Order Date – 14 December 2023

Parties: Sapphire Intrex Limited Vs Union of India & Ors

Facts –

• The Petitioner, Sapphire Intrex Limited, made a deposit during the search conducted by Anti-Evasion department coercively and the payment details were intimated vide FORM GST DRC-03. Thereafter the petitioner claimed that the payment made by the petitioner is under protest and that it reserves the right to apply for refund of the amount so deposited and filed a refund claim.
• A show cause notice dated 23.06.2022 was issued to the petitioner demanding the recovery of GST and further sought to appropriate the amount deposited during investigation, towards the proposed demand. Thereafter a deficiency memo was issued. After duly responding to the deficiency memos again a deficiency memo was issued alleging the same deficiencies as were pointed out in the first set of deficiency memos. Further advise to file a fresh refund application.
• Upon filing fresh application, the respondent intimated that as the SCN dated 23.06.2022 issued to it has not been adjudicated, the refund claims filed by it cannot be processed. It further recommended the petitioner to file fresh refund claim after adjudication of the SCN.

Issue –

• Whether the petitioner is entitled to refund of the amount that was made through its cash ledger?

Order –

• The Divisional Bench of Hon’ble High Court observed that it is not in doubt that a tax payer can voluntarily pay tax prior to issuance of the Show Cause Notice in terms of Section 73(5) of the Act. The provision is clearly for the benefit of the tax payer who voluntarily pays tax prior to issuance of any Show Cause Notice and, thus, absolves himself of any liability to pay the penalty. These provisions do not empower the Department to compel the tax payer to pay any tax.
• However, if the tax payer, after such payment, turns around and claims that the payment had not been made voluntarily and the circumstances, as mentioned above, also point out towards the same, it must be accepted that the payments were not made voluntarily. The tax payer, in such circumstances, will forfeit the immunity which he is entitled to, in terms of Section 73(6) of the Act from levy of any penalty. The authorities, in such cases, are not precluded from demanding any tax and also the penalty.
• It is not disputed that any voluntary deposit in Form GST DRC-03 is to be followed by an acknowledgment accepting the payment as being voluntarily made by issuance in Form GST DRC-04. The respondents, admittedly, have not issued Form GST DRC-04 as required under the CGST Rules.
• Since the deposit made by the petitioner has been held to be involuntary and the respondents are directed to forthwith process the petitioner’s claim for refund, it is not apposite to adjudicate other issues raised by the petitioner.
• The writ petition is allowed.