NOIDA Authorities Deposited Party's Tax Under Wrong Head: Allahabad HC Directs Compensation To Assessee For Penalty Imposed U/S 73 Of GST Act

Petitioner rented out his property in Gautam Budh Nagar(Noida). The rent received from the property was taxable under the GST Act. Petitioner duly deposited the one-time lease rent of Rs. 97,18,500/- and the tax of Rs.17,49,330/- with NOIDA. Petitioner pleaded that he filed his return under Section 39 of the GST Act. The tax deposited by the petitioner to NOIDA was not reflecting in the form GSTR-3B due to mistake on part of NOIDA.

Petitioner argued that even though he submitted the evidence in proceedings under Section 73 of the Act to show deposit of tax, the same was not considered and tax and penalty were imposed. It was argued that the appellate authority also disregarded the material on record while dismissing the petitioner's appeal.

Petitioner argued that once NOIDA had accepted the deposit of tax, he could not be made to deposit the same again.

Counsel for NOIDA accepted that the amount towards tax liability was deposited by the petitioner, however, the same was deposited under wrong head which was not notified to the petitioner to enable him to make rectifications.

Perusing the counter affidavit filed by NOIDA, Justice Piyush Agrawal observed that NOIDA had admitted to its mistake of not depositing the tax deposited by the petitioner under the wrong head. In such facts, the Court held that the impugned orders were not arbitrary.

“Before parting, it will be relevant to notice that the tax amount paid by the petitioner to the NOIDA authorities was accepted, and deposited under the wrong head, hence the petitioner cannot be permitted to suffer to the mistake committed on the part of NOIDA. The petitioner paid the legitimate tax to NOIDA, which was not deposited under the proper head and therefore, on account of that the petitioner has to face not only the proceedings of GST, but also imposition of penalty,” held the Court.

Relying on decision of the Supreme Court in Batliboi Environmental Engineers Limited Vs. Hindustan Petroleum Corporation Limited and Another regarding computation of compensation, Justice Agrawal directed NOIDA to pay Rs.19,22,778/- (the penalty determined by the assessing authority) to the petitioner.

Accordingly, the writ petition was disposed of.

Case Title: Surender Gupta vs. Appellate Authority State Gst / Additional Commissioner Grade-Ii And 2 Others 2025 LiveLaw (AB) 119 [WRIT TAX No. - 1892 of 2024]

Case citation: 2025 LiveLaw (AB) 119