GST Orders Quashed Because Deposit Made ‘Under Protest’ Was Treated as Voluntary

Deepak Agro Industries Vs State of Himachal Pradesh and others (Himachal Pradesh High Court)

The petitioner approached the Himachal Pradesh High Court seeking quashing of intimation in Form GST DRC-05 dated 19.12.2023, alleging that it was issued without jurisdiction and in violation of principles of natural justice. The dispute arose after the Assistant Commissioner issued a show cause notice in Form GST DRC-01 dated 28.09.2023 for recovery of GST and IGST amounting to ₹18,58,538.

In response, the petitioner filed Form GST DRC-06 on 28.10.2023, requesting time to submit a detailed reply and informing the authority that the demanded tax had been deposited under protest. A written request to this effect was also made. Subsequently, a detailed reply along with supporting documents was filed on 30.11.2023.

However, on 19.12.2023, the Assistant Commissioner issued an order in Form GST DRC-05 stating that since the petitioner had paid the tax, interest, and penalty in accordance with the relevant provisions, the proceedings initiated by the notice stood concluded. The authority treated the deposit as voluntary and dropped the proceedings. The appellate authority, by order dated 22.07.2025, upheld this conclusion, observing that under Section 73(8) of the Act, once payment of tax and interest is made, there is no scope for further adjudication.

The High Court observed that it was undisputed that the deposit was made under protest and that a detailed reply had been filed. The authority erred in treating the payment as voluntary and concluding proceedings without considering the reply and documents submitted. The Court held that the matter required adjudication on merits.

Accordingly, the order dated 19.12.2023 in Form GST DRC-05 and the appellate order dated 22.07.2025 were quashed and set aside. The matter was remanded to the Assistant Commissioner for fresh adjudication on merits after providing due opportunity of hearing to the petitioner, to be completed on or before March 2026. The writ petition was disposed of in these terms.

FULL TEXT OF THE JUDGMENT/ORDER OF HIMACHAL PRADESH HIGH COURT

Notice. Mr. Sushant Keprate, Additional Advocate General, appears, waives and accepts service of notice on behalf of the respondents/State. As agreed, matter has been heard and is being decided today, vide this order.

2. Petitioner has approached this Court, seeking following substantive relief:-

“i. Issue writ of certiorari quashing intimation in Form GST DRC-05 dated 19.12.2023 Annexure P-10 issued without jurisdiction and in gross violation of Principles of Natural Justice.”

3. In present case, respondent No. 3, Assistant Commissioner Sales Taxes and Excise, Sarahan, Circle Sirmour, South Zone, Shimla, H.P. had issued notice to petitioner in Form GST DRC-01, dated 28.09.2023 (Annexure P-5), for recovery of GST & IGST, amounting to Rs.18,58,538/-.

4. In response to the show cause notice, petitioner had submitted Form GST DRC-06, dated 28.10.2023, with prayer to allow time to file detailed reply, but with information that tax demanded was deposited under protest and in this regard, a written request was also made, as evident from Annexure P-6.

5. Petitioner filed detailed reply on Form GST DRC-06 on dated 30.11.2023, along with supporting documents.

6. Thereafter, respondent No. 3, passed an order on Form GST DRC-05 (Annexure P-10) on 19.12.2023, stating therein as under:-

“This has reference to the show cause notice referred to above. As you have paid the amount of tax and other dues mentioned in the notice along with applicable interest and penalty in accordance with the relevant provisions of Act, the proceedings initiated vide the said notice are hereby concluded.”

7. Learned Additional Advocate General has also placed on record photocopy of the even dated order stated to have been passed by the Assistant Commissioner, wherein it has been recorded by the Assistant Commissioner that as present petitioner had deposited due amount of Rs.18,58,538/-, demanded vide Form GST DRC-01 voluntarily, proceedings initiated vide notice dated 28.09.2023, were dropped with immediate effect.

8. Crux of decision in both copies, i.e., copy of order obtained by the petitioner through electronic mode as well as photocopy of order placed on record by the learned Additional Advocate General, is that deposit made by the petitioner was treated as voluntarily deposit and notice was concluded and proceedings were dropped accordingly, whereas it is undisputed that the petitioner had requested time for filing detailed reply with deposit of the demanded amount, but under protest and, thereafter, detailed reply was also filed by the petitioner. But respondent No. 3 dropped the proceedings and concluded the notice by adjudicating the matter without taking into consideration detailed reply as well as document filed therewith.

9. In appeal preferred by the petitioner, Appellate Authority, i.e., Additional Commissioner, Grade-I (Appeal), has also disposed of the appeal, vide order dated 22.07.2025 with following operative portion:-

“5.9 I find that the usage of the expression ‘deemed to be concluded’ in sub-section 8 of section 73 of the Act clearly indicates that there is no scope for any decision by the Adjudicating Authority, once payment of tax along with due interest has been made.”

10. Taking into consideration the aforesaid facts and submissions made by learned counsel for the petitioner as well as the documents placed on record by the learned Additional Advocate General, we are of the considered opinion that respondent No. 3 has committed a mistake by treating the deposit as voluntarily deposit and concluding the notice accordingly, whereas the matter was and is required to be adjudicated on merit by respondent No. 3.

11. Accordingly, order dated 19.12.2023 GST DRC-05 (Annexure P-10) is quashed and set-aside and consequently, order dated 22.07.2025 (Annexure P-12), passed by the Appellate Authority also stands quashed and set-aside.

12. Matter is remanded back to respondent No. 3 for adjudication on merit in accordance with law, after giving due opportunity of hearing to the petitioner. Needful be done on or before 03.2026.

13. This writ petition stands disposed of in above terms. Pending miscellaneous application(s), if any, also stands disposed of.

Notes:

¹ Whether the reporters of the local papers may be allowed to see the judgment?