Chetna Steel Tubes Tax collected at the stage of detention can be claimed as GST refund if excess tax is paid in regular returns: Madras High CourtPrivate Limited Vs Goods and Service Tax Network (Madras High Court)
The Madras High Court, in the case of Chetna Steel Tubes Private Limited v. Goods and Service Tax Network, dismissed the petitions challenging a 2018 circular regarding tax liability under Section 129 of the CGST Act. The petitioner contended that paying tax at both the detention stage and in regular GST returns amounted to double taxation. The court observed that prior to January 1, 2022, businesses had to bear both tax and penalties when goods were detained. However, post-amendment, only a penalty of 200% of the tax is applicable. The court ruled that while tax is collected at the stage of detention to ensure compliance, any excess amount paid in returns can be claimed as a refund. The ruling clarifies that taxpayers are not subjected to double taxation, as excess GST paid in GSTR-3B can be refunded. The court maintained that the purpose of Section 129 was to enforce tax compliance during transit, and the impugned circular does not create an automatic tax liability beyond what is legally required. Consequently, the petitions were dismissed, affirming the taxpayer’s right to claim refunds for any excess tax paid due to detention.
