P&H HC: GST Refund Should be Issued, Collected via DRC 03 Form Without SCN

The Punjab and Haryana High Court rendered that the Goods and Service Tax (GST) Department refund the amount recovered via DRC-03 when a show cause notice (SCN) was furnished.

The applicant, M/s Samyak Metals Pvt. Ltd, asking the writ in the nature of mandamus rendering that the GST Department refund the amount, which was recovered illegally from the applicant vide Form GST DRC-03 without providing any show cause notice or passing any order under Section 74 of the Central GST Act and Haryana GST Act, 2017.

The applicant would be involved is engaged in the manufacturing of aluminium ingots. For the purpose of Goods and Service Tax, the applicant is registered under the provisions of the Central GST Act/Haryana GST Act, 2017. The applicant’s business premises were explored via the officers of the Central GST Commissionerate.

The applicant’s contention is that post-depositing the aforesaid amount, no GST DRC-04 has been provided via respondent No.3. Amount of Rs.71,46,294/- has been rescued via the respondents without passing any adjudicating order or following any directions under Sections 73/74 of the CGST Act.

Important: Issuance of SCN Under GST Section 73(10) with Time Limits

In the case of Bhumi Associate v. Union of India, it was decided that unless it is voluntary, no tax should be recovered during a search, inspection, or investigation. After the day of the search, a voluntary payment in the specified form, GST DRC-03, may be made to prevent harassing the individual whose premises were searched. The aforementioned directives have been given to prevent needless intimidation of the assessee.

It is stated in Govt. instruction No.01/2022-23 dated 25.05.2022 that there is no ban on taxpayers making voluntary contributions on the grounds of ascertainment of their due on non-payment/short payment of taxes before or at any stage of these proceedings. It is the officer’s liability to notify assessees about the provisions for voluntary tax payment via GST Form DRC 03.

A Division Bench including Justices Ritu Bahri and Kuldeep Tiwari marked 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 additionally ordered the GST Department to reimburse the petitioner, plus simple interest at the rate of 6% annually from the date of deposit until the payment is paid. Within two weeks of receipt date a certified copy of this judgment, the money will be returned to the petitioner.