Case Law Details
Sri Sai Krishna Enterprises Vs Superintendent of Central Tax (Telangana High Court)
In a practical ruling, the Telangana High Court addressed a common GST issue—tax demand raised despite prior payment. Such cases usually arise due to return mismatches or lack of proper verification by authorities. The Court stepped in to ensure that taxpayers are not subjected to double taxation, while also directing them to follow proper procedural remedies.
Case Background
The petitioner, M/s. Sri Sai Krishna Enterprises, challenged recovery proceedings initiated by the department.
- SCN dated: 25.09.2023
- Order-in-Original dated: 26.12.2023
- Recovery Notice (DRC-13): 14.10.2025
The department alleged:
- Short payment of ₹2,67,300 due to GSTR-1 vs GSTR-3B mismatch
- Excess ITC claim of ₹41,784
However, the petitioner contended that:
- The amount of ₹2,67,300 was already paid on 30.07.2018
- Despite this, demand was raised again and recovery proceedings were initiated
Key Legal Issue
Whether GST demand and recovery can be sustained when the same tax amount has already been paid prior to issuance of the show cause notice?
Arguments
Petitioner
- Tax was already paid, hence demand leads to double taxation
- Authorities failed to consider representation
- Recovery action was unjustified
Department
- Did not dispute payment entirely
- Argued that payment requires proper verification and documentation
Court Observations
The Court noted that:
- Prima facie, the tax amount was already paid
- The demanded amount matched the earlier payment
It held that:
- Raising demand again may result in double taxation, which is not permissible
- However, verification of records is necessary before granting relief
The Court adopted a balanced approach, ensuring fairness to both taxpayer and department.
Final Judgment
- Petitioner allowed to file a rectification application with proof of payment
- To be filed within two weeks
- Authority directed to decide the matter within three weeks thereafter
- Writ petition disposed of, no costs
Author’s Analysis: These ruling highlights key practical points:
- Double tax demand can be challenged if payment is already made
- Maintain proper records like payment receipts and DRC-03
- GST mismatches often trigger automated demands
- Rectification is an effective remedy before escalating disputes
Conclusion: The Telangana High Court reaffirmed that tax cannot be demanded twice for the same liability. At the same time, it emphasized procedural compliance by directing the taxpayer to seek rectification with proper proof. This judgment serves as a reminder that while courts protect taxpayers from unjust demands, accurate documentation and timely action remain crucial.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Sri M.V.L. Narasimha Rao, learned counsel for the petitioner.
Mr. Dominic Fernandes, learned Senior Standing counsel for Central Board of Indirect Taxes and Customs (CBIC) appears for respondent Nos.1 and 2.
2. The petitioner contends that it could not participate in the adjudication proceedings initiated by show cause notice in Form GST DRC-01 dated 25.09.2023 under Sections 73(1), 50 and 122 of the Central Goods and Services Tax Act, 2017 (for short, “the CGST Act”)/Telangana State Goods and Services Tax Act, 2017 read with relevant rules on account of non-service of proper notice which lead to imposition of tax liability to the tune of Rs.3,09,084/- with interest at the applicable rate under Section 50 and penalty @ 10% over the tax amount in terms of Section 73(1) read with Section 122(2)(a) of the CGST Act. However, petitioner has referred to the payment receipt at Annexure-P6 which shows payment of Rs.2,67,300/- on 30.07.2018 much before issuance of the show cause notice on 25.09.2023 which alleged non-payment of tax to the same amount i.e., Rs.2,67,300/- in GSTR-3B compared to his tax liability in GSTR-1 for the period July, 2017 to March, 2018. The order-in-original is dated 26.12.2023. The second charge related to regular availment of Rs.41,784/- as ITC in GSTR-3B when compared to ITC available in GSTR-2A. On issuance of recovery notice in Form GST DRC-13, dated 14.10.2025, upon its banker, petitioner has approached this Court.
3. Learned counsel for the petitioner submits that though representation has been made to respondent No.1 – Superintendent of Central Tax, Hyderabad, to drop the order and revoke bank attachment, but no heed has been paid. It is submitted that demand of an amount equivalent to Rs.2,67,300/- already paid as tax on 30.07.2018 under the order-in-original would tax the petitioner twice, which is not permissible in law. Therefore, appropriate direction may be issued upon the respondents to consider the representation of the petitioner in accordance with law and drop the recovery notice, dated 14.10.2025.
4. Learned Senior Standing Counsel for CBIC is not able to dispute that the amount shown to have been paid on 30.07.2018 is the same amount alleged in the show cause notice issued on 25.09.2023 for alleged non-payment of tax in GSTR-3B. He submits that apart from the payment receipt, there are no Form GST DRC-03 annexed to show payment of the said amount. These are subject to verification.
5. Upon hearing learned counsel for the parties and in the facts and circumstances of the case, since, prima facie, it appears from Annexure-P6 – Payment Receipt, dated 30.07.2018, that the petitioner has paid an amount of Rs.2,67,300/-, which is the subject matter of the show cause notice, dated 25.09.2023, for short payment of tax against GSTR-3B, we are of the view that petitioner be allowed an opportunity to file a rectification application in the prescribed form containing the details and proof of payment of tax much earlier than initiation of the adjudication proceedings in order to relieve itself from the tax liability as against the aforesaid amount. In case, such an application is filed within two weeks, the respondent – Proper Officer would consider it in accordance with law within a reasonable time, preferable, within three weeks thereafter.
6. Accordingly, the writ petition is disposed of. There shall be no order as to costs.
Miscellaneous applications, if any pending, shall stand closed.
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