Assessee Coerced To Deposit GST During Search: Delhi High Court Orders Refund
The Delhi High Court has directed the department to refund the amount deposited by the petitioner by making a payment of Rs. 23,70,000 in cash along with interest at a rate of 6% per annum.The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that payments aggregating to Rs. 28,20,000 were made at 11:49 PM and at 12:38 PM during the search operations. The payments made by...
The Delhi High Court has directed the department to refund the amount deposited by the petitioner by making a payment of Rs. 23,70,000 in cash along with interest at a rate of 6% per annum.
The bench of Justice Vibhu Bakhru and Justice Amit Mahajan has observed that payments aggregating to Rs. 28,20,000 were made at 11:49 PM and at 12:38 PM during the search operations. The payments made by it were not voluntary but under compelling circumstances.
The petitioner carries on a business in the trading of waste paper and craft paper, which are taxable at 5% and 12%, respectively, under the provisions of GST laws.
The petitioner/assessee has filed the petition seeking the refund of Rs. 28,20,000 deposited by the petitioner during the course of search and inspection, along with a simple interest rate of 12% p.a. from the date of payment.
The petitioner claimed that he was coerced to deposit the amount and that it cannot be considered a deposit done voluntarily under Section 74(5) of the Central Goods and Services Tax Act, 2017.
The petitioner claimed that its director was coerced by the visiting team officers of the respondent or department into depositing an amount of Rs. 25,20,000 under GST DRC-03 and Rs. 3,00,000 under GST DRC-03.
The issue raised was whether the payments so made could be considered voluntary payments under Section 73(5) or Section 74(5) of the CGST Act.
Section 73 of the CGST Act, as well as Section 74 of the CGST Act, enables a taxpayer to make voluntary payments. In terms of Sub-Section (5) of Section 73 of the CGST Act, a person chargeable with tax may pay tax on a self-assessment basis, along with interest, prior to the issuance of any notice under Section 73(1) of the CGST Act. If the taxpayer makes any such payments, it would be absolved of the penalty payable under the provisions of the CGST Act. However, if the payments made fall short of the amount payable, the proper officer may proceed with the issuance of notice under Section 73(1) of the CGST Act.
The court held that not following the stipulated procedure would also lead to the conclusion that the payments were not voluntary.
Counsel For Petitioner: Shammi Kapoor
Counsel For Respondent: Rajvee Aggarwal
Case Title: Neeraj Paper Marketing Ltd. Versus Special Commissioner, Department Of Trade And Taxes, Gnctd & Ors.
Citation: 2023 LiveLaw (Del) 1270
Case No.: W.P.(C) 158/2023