M/S Shiva Structures PVT LTD And M/S Sandeep Jagdhane And Associates vs. Union Of INDIA Through Its Secretary And Others

Held

The Court held that the payment of Rs. 3,00,00,000/- by the petitioner could not be treated as a voluntary payment of tax liability. The reasoning was that the payment was made on the very day the revenue officials visited the petitioner's premises, and prior to any adjudication of the petitioner's liability. The Court referred to its own decision in M/s. Cleartrip Pvt. Ltd. Vs. The Union of India, (2016) 42 STR 948, which likely supports the principle that payments made under such circumstances, especially when challenged, are not to be considered voluntary. The ratio decidendi is that a payment made under duress or before a formal determination of liability, when challenged, should be treated as a deposit or payment under protest, and if the subsequent adjudication process is still pending or the payment is disputed, a refund may be warranted. The Court allowed the writ petition partly and directed the respondent CGST to forthwith refund the amount of Rs. 3,00,00,000/- to the petitioner. If not refunded within two weeks, it would carry simple interest at 6% per annum.

Facts

The petitioner, M/s. Shiva Structures Pvt. Ltd., was investigated by CGST officers based on intelligence. During the investigation, the petitioner allegedly agreed to a short payment of GST amounting to Rs. 4,47,53,244/-. On the same day, the petitioner paid Rs. 3,00,00,000/-. Subsequently, the petitioner provided records and its officer's statement was recorded. The CGST office then demanded the remaining amount of Rs. 1,47,53,244/- along with interest, referencing the recorded statement. The petitioner filed a writ petition seeking a declaration of entitlement to Input Tax Credit (ITC), or alternatively, a refund of Rs. 3 Crore paid under protest, and a direction to issue a show cause notice. The petitioner later amended its prayer to solely seek the refund of Rs. 3 Crore.

Key Issues

1. Whether the payment of Rs. 3,00,00,000/- made by the petitioner can be considered a voluntary payment of GST liability, or if it was made under protest and prior to adjudication. This issue turns on the interpretation of the circumstances surrounding the payment and the petitioner's subsequent actions. Petitioner's contention: The petitioner argued that the payment of Rs. 3 Crore was made under protest and before any adjudication of its tax liability. They sought a refund of this amount. Revenue's contention: The respondent CGST stated that an inquiry was underway, a show cause notice had been issued on 24-11-2023, demanding GST of Rs. 4,47,53,244/- under Section 74 of the CGST Act, and the adjudication process was ongoing. They did not explicitly argue that the Rs. 3 Crore payment was voluntary, but rather that an adjudication was in progress.