Order Date – 05 December 2023

Parties: Neeraj Paper Marketing Ltd. Vs Special Commossioner, Department of Trade & Taxes, GNCTD & Ors.

Facts –

• The Petitioner, Neeraj Paper Marketing Ltd, deposited an amount during the course of search and inspection conducted on 29.07.2022. The inspection revelead a mismatch in GSTR-2A and GSTR-3B during the year 2018-2020.
• The petitioner claimed that its Director was coerced by the visiting team officers of respondent no.1 into depositing the amount under GST DRC- 03 dated 29.07.2022 and 30.07.2022. So the petitioner claimed a refund of amount deposited along with a simple interest of 12% p.a. from the date of payment.

Issue –

• Whether the amount deposited during the search can be considered as voluntary payments

Order –

• The Divisional Bench of Hon’ble High Court observed that the respondents have not followed the procedure in respect of voluntary deposits made by a taxpayer. Admittedly, an acknowledgment under Rule 142(2) of the Central Goods & Services Tax Rules, 2017 has not been followed. Although, the payments made by the petitioner were covered under form GST DRC-03, the respondents have not issued any acknowledgement accepting the said payment in form GST DRC-04.
• It is also material to note that although, the show cause notices indicate that the petitioner had deposited the tax and penalty on 29.07.2022, the quantum of proposed demand did not provide for any credit for the same . It is apparent that such show cause notices are in terms of Section 74(7) of the CGST Act inasmuch as they are not limited to the amount which falls short of the amount payable after accounting for the tax deposited.
• Thus, the respondents have neither acknowledged the on 29.07.2022 nor have they granted the benefit of the said deposit, while issuing the proposed demand under Section 74(7) of the CGST Act.
• Whilst the petitioner has accepted that there was a mismatch in its return regarding the ITC, he did not acknowledge that the ITC was incorrectly availed. On the contrary, the Director of the petitioner had acknowledged that in case there was any tax liability, the same would be paid with interest and penalty. Admittedly, the respondents have not ascertained the said liability and no notice has been issued to the petitioner as contemplated under Rule 142 (1A) of the CGST Rules communicating the details of any tax, interest or liability as ascertained.
• Thus the respondents are directed to refund the amount deposited by the petitioner by making a payment of ₹23,70,000/- in cash along with interest at the rate of 6% per annum from 13.12.2022 till the date of payment.