Order dated 14 July 2025 
Parties:  Dharmendra Singh v. Deputy Commissioner of Revenue, Bally & Salkia Charge & Ors.

Facts - 

• The petitioner, a registered taxpayer, availed ITC on transactions with Balaji Trading Co. For the period June to November 2019. After cancellation of the supplier’s registration, proceedings were initiated against the petitioner under Section 74.
• The petitioner made part payments voluntarily in DRC-03 on 24.03.2022 and 27.05.2022, treating it as compliance under Section 73(5). However, without contesting the SCN or appearing for a personal hearing, an ex parte order dated 17.02.2023 was passed. 
• Subsequently, the department recovered the entire demand from the petitioner’s electronic credit ledger before the expiry of the appeal period. An appeal filed on 06.01.2024 was dismissed on the ground of delay. 

Issue -  

•  Whether recovery of tax dues before expiry of appeal period and without examining the nature of voluntary payments under Section 73(5) is legally sustainable? 

Order -

• The single judge of Hon’ble high court noted that ordinarily in such circumstances, having regard to the payment being made voluntarily under Section 73(5) of the said Act, an explanation ought to have been sought for from the petitioner in this regard. None could enlighten the Court as regards and further explanation being sought for from the petitioner.
• Having regard to the peculiar facts narrated above and by noting that the entire amount of tax has ready been recovered from the petitioner, the Court was of the view that the matter is required to be remanded back to the proper officer for providing an opportunity to the petitioner to explain the circumstances under which the payment was made voluntarily under Section 73(5) of the said Act.
• In view thereof, while setting aside the orders dated 23rd February 2024 and 17th February 2023, the matter is remanded back to the proper officer for an adjudication on merits.