M/S Real Metals Trading vs. Union Of INDIA And 2 Others

Facts

The petitioner, M/s Real Metals Trading, filed a writ petition seeking a mandamus to direct respondents 2 and 3 to refund Rs. 25,00,000/- along with interest, allegedly collected illegally on April 9, 2021, following a search on April 6, 2021. The respondents, represented by learned Senior Standing Counsel, stated that the petitioner voluntarily deposited Rs. 50,00,000/- on April 9, 2021, based on an admission of liability of around Rs. 50,00,000/- made in a voluntary statement dated April 9, 2021. The deposit was also reflected as voluntarily made under Section 73(5) of the CGST Act, 2017. The respondents further indicated that a notice under relevant provisions of the CGST Act, 2017, would be issued shortly for adjudication.

Held

The Court held that there was no good reason to direct the refund of the amount at this stage. The reasoning was based on the fact that the petitioner had voluntarily deposited Rs. 50,00,000/- on April 9, 2021, as evidenced by the DRC-03. This deposit was made pursuant to the petitioner's own voluntary statement dated April 9, 2021, wherein the petitioner admitted a liability of around Rs. 50,00,000/-. Furthermore, the receipt itself reflected the amount as voluntarily deposited under Section 73(5) of the CGST Act, 2017. The Court also noted the respondents' statement that a notice for adjudication of the case on merit was likely to be issued shortly. The ratio decidendi is that voluntary deposits made under Section 73(5) of the CGST Act, 2017, based on an admitted liability, are not refundable at the writ stage before adjudication, especially when adjudication proceedings are about to commence. The operative direction was to issue notice expeditiously for adjudication of demand, subject to the observations made.

Key Issues

1. Whether the petitioner is entitled to a refund of Rs. 25,00,000/- along with interest, as the amount was allegedly collected illegally and retained without authority of law, turning on the interpretation of the petitioner's voluntary deposit and admission of liability. 2. Whether the respondents are legally justified in retaining the deposited amount without adjudication, considering the petitioner's prayer for refund. Petitioner's Contention: The petitioner argued that Rs. 25,00,000/- was illegally collected and retained without authority of law, seeking its refund with interest. Respondent's Contention: The respondents contended that the petitioner voluntarily deposited Rs. 50,00,000/- on April 9, 2021, admitting a liability of approximately Rs. 50,00,000/- in a voluntary statement dated April 9, 2021. This voluntary deposit was also reflected under Section 73(5) of the CGST Act, 2017. They further stated that adjudication proceedings were imminent, with a notice likely to be issued shortly.