GST Appeal Restored; Voluntary Pre-Deposit in Form GST DRC-03 instead of DRC 03A Valid

Issue: Whether an assessee’s appeal can be rejected because the pre-deposit was made through Form GST DRC-03 instead of the newly introduced Form GST DRC-03A, especially when the payment was made voluntarily and the online facility for DRC-03A was not available at the time.

Facts:

The assessee filed an appeal against an order-in-original.
The respondent refused to take the appeal on record, stating that the pre-deposit had not been made through Form GST DRC-03A.
The assessee had voluntarily made the pre-deposit through Form GST DRC-03.
Form GST DRC-03A was introduced later vide Notification dated July 10, 2024.
Circular No. 224/18/2024-GST dated July 11, 2024, clarified that voluntary payments made in Form GST DRC-03 shall be considered as pre-deposit paid through Form GST DRC-03A.

Decision:

The court held that due to the non-availability of facilities to pay the pre-deposit online for filing an appeal, the assessee had voluntarily made the pre-deposit through Form GST DRC-03.
The subsequent introduction of Form GST DRC-03A and the clarification in Circular No. 224/18/2024-GST made it clear that voluntary payments in Form GST DRC-03 should be considered as pre-deposits paid through Form GST DRC-03A.
Therefore, the impugned rejection order was set aside, and the assessee’s appeal was to be restored.

Key Takeaways:

Voluntary Pre-Deposit: Voluntary payments made in Form GST DRC-03 can be considered valid pre-deposits for filing an appeal.
Subsequent Clarifications: Circulars and notifications issued by the department provide clarifications and can have retrospective implications.
Technical Compliance: Courts are willing to take a lenient view on procedural technicalities, especially when the assessee has demonstrated a genuine intention to comply with the law.
Pre-deposit for Appeal: The primary requirement for filing an appeal is the pre-deposit of the specified amount, and the mode of payment, if done voluntarily, should not be a ground for rejection.
The court is taking a practical approach and not penalizing the tax payer for the non-availability of an online facility.

HIGH COURT OF MADRAS

AR Foundations (P.) Ltd.

Appellate Deputy Commissioner (ST)

Krishnan Ramasamy, J.

W.P.No. 34020 of 2024
W.M.P.Nos. 36839 and 36840 of 2024

FEBRUARY 6, 2025

Ms. J. Vamini and K. Vaitheeswaran, Advs. for the Petitioner. V. Prashanth Kiran, Government Adv. for the Respondent.

ORDER

1. This writ petition has been filed challenging the impugned order dated 26.07.2024 passed by the respondent.

2. Mr.V.Prashanth Kiran, learned Government Advocate, takes notice on behalf of the respondent. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.

3. The learned counsel for the petitioner would submit that the petitioner had filed an appeal against the order-in-original dated 26.07.2024 before the respondent. However, the respondent had refused to take the appeal on record by stating that no pre-deposit has been made by the petitioner.

4. Further, she would submit that in this case, due to nonavailability of facilities to pay the pre-deposit through online for filing appeal against the original order, the petitioner was not in a position to pay the same and hence, the said pre-deposit was voluntarily made by the petitioner through Form GST DRC-03. Subsequently, Form GST DRC-03A was introduced.

5. At this juncture, she referred paragraph Nos.7.1, 8.1 and 8.2 of the Circular No.224/18/2024 dated 11.07.2024 and would submit that even in the said circular, it was clarified that “the amount paid vide Form GST DRC-03 may be adjusted against the pre-deposit under Section 107 or Section 112 of the CGST Act”. However, without considering the said aspect, the respondent has arrived at conclusion that no pre-deposit was made and refused to take the appeal on record. Hence, this writ petition.

6. The learned Government Advocate appearing for the respondent would submit that their only apprehension is that as per the tax liabilities, the petitioner was supposed to have paid only a sum of Rs.2,36,738/-, i.e., 10% of the disputed tax amount, as pre-deposit for filing the appeal. However, the petitioner paid a sum of Rs.5,02,780/-through Form GST DRC-03, due to which, the respondent had suspicion that the said amount should have been paid for some other purpose and accordingly, rejected the appeal.

7. In reply, the learned counsel for the petitioner would submit that on 19.03.2024, the petitioner made the payment of pre-deposit of a sum of Rs.5,02,780/-, which is 10% of the total tax liabilities (including interest and penalty), only for the purpose of filing the appeal, however, since there was a technical issue, the appeal was filed on the very next day, i.e., 20.03.2024. Further, she would contend that the said amount is still lying in Form GST DRC-03. Hence, she requests this Court to allow this petition.

8. Heard the learned counsel for the petitioner and the learned Government Advocate for the respondent and also perused the materials available on record.

9. In this case, due to non-availability of facilities to pay the predeposit through online for filing an appeal against the original order, the petitioner has voluntarily made the said payment of pre-deposit through Form GST DRC-03 on 19.03.2024 and filed their appeal on 20.03.2024. Subsequently, Form GST DRC-03A was introduced vide Notification dated 10.07.2024. Under these circumstances, the appeal filed by the petitioner was rejected by the respondent vide impugned order dated 26.07.2024 by stating that no pre-deposit was made through Form GST DRC-03A.

10. Further, the Circular No.224/18/2024-GST dated 11.07.2024 came to be issued by the respondent. At this juncture, it would be apposite to extract the relevant portion of the said circular, which reads as follows:

“7.1 It has also been noticed that some taxpayers have already paid amounts that were intended to have been paid towards a demand, through FORM GST DRC-03. Attention is invited to Notification No. 12/2024- CT dated 10.07.2024, vide which sub-rule (2B) of Rule 142 and FORM GST DRC-03A has been inserted in Central Goods and Services Rules, 2017 (hereinafter referred to as ‘CGST Rules), providing for a mechanism for cases where the person liable to pay tax, interest and penalty under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 of CGST Act has made payment of such tax, interest and penalty, inadvertently through FORM GST DRC-03 under subrule (2) of Rule 142. In such cases, the said person can file an application in FORM GST DRC-03A, electronically on the common portal, and the amount so paid and intimated through the FORM GST DRC-03 shall be adjusted as if the said payment was made towards the said demand on the date of such intimation through FORM GST DRC-03.

7.2……

7.3……

8.1 Currently, the above-mentioned functionality for filing of an application in FORM GST DRC-03A, is not available on the common portal. Therefore, till the time such functionality is made available on the common portal, in respect of cases where an amount of predeposit has been inadvertently paid through FORM GST DRC-03 instead of making the said payment through Electronic Liability Ledger-II against the demand created in the said ledger, the concerned taxpayer may intimate the proper officer about the same, and on such intimation, the proper officer may not insist on recovery for the remaining amount payable by the concerned taxpayer, till the time the said functionality of FORM GST DRC-03A is made available on the portal.

8.2 Once the functionality of FORM GST DRC-03A is made available on the portal, the concerned taxpayer may file an application in FORM GST DRC-03A, on the common portal, at the earliest, as mentioned in para 7.1 above and on doing so, the amount paid vide FORM GST DRC-03 may be adjusted against the pre-deposit under section 107 or section 112 of the CGST Act, as the case may be, as detailed in para 7.2 above. However, in case the taxpayer fails to file an application in FORM GST DRC-03A on the common portal, the proper officer may proceed to recover the amount payable as per provisions of section 78 and section 79 of CGST Act.”

11. A perusal of the above circular makes it clear that the said circular talks about the difficulties faced by the Assesee in payment of pre-deposit and on that aspect, the clarification has been issued by the Department to the extent that the voluntary payment made in Form GST DRC-03 shall be consider as pre-deposit paid through Form GST DRC-03A. Accordingly, the petitioner made the payment of pre-deposit through Form GST DRC-03.

12. As far as the apprehension expressed by the learned Government Advocate appearing for the respondent is concerned, though this Court has already adjourned this matter during the 7 earlier occasions, till date, no verification was made by the respondent. Further, it was submitted by the petitioner that the said amount is still lying in Form GST DRC-03. In such case, if at all if there is any discrepancies, the same shall be verified and reported before this Court by the respondent.

13. In view of the above, this Court is inclined to set aside the rejection order passed by the respondent. Accordingly, this Court passes the following order:-

(i)

The rejection order dated 26.07.2024 is set aside and the appeal filed by the petitioner is restored. The amount paid by the petitioner through Form GST DRC-03 shall be considered as pre-deposit for filing the appeal.

(ii)

The respondent is directed to take the appeal on record and pass appropriate orders on merits and in accordance with law, after providing sufficient opportunity to the petitioner, as expeditiously as possible.

14. With the above directions, this writ petition is disposed of. No costs. Consequently, the connected miscellaneous petitions are also closed.