Duty paid under Protest in GST

[Vinay Kumar]

In excise law, there was separate rule called 233B which listed down some conditions that need to be fulfilled to satisfy'Duty paid under protest'. Are these rules applicable to GST also if we want to pay duty under protest? Because GST has not listed down any such conditions.

[KASTURI SETHI]

This is FAQ dated 15.12.18 (Third edition)

Q55. Does GST law recognize the concept of payment of tax under protest?

Ans. No.

However, Central Excise Rules were saved by Section 38 A of Central Excise Act, 1944. If we peruse the language of Section 174 (1) (2) & (3)of CGST Act read with Section 6 of General Clauses Act, 1897, Section 38 A of CEA, 1944 stands saved. Saving Section is both for the department as well as the assessees. In my view, the provision of 'under protest' provided under erstwhile Rule 233 B is in force because of Section 174 of CGST Act. Board's FAQ has no statutory force.

It is further opined that a specific provision to this effect is required in CGST Act also in the interest of tax payers for the purpose of natural justice..

[Vinay Kumar]

Dear Sir,

As per my understanding, section 174 is applicable when the right of assessee in the previous law is affected by the introduction of GST law. But, here, paying duty under protest is not a right given to the assessee. So, I just want to know what is the exact point in section 174, on which your opinion is based.

[Alkesh Jani]

Sir,

I am of the view that 'to protest' is one's fundamental right, so paying duty/tax under protest is fundamental right and we don't need any specific provisions for that. However, our other experts from the field of law can detail us in the matter.

Thanks,

With Regards

[KASTURI SETHI]

'Under protest' is an integral part of 'principles of natural justice'. Payment of tax under protest means challenging the issue on merits. Not accepting the decision or order or notification or circular for seeking natural justice and that too not at the cost of revenue.. To contest is your fundamental right or constitutional right. Nobody can snatch this right. Otherwise also, it exists by way of Section 174 of CGST Act. We have to dive deep into Section 174 word for word.

 

[Vinay Kumar]

Dear Sir,

I couldn't understand section 174 properly. Can you please give a basic idea what it says.

[Vinay Kumar]

Dear Kasturi sir,

I agree with your view that paying duty under protest is a right given to the assessee and he can use such privilege as per section 174. But, now the question is...what is the process of paying duty under protest.

[KASTURI SETHI]

Write a simple letter to the jurisdictional GST Range Officer with a copy to the Deputy Commissioner, In-charge GST Division. Mention details of amount paid under protest, Challan No., or Adjudication Order etc. if any. Clearly write as ,

"this payment has been made under protest. We do not agree with the views of the department. We shall contest the issue before Appellate Authority."

Get dated acknowledgement along with sign and stamp of the office. Name of the dealing official (receiving) should also be mentioned.

[chetan jadhav]

Dear Experts,

My GST registration has been cancelled by the GST officer in May 2019. In order to restore the same, I have been asked to pay interest of gross basis approx 9 lacs.

As we all are aware government has clarified that Interest u/s 50 would be applicable only on NET Basis and with retrospective effect from 01.07.2017. However the same is yet to be notified as on date.

Since section is not yet notified, GST department has asked us to pay interest on gross basis.

what is the remedy available to me in this case (kindly note, we have already waited for long and now can not defer the same any further).

Can I Pay interest under protest and file DRC 03 and subsequently when section gets notified, I can apply for refund.

regards,

[KASTURI SETHI]

Dear Chetan Jadhav Ji,

The sword of uncertainty is hanging over the issuance of notification in this aspect. Whether will it be issued retrospectively i.e. 1.7.17 or not nothing can be said at this moment, especially, keeping in view health crisis in our country. This health has effected economic condition of our country. Govt. may issue notification regarding charging interest on net cash liability but no hope of retrospective amendment. If issued, it will become a precedent.

Sufficient detail has been given above. Refund claim can be filed under Section 54(8)(e) of CGST Act which is extracted below,

"Section 54 (8)(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person;"

You will pay interest from your own pocket, you can prove that you have not passed the burden of tax/interest onto an other person and thus you will qualify to claim refund of interest. Lodging protest with the department means no time bar limit will be applicable.

Write a letter to the jurisdictional GST Range officer along with a copy to the Deputy Commissioner, in charge of GST division. Mention the details of amount paid under protest, challan number etc., and also give remarks in the letter as under

“This payment has been made under protest. We do not agree with the views of the department..

Get an acknowledgement along with sign and stamp of the office, along with name of dealing official mentioned therein.

 

[chetan jadhav]

Dear Kasturi Sir,

Thank you for the promt reply.

regards,

AI Summary

Payment of tax under protest preserved by transitional saving, enabling taxpayers to pay under protest and later seek challenge and refund. Payment of tax 'under protest' allows a taxpayer to pay disputed tax or interest while preserving the right to contest the demand; contributors rely on the transitional saving in Section 174 of the CGST Act and the survival of prior Central Excise provisions to justify that the practice remains available despite Board FAQs to the contrary. Taxpayers should send a written protest to the jurisdictional Range Officer with a copy to the Deputy Commissioner, record payment details, and obtain a dated acknowledgement to preserve rights and enable subsequent challenge or refund claims.