A Division Bench of Madhya Pradesh High Court observed that “no one cannot be made to suffer for the fault of another”. The bench directed the railway to refund Rs. 13,38,544/- to the petitioner-partnership firm which was paid to the Goods and Services Tax (GST) Authorities to avoid GST registration cancellation.
The bench of Justice Vivek Rusia and Justice Hirdesh directed the Railway (Respondent No. 1) to refund Rs. 13,38,544 within two months from the date of the order.
Agarwal and Brothers, the petitioner is a partnership firm engaged in supplying and distributing iron and steel metal scrap. The Railway conducted an e-auction dated 12.08.2017 for the sale of iron and steel material scraps.
The petitioner’s bid was found highest and declared the H1 bidder. The petitioner purchased 228 metric tons of scrap MST silver P and C (ORDBG) in a total consideration of Rs.51,97,142/- including the GST of Rs.9,35,486/-.
However, the railway authorities committed default in reporting the entries with respect to the purchase made in the e-auction of the petitioner on 12.08.2017, by not reporting the auction sales invoice duly paid by the petitioner in the return under GSTR-1 due to which the auction sale invoice was not reflected in the petitioner’s GSTR-2A.
The railway authorities admitted that they inadvertently deposited the amount of GST deposited in the GST No.23AAIFA875GIZ1 instead of 23AAIFA8751ZI.
The petitioner claimed an input tax credit of Rs.9,35,486/- against the purchase made from respondent No.1. Later only the petitioner came to know about the default. The GST authorities issued a notice demanding input tax with interest to the petitioner firm. In order to avoid the cancellation of GSTIN due to non-payment of the GST charges, the petitioner agreed to repay the requisite GST charges on aforesaid entries for the year 2017- 18 under protest.
The petitioner paid the amount of Rs.6,69,274 as CGST, Rs.6,69,274 as SGST i.e. in total Rs.13,38,544 including interest and now approached this Court by way of a writ petition seeking the return of amount from the Railway.
According to Prasanna Prasad, the representative for the GST authorities, the Assistant Commissioner CGST and CGS Division, Ratlam has issued a final order. The order confirms that the petitioner wrongly claimed an Input Tax Credit (ITC) amounting to Rs.9,34,096, along with an interest of Rs.4,04,451. However, the demand for the recovery of Rs.17,38,572 has been dismissed. Additionally, a penalty of Rs.10,000 has been imposed.
The High Court allowed the appeal and held that “Since this deposit of GST was not reflected in the account of the petitioner, therefore, a show cause notice was issued and the petitioner had to pay the GST to the department with interest again in order to avoid the cancellation of GSTIN, therefore, he is entitled to seek the return of Rs.13,38,544/- from the respondent No.1.”
It was also mentioned that Respondent No.1 has the option to file a claim with the GST department regarding the amount paid by the petitioner. If such a claim is submitted, the competent authority of Respondent No.2 (GST Authorities) will assess and decide on the claim based on applicable laws.
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