Shree Nakoda Infrastructure PVT. LTD. vs. State Of Chhattisgarh

Facts

The petitioner, Shree Nakoda Infrastructure Pvt. Ltd., engaged in fabrication of iron and steel items, challenged an order dated 24.09.2019 passed by the Additional Commissioner, State Tax, Chhattisgarh. The petitioner filed GST returns for April to September 2018 and paid Rs. 24,90,879/-. However, due to an inadvertent error, this tax amount was paid into the GST account of its sister concern, M/s Jain Engineering Works, on 26.10.2018. Upon realizing the mistake, the petitioner requested a refund from its sister concern, which was received. Subsequently, the petitioner deposited the GST amount again on 20.04.2019 along with interest. Despite this, a show cause notice was issued on 24.12.2018, followed by a recovery order on 27.05.2019. An appeal against this demand notice was dismissed by the Additional Commissioner on 24.09.2019, leading to the present writ petition.

Held

The Court held that the demand notice issued against the petitioner for payment of tax amounting to Rs. 23,45,000/- should be set aside. The reasoning was based on the undisputed fact that the petitioner had already deposited a sum of Rs. 24,90,000/-, which exceeded the demand and included the principal and interest as stated in the demand notice. The Court found that the subsequent developments, specifically the petitioner's deposit of the tax amount with interest, had not been adequately considered by the appellate authority. Therefore, the order passed by the Additional Commissioner, State Tax, Chhattisgarh, dated 24.09.2019, was set aside. The matter was remitted back to the concerned authorities for reconsideration of these subsequent developments and to pass appropriate orders. The ratio decidendi is that where a tax liability, including interest, has been demonstrably paid by the assessee, even after an initial procedural lapse, and the appellate authority fails to consider such subsequent payment, the matter should be reconsidered by the authorities.

Key Issues

1. Whether the demand notice issued by the revenue authorities for payment of GST should be set aside, considering the petitioner has already deposited the tax amount, including principal and interest, albeit with an initial inadvertent error? (Question of law and fact, turning on principles of tax recovery and procedural fairness). Petitioner's contention: The petitioner argued that the demand notice should be set aside because the entire tax amount of Rs. 24,90,879/- has been deposited, including Rs. 12,55,074/- on 30.03.2019 and Rs. 12,35,594/- on 20.04.2019, along with applicable interest. They relied on the fact of subsequent deposit to demonstrate compliance. Revenue's contention: The State's counsel acknowledged that the petitioner appears to have deposited the GST amount. They submitted that this fact needs to be verified by the department itself and that an appropriate order may be passed by the Additional Commissioner, GST, Chhattisgarh, as the appeal was dismissed by the same authority.