Punjab and Haryana HC directs GST Department to Refund Amount Recovered through DRC03 when no SCN issued [Read Order]

The Punjab and Haryana High Court directed the Goods and Service Tax (GST) Department to refund amount recovered through DRC03 when no show cause notice (SCN) was issued.

The Petitioner, M/s Samyak Metals Pvt. Ltd, is seeking a writ in the nature of mandamus directing the GST Department to refund the amount, which was recovered illegally from the petitioner vide Form GST DRC-03 without issuing any show cause notice or passing any order under Section 74 of the Central GST Act and Haryana GST Act, 2017.

The petitioner is engaged in the business of manufacturing of aluminium ingots. For the purpose of Goods and Service Tax, the petitioner is registered under the provisions of Central GST Act/Haryana GST Act, 2017. The business premises of the petitioner were searched by the officers of Central GST Commissionerate.

Grievance of the petitioner is that even after depositing the above said amount, no GST DRC-04 has been issued by respondent No.3. Amount of Rs.71,46,294/- has been recovered by the respondents without passing any adjudicating order or following any procedure under Sections 73/74 of the CGST Act.

In Bhumi Associate vs. Union of India, it was held that no recovery of tax should be made during search, inspection or investigation unless, it is voluntary. In order to avoid harassment to the person, whose premises has been conducted, the voluntary payment in prescribed form i.e. GST DRC-03 can be made after the day of the search. The above instructions have been issued to avoid unnecessary harassment caused to the assessee.

In Govt. instruction No.01/2022-23 dated 25.05.2022 it is clarified that there is no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liability on non-payment/short payment of taxes before or at any stage of such proceedings. It is the duty of the officer to inform the taxpayers regarding the provisions of voluntary tax payment through DRC03.

A Division Bench comprising Justices Ritu Bahri and Kuldeep Tiwari observed that “However, in the present case, as per these instructions, 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 issued any notice under Section 74 (1) of the CGST Act.”

The Bench further directed the GST Department to return the amount in question to the petitioner along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made. The amount will be refunded to the petitioner within a period of two weeks from the date of receipt of certified copy of this judgment.

To Read the full text of the Order CLICK HERE

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