Siddhant Steels vs. State Of Chhattisgarh

Facts

The Petitioner, Siddhant Steels, filed a writ petition seeking a refund of Rs. 10,91,539.45, which they claim was an excess deposit made during proceedings under Section 71 of the State Goods and Services Tax Act, 2017. The Petitioner's premises were inspected on March 19, 2025, leading to a show cause notice for cancellation of registration dated March 20, 2025, alleging fraud and misstatement. The Proprietor's statement was recorded on March 21, 2025, where he declared a tax liability of Rs. 1,08,461/-. On the same day, he deposited Rs. 12,00,000/- in cash via GST DRC-03, allegedly under duress. The proceedings for cancellation of registration were subsequently dropped on March 24, 2025. The Petitioner complained on April 5, 2025, alleging the deposit was made under duress and applied for a refund, which was not acted upon, leading to the present writ petition filed on June 8, 2025.

Held

The Court directed that the amount deposited by the Petitioner-Firm, if found to be in excess, may be adjusted at the time of final adjudication or against any dues in their favour. The Court also expressed an expectation that authorities should initiate further action expeditiously in terms of Section 71 of the Act, in the spirit of the Act of 2017. The Court did not explicitly decide whether the deposit was made under duress or not, but focused on the adjustment of the amount. The refund application was examined and rejected by the authorities, but the Court's direction for adjustment implies that the deposited amount is not being treated as irrevocably forfeited. The ratio decidendi is that excess deposits made during GST proceedings, even if contentious, can be adjusted against final dues or liabilities, and the authorities should act expeditiously.

Key Issues

1. Whether the deposit of Rs. 12,00,000/- made by the Petitioner under Section 71 proceedings was voluntary or made under duress, and if voluntary, whether it can be refunded as excess deposit. (Section 71, Section 73(5), Section 74(5) of the State Goods and Services Tax Act, 2017). Petitioner's contention: The deposit was made under duress during an inspection and is in violation of Finance Ministry Instruction No. 01/2022-23. The excess amount should be adjusted or refunded after final adjudication. Revenue's contention: The Petitioner voluntarily made the deposit of Rs. 12,00,000/-. Sections 73(5) and 74(5) permit voluntary payment of tax liability. The refund application was examined and rejected on June 27, 2025, as the claim was initiated under Section 74(5) in proceedings under Section 71. However, no notice under Section 73 or 74 has been issued. The Revenue has no objection if the deposited amount is adjusted at the time of final adjudication.