Punjab And Haryana High Court Directs GST Dept. To Return Illegally Recovered GST Without Issuing SCN Along With 6% Interest

The Punjab and Haryana High Court has directed the GST Department to return illegally recovered GST without issuing a Show Cause Notice, along with 6% interest.

The bench of Justice Ritu Bahri and Justice Kuldeep Tiwari has observed that it is the duty of the officer to inform the taxpayers regarding the provisions of voluntary tax payment through DRC-03. However, the petitioner has deposited the amount of Rs. 35,73,147, but the officer has not issued DRC-03 till date. Neither the department has followed the provisions of Rule 142 (2) of the CGST Rules nor has it issued any notice under Section 74 (1) of the CGST Act.

The petitioner/assessee is in the business of manufacturing aluminum ingots. The business premises of the petitioner were searched by the officers of the Central GST Commissionerate. During the course of the search, the respondent examined the purchase ledger and asked about the purchases made by the petitioner from M/s D.G. Enterprises, Faridabad. No document was returned during the course of the search. After analyzing the ledger of M/s D.G. Enterprises, the petitioner was forced to deposit tax in lieu of the input tax credit claimed by it on the purchases made from M/s D.G. Enterprises under the Central GST Act and State GST Act, including interest and penalty.

The petitioner contended that even after depositing the amount, no GST DRC-04 has been issued by the respondent and has been recovered by the respondents without passing any adjudicating order or following any procedure under Sections 73 or 74 of the Act.

As per Rule 142 (2) of the CGST Rules, when a payment is made in FORM GST DRC-03, the proper officer has to issue an acknowledgement, accepting the payment made by the said person in FORM GST DRC-04.

Till date, they have neither issued FORM GST DRC-04 nor issued any notice under Section 74 (1) of the CGST Act. The respondents have not followed Govt. Instruction No. 01/2022–23, dated May 25, 2022, issued by the CBIC. In the instructions, it was clarified that there is no bar on the taxpayers voluntarily making the payments on the basis of ascertainment of their liability for non-payment or short payment of taxes before or at any stage of the proceedings.

The court directed the respondents to return the amount to the petitioner along with simple interest at the rate of 6% per annum from the date of deposit until the payment is made. The amount will be refunded to the petitioner within a period of two weeks.

Case Title: M/s Samyak Metals Pvt. Ltd. Versus Union of India and others

Citation: 2023 LiveLaw (PH) 109

Case No.: CWP No.26529 of 2022

Date: 24.05.2023

Counsel For Petitioner: Sandeep Goyal

Counsel For Respondent: Tajender Joshi

Click Here To Read The Order