
- Natural justice
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.862 of 2026
======================================================
Manju Devi Agarwal wife of Bhupesh Kumar Agarwal, resident of Ward No.
06, Hospital Road, Forbesganj, Araria, Bihar- 854318 proprietor M/s
Sampark, having its office at Ward No. 06, Hospital Road, Forbesganj, Araria,
Bihar- 854318 through its Authorized Signatory Nikesh Kumar Jha, (Male,
aged about 32 Years) son of Shri Dharam Nath Jha, resident of Bhadreshwar,
Araria, Bhadreshwar, Bihar-854316.
... ... Petitioner/s
Versus
1. Central Board of Indirect Taxes and Customs GST Policy Wing,
Government of India, Department of Revenue having its office North, New
Delhi-110001.
2. Commissioner of CGST and Central Excise having its office at Bir Chand
Patel Path Patna -800001.
3. Asst. Commissioner of CGST and Central Excise, Purnea Division,
Darbhanga.
4. Asst. Commissioner of CGST and Central Excise, Audit Circle, Darbhanga.
5. Manager, State Bank of India, Forbesganj Branch, Forbesganj, District -
Araria, Bihar
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Sadashiv Tiwari, Advocate
Mr. Hiresh Kiran, Advocate
For the Resp. Nos. 1 to 4: Mr. Amit Pandey, Sr.S.C., CGST and CX
Mrs. Asmita Sinha, Advocate
For the Resp. No. 5 (SBI): Mr. Kaushalesh Choudhary, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE JUSTICE SMT. SONI SHRIVASTAVA
ORAL ORDER
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
3 27-04-2026 Heard learned counsel for the petitioner, learned
counsel for the CGST and learned counsel for the State Bank of
India.
2. The petitioner in the present writ application is
seeking the following reliefs:-
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
2/13
“(i) The notice dated 25.07.2024 and 31.07.2024 (as
contained in Annexure - P 3 series) issued by the
respondent no. 3 and 4 under section 74 of the Central
Goods and Services Tax Act, 2017 (hereinafter called the
Act) in absence of any fraud or any willful misstatement
or suppression of facts to evade tax particularly, in view
of payment of tax voluntarily for multiple assessment
years before the issue of the show cause notice be set
aside and quashed.
(ii) The order dated 04.02.2025 and 06.02.2025 (as
contained in Annexure-P 4 series) and notice dated
24.10.2025 (as contained in Annexure-P 5) passed by the
respondent no. 3 for the Tax Period 2017-18 to 2022-23
under section 74 of the Central Goods and Services Tax
Act, 2017 (hereinafter called the Act) for multiple
assessment years and also in view of payment of tax
prior to issue of a show cause notice in Form GST DRC
1 voluntarily and more importantly, in view of levy of
interest and penalty in excess of the show cause notice in
Form GST DRC 1 being in contradiction of the statutory
provisions contained in section 75 (7) of the Act be set
aside and quashed.
(iii) The Circular F. No. CBIC 20010/67/2025- GST/994
dated 16.09.2025 issued by the respondent no. 1 issuing
standard public comments explaining statutory
provisions contained in section 73 and 74 of the Act in
supersession of the law laid down by other Hon'ble High
Courts in the Country and holding such judicial
pronouncements to be applicable only within the
jurisdiction of the said Hon'ble High Court including
non-applicability of certain judicial pronouncements
purportedly issued in exercise of powers under section
168 of the Act being excess of powers conferred and
being opposed to the scheme of GST being "One Nation
One Tax" theory is arbitrary, illegal and without
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
3/13
jurisdiction?
(iv) The notice dated 24.10.2025 issued by the
respondent no. 3 in Form GST DRC - 13 under section
74 (9) of the Act directing the respondent no. 5 to remit
the amount of tax determined in pursuance of an order of
assessment particularly, in view of payment of tax prior
to the issue of show cause notice fully illegal and
without jurisdiction?
(v) For granting any other relief (s) to which the
petitioner is otherwise found entitled to.”
Brief facts of the case
3. The petitioner is engaged in the business of
fertilizer, cement and pesticides. It is an admitted position that
the petitioner filed the statutory returns in Form GSTR 1 and
GSTR 3B for the tax period 2017-18 to 2022-23.
4. It appears from the show cause notice (in short
‘SCN’) dated 25.07.2024 (Annexure ‘P/3’) that the petitioner
was served with the SCN calling upon her to show cause for the
alleged contravention of the provisions of Sections 9, 16, 50 and
74 of the CGST Act, 2017. The SCN alleged short payment of
tax and the excess availment of the input tax credit for which the
petitioner was liable to pay the amount of tax along with the
interest as applicable under Section 50 (1) and Section 74 of the
Central Goods and Services Tax Act, 2017/BGST Act, 2017
(hereinafter referred to as ‘CGST Act, 2017’).
5. From the narration of facts present in the SCN, it
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
4/13
would appear that in course of audit and scrutiny of GSTR-1
and GSTR-3B, the short payment of taxes to the extent of Rs.
10,59,756/- [CGST- 5,29,878/- + SGST- 5,29,878/-] was noticed
and the differences which were being reflected in the Annual
Return i.e. GSTR-9, have been shown in the SCN. It appears
that the tax payer/ petitioner was requested to pay the said short
paid GST along with applicable interest under Section 50 of the
CGST Act, 2017.
6. The records would further reveal that the tax payer
paid a sum of Rs. 5,79,756/- vide DRC-03, Debit entry dated
19.06.2024. The tax payer was then requested to discharge
remaining tax amounting to Rs. 4,80,000/- vide various office
letters. In response to the same, the tax payer discharged the
remaining payment amounting to Rs. 4,80,000/- but the liability
towards the interest under Section 50 of the CGST Act, 2017
was not discharged.
7. It is further noticed that the petitioner had availed
excess input tax credit amounting to Rs. 29,35,892/- [IGST-
12,188/- + CGST- 17,88,273/- + SGST- 11,35,431/-] during the
period 2017-18 to 2022-23. This was detected during the
scrutiny of the ITC available as per GSTR-2A and ITC availed
as per GSTR-3B. This was found in violation of Section 16 of
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
5/13
the CGST Act, 2017 read with Rules 36 of the CGST Rules,
2017. In response to the said wrong availment of input tax
credit, the petitioner was requested reverse excess availed ITC.
In response to the same, the petitioner paid tax amounting to Rs.
29,35,892/- which have been shown in the show cause notice. It
is mentioned that the tax payer/petitioner did not discharge
applicable interest under Section 50 and penalty under Section
74 of the CGST Act, 2017 on the said tax paid. The show cause
notice therefore, claimed that the tax-payer is liable to pay
applicable interest under Section 50 along with penalty as
applicable under Section 74 of the Act on payment of the above
tax.
8. The third head under which the show cause notice
has been issued relates to non-payment of GST amounting to
Rs. 3,43,864/- with recoverable interest of Rs. 3,17,683/- and
applicable penalty. It is stated that during scrutiny of Form
26AS of Financial Year 2017-18 to 2022-23 and the turnover
declared in Profit and Loss Account, it appears that the tax payer
had not discharged the GST liabilities against payment received
under different sections, such as 194(b), 194R etc. The tax-payer
was called upon to pay GST amounting to Rs. 3,43,864/- with
applicable interest and penalty and the same was communicated
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
6/13
to the tax-payer through Audit Memo: 01/MDA/2024-25 dated
07.06.2024. In response to the same, the tax-payer paid the tax
amounting to Rs. 3,43,864/-. The interest on the said tax amount
has been calculated year wise in the show cause notice. Since
the tax-payer had not discharged the said interest liability as
calculated under Section 50 and penalty under Section 74 of the
CGST Act, 2017, the show cause notice called upon the
petitioner to pay interest and the penalty. In paragraph nos. 5
and 6 of the show cause notice, the following stipulations are
present which are quoted hereinunder for a ready reference:-
“5. All the above acts of contravention appeared to have been
committed by way of suppression/wilful-misstatement of the facts with
an intention in evade payment of GST and therefore, the GST not paid
is required to be demanded and recovered from them under the proviso
to Section 74(1) of the Acts by invoking extended period
"Section 74: Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or utilized by
reason of fraud or any wilful-misstatement or suppression of facts.-
(1) Where it appears to the proper officer that any tax has not been
paid or short paid or erroneously refunded or where input tax credit
has been wrongly availed or utilized by reason of fraud, or any wilful-
misstatement or suppression of facts to evade tax, he shall serve notice
on the person chargeable with tax which has not been so paid or which
has been so short paid or to whom the refund has erroneously been
made, or who has wrongly availed or utilized input tax credit,
requiring him to show cause as to why he should not pay the amount
specified in the notice along with interest payable thereon under
section 50 and a penalty equivalent to the tax specified in the notice."
6. The said taxpayer was communicated the decision of the MCM
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
7/13
conducted on 20.06.2024 (Form GST ADT-02) vide this office letter
C.No. GADT CnGADT/GST/6266/2024-GR19-CGST-ADT CIR-6-
ADT-PATNA/621 dated 27.06.2024 (RUD-4 and further through
DRC-01A: 09/Audit(Dbg)/Gr.19/2024-25 vide this office letter
GADT/ Cn ADT/GST/6266/2024-GR19-CGST-ADTCIR-6-ADT
PAINA /641 dated 04.07.2024 (RUD-5) requesting to pay Tax
amounting to Rs.34,29,719/- CGST- Rs.20,35,187/-, SGST-
Rs.13,82,344/- & IGST-Rs.12,188/- alongwith confirmed interest
amounting to Rs.4,56,626/- CGST- Rs.2.14,841/- & SGST- Rs.
2,07,332/- +IGST-Rs. 34,053-] and Late Fees- 7,94,350/- [CGST-
Rs.3,97,175/- and SGST- 3,97,175/-] in addition to applicable
interest under Section 50 and penalty at applicable under Section 74
of the CGST Act, 2017 during the period 2017-18 (Jul-Mar) to 2022-
23.
In response to above letters, the taxpayer discharged Tax amounting
to Rs. 34,29,719/- [CGST-Rs. 20,35,187/-, SGST-Rs. 13,82,344/-&
IGST-Rs. 12,188/-] vide DRC-03s:-
• Debit entry no. D1107240004716 dated 07.07.2024(RUD-6)
• Debit entry no. 11100-240004720 dated 07.07.2024(RUD 8)
• Debit entry no. D11007240004723 dated 07.07.2024 (RUD-9)
• Debit entry no. D11007240004726 dated 07.07.2024-(RUD-10)
• Debit entry no. D11007240004729 dated 07.07.2024 (RUD-11)
• Debit entry no D11007240004732 dated 07.07.2024 (RUD-12)
• Debit entry no. DC 1007240011431 dated 07.07.2024 (RUD-13)
• Debit entry no. DC 1007240011422 dated 07.07.2024(RUD-18)
• Debit entry no. DC1007240011428 dated 07.07.2024(RUD-19)
• Debit entry no. DC1007240011416 dated 07.07.2024(RUD-20)
Confirmed interest amounting to Rs.1,38,942/-[CGST-
Rs.55,999/-,SGST-Rs.48,890/- & IGST-34,053/- ] and Rs.17,110/-
[CGST-Rs.8,555/- & SGST-Rs.8,555/-] out of applicable interest and
Rs.2,076/- [CGST-1,038/- & SGST-1,038/-] out of applicable penalty
concerned to Para No. 03 and Para no.10 of Audit Memo:
01/MDA/24-25 dated 07.06.2024 (RUD-1) and vide DRC-03s
• Debit entry no. DC 1007240011389 dated 07.07.2024 (RUD-21)
• Debit entry no. DC 1007240011394 dated 07.07.2024(RUD-22)
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
8/13
• Debit entry no. DC1007240011401 dated 07.07.2024(RUD-23)
• Debit entry no. DC 1007240011408 dated 07.07.2024 (RUD-24)
• Debit entry no. DC 1007240013463 dated 08.07.2024 (RUD-25)
• Debit entry no. DC 1007240013475 dated 08.07.2024(RUD-26)
• Debit entry no. DC 100-240011416 dated 07.07.2024(RUD-20)
and Late Fee amounting to Rs.7,94,350/- [CGST-Rs.3,97,175/- and
SGST-3,97,175/-] vide DRC-03s
• Debit entry no. DC 1007240011339 dated 07.07.2024(RUD-27)
• Debit entry no. DC 1007240011348 dated 07.07.2024(RUD-28)
• Debit entry no. DC 1007240011351 dated 07.07.2024(RUD-29)
• Debit entry no. DC 1007240011361 dated 07.07.2024(RUD-30)
• Debit entry no. DC 1007240011365 dated 07.07.2024(RUD-31)
• Debit entry no. DC 1007240011372 dated 07.07.2024(RUD-32)
• Debit entry no. DC 1007240011378 dated 07.07.2024(RUD-33)
• Debit entry no. DC 1007240011382 dated 07.07.2024(RUD-34)
and communicated to this office requesting to waive all the interest
and penalty in light of 53rd GST council meeting vide their e-mail
dated 08.07 2024 (RUUD-7).
However, as on date, there is no such circular or notification
regarding such waiver.
Thus, the taxpayer is liable to discharge the confirmed interest
amounting to Rs.3,17,684/- [CGST-1,58,842/- & SGST-
Rs.1,58,842/-] (concerned to the tax amount mentioned in para
no.3.3 above) along with applicable interest (concerned to the tax
amount mentioned in para no.3.1 and 3.2 above) under section 50
and Penalty under section 74 of the Acts.”
9. It is evident from paragraph ‘5’ of the show cause
notice that the department has made specific allegation against
the petitioner that there is a suppression/wilful-misstatement of
the facts with an intention to evade payment of GST. The tax-
payer was communicated about the decision of the MCM
conducted on 20.06.2024 vide letter referred under paragraph
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
9/13
‘6’ of the show cause notice.
10. There is no dispute over the fact that the show
cause notice had been duly served upon the petitioner but the
petitioner chose not to file any response to the said show cause
notice.
11. On perusal of the summary of the order in Form
GST DRC-07, it would appear that the petitioner was given an
opportunity of hearing as well. Paragraph ‘3’ of the order
records this fact that the matter was fixed for personal hearing
on 17.10.2024. Sri Anand Agrawal appeared on behalf of the
noticee and said that the noticee had paid tax and partial interest
and partial penalty through DRC-03 and the rest amount of
interest and penalty will be deposited within two months.
12. It is evident from the order (Annexure ‘P/4’) that
the representative of the petitioner admitted not only the tax
liability but also the liability towards interest and penalty. In
fact, the representative made a statement that rest of the amount
of interest and penalty will be deposited within two months.
13. Based on what were submitted before the
competent authority, the order impugned in the present writ
application (Annexure ‘P/4’) has been passed.
14. The petitioner did not challenge the order
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
10/13
(Annexure ‘P 4’) in appeal before the Appellate Authority. After
10 months of the order (Annexure ‘P/4’), the present writ
application has been preferred.
Submission of the petitioner
15. Learned counsel for the petitioner has submitted
that in this case, the SCN (Annexure ‘P/3’) has been issued after
payment of the tax amount by the petitioner. It is his submission
that once the tax amount has been paid by the petitioner, no
SCN could have been issued under Section 74 of the CGST Act.
According to him, the SCN could have been issued only under
Section 73 of the CGST Act. Learned counsel submits that the
SCN did not mention any penalty amount to be levied against
the petitioner. Therefore, levy of penalty in the final order
(Annexure ‘P/4’) would not be sustainable.
16. Learned counsel for the petitioner submits that
these are sufficient grounds for setting aside of the impugned
order (Annexure ‘P/4’) and remand the matter to the Assistant
Commissioner (Respondent No. 4) who has passed the
impugned order.
Submission of the respondents
17. On the other hand, learned counsel for the
respondent nos. 1 to 4 submits that the impugned order does not
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
11/13
suffer from violation of principles of natural justice. The
petitioner has been given adequate opportunity to place the case
before the Assistant Commissioner ( respondent no. 4). There is
an admission of liability by the representative of the petitioner
in course of hearing. Thus, the petitioner is estopped from
taking any plea against the imposition of interest and penalty in
terms of the statutory provisions.
18. Learned counsel further submits that the
petitioner, if at all, was aggrieved by the impugned order, had a
remedy available by filing an appeal before the Appellate
Authority under Section 107 of the CGST/BGST Act, 2017. The
petitioner chose not to file any appeal within the prescribed
period of the limitation. This writ application has been preferred
10 months after the impugned order when the remedy of appeal
became barred by limitation. The submission is that this Court
sitting under 226 of the Constitution of India would not step into
the domain of the competent authority, such as the respondent
no. 4 to consider the matters having certain issues of facts which
are in complete conflict with the stand taken before the
respondent no. 4. The submission is that where the petitioner/her
representative has admitted the liability before the respondent
no. 4, any interference by this Court even by way of remand
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
12/13
would not be justified. Such interference in the revenue matters
is required to be discouraged.
Consideration
19. Having regard to the submissions noted herein-
above and the materials which are placed before this Court, we
find force in the submissions of the learned counsel for the
respondent nos. 1 to 4. The SCN dated 25.07.2024 (Annexure
‘P/3’) clearly alleged willful suppression on the part of the tax-
payer/petitioner. The provisions of Section 74 under which the
SCN has been issued, had been brought to the notice of the tax-
payer. A response was sought for but the tax-payer did not file
any response, rather went on depositing the money with the
department. It is clearly recorded in paragraph ‘3’ of the
impugned order that the representative of the petitioner
submitted that the partial payment on account of interest and
penalty has been made. This statement recorded in the
impugned order has not been challenged by the petitioner.
20. We, therefore, agree with the submission of
learned counsel for the respondent nos. 1 to 4 that having taken
one stand before the competent authority, the petitioner would
be estopped from changing her stand before this Court by filing
a writ application. Such submissions, on behalf of the petitioner
Patna High Court CWJC No.862 of 2026(3) dt.27-04-2026
13/13
are being made only to get rid of the impugned order and those
are required to be discouraged by this Court. We find no force in
the submissions of the learned counsel for the petitioner because
the petitioner had paid the tax amount without protest. The
payment of taxes on account of short payment of taxes or
wrongful availment of input tax credit after it was pointed out in
the audit, the submission that the SCN could not have been
issued under Section 74 of the CGST Act, 2017 has no basis to
stand. As recorded above, the petitioner was served with the
SCN clearly saying that it was a case of willful suppression,
which the petitioner did not contest before the competent
authority.
21. In such circumstance, we find no merit in this
application. It is dismissed, accordingly.
(Rajeev Ranjan Prasad, J)
( Soni Shrivastava, J)
Devendra/priyanka
U
Checking your session…