The Delhi High Court directed to allow Goods and Service Tax(GST) Refund since the FORM GST DRC-04 under Central Goods and Service Tax (CGST) rules, 2017.It is not disputed that any voluntary deposit in Form GST DRC-03 is to be followed by an acknowledgement accepting the payment as being voluntarily made by issuance in Form GST DRC04.
The petitioner, Sapphire Intrex Limited is a public company engaged in the supply of services such as trading in shares & securities, renting of immovable properties, commission, and brokerage, etc, in New Delhi. The petitioner is registered under the Central Goods and Services Tax Act, 2017 (‘the Act’) with registration.
Asearch operation was conducted at the premises of the petitioner on 20.10.2021, by the officers of the GST Anti-Evasion department, under Section 67(2) of the Act. During the search, the petitioner was allegedly made to deposit an amount of ₹2,30,00,000/-, which was coercively paid by it, and the payment details were intimated vide FORM GST DRC-03 bearing ARN AD071021006167P.
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. Respondent no.3 issued a Show Cause Notice (‘SCN’) dated 23.06.2022, inter alia, demanding the recovery of GST amounting to ₹36,35,359/- under Section 74(1) of the Act and Section 20 of the Integrated Goods and Services Tax Act, 2017, and further sought to appropriate the amount of ₹2,30,00,000/-, deposited by the petitioner during investigation, towards the proposed demand.
The petitioner, in terms of Section 54 of the Act read with Rule 89 of the Central Goods and Services Tax Rules, 2017 (‘CGST Rules’) filed two separate refund claims in FORM GST RFD-01 claiming refund of the amount of ₹2,30,00,000/-.
On 17.10.2022, Respondent no.5 issued the impugned letter dated 17.10.2022, intimating the petitioner 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.
It was settled 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. In terms of Section 73(6) of the Act, in case a person chargeable with tax before service of notice under Section 73(1) or before giving any statement under Section 73(3) of the Act, makes a voluntary payment of tax with interest, the proper Officer is not to serve any notice in respect of tax so paid or any penalty payable under the provisions of the Act or the CGST Rules made thereunder.
The Court observed that the requisite procedure under Rule 142 of the CGST Rules, has also been complied with in the present case. It is not disputed that any voluntary deposit in Form GST DRC-03 is to be followed by an acknowledgement accepting the payment as being voluntarily made by issuance in Form GST DRC04. The respondents, admittedly, have not issued Form GST DRC-04 as required under the CGST Rules.
The petitioner has also raised the issue vis-à-vis the issuance of multiple deficiency memos and that the adjudication of the Show Cause Notice is not a pre-requisite for processing the refund for claim.
A division bench of Justice Vibhu Bakhru and Justice Amit Mahajan observed that “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, we do not consider it apposite to adjudicate other issues raised by the petitioner. “
“It is also clarified that the respondents are not precluded from taking any other necessary steps in accordance with law. The Department is also not precluded from passing appropriate order including any order under Section 83 of the CGST Act, for protecting the interest of the Revenue in accordance with law, if the conditions for passing such orders are satisfied. “, the Court concluded.
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