Allahabad High Court Waives Penalty Where GST Paid Under Wrong Head

The petitioner, Siddiqui Transport Company through its proprietor Mr. Vanshi Dhar Gairola, challenged the order dated 25.04.2024 passed by the adjudicating authority and the appellate order dated 30.11.2024 affirming the same. The dispute arose after a show cause notice dated 23.12.2023 demanded tax of Rs. 1,42,495/-. The petitioner maintained that the tax amount had already been deposited; however, by mistake, the IGST liability was paid under the heads of CGST and SGST. It was also pointed out that the total amount deposited exceeded the demanded sum by Rs. 1,048/-.

The department did not dispute that the amount stood deposited, but contended that it had been paid under the wrong tax head. Despite this, penalty was imposed on the ground of non-payment of IGST.

Issue before HC: Whether penalty and demand can be sustained when a tax liability has been discharged but mistakenly deposited under an incorrect GST head.

HC’s Ruling: The High Court held that the issue was squarely covered by the earlier ruling in Ocean E Mart. Since the tax amount had already been deposited with the department the same could not be treated as deliberate non-payment or tax evasion.

The Court permitted the petitioner to deposit the amount under the correct IGST head within ten days. The authorities were directed to refund the amount earlier deposited under CGST and SGST within a further period of ten days, in accordance with law. The Court further clarified that as the mistake was not mala fide and the tax amount was already with the department, the petitioner would not be liable to pay any interest or penalty. Therefore, the impugned orders were set aside.

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