Refund w.r.t wrongly paid penalty

[Bruce Reddy]

Suppose, if penalty is paid by the taxpayer based on the verbal demand of the tax authority (eway bill verification related); however the authority doesn't upload the demand in portal nor give any document regarding the demand.

Is the taxpayer eligible for refund of penalty in this scenario? Please shed light.

[Shilpi Jain]

How was the penalty paid? Through banking channel?

If yes, then file a refund application since there is no demand order for such payment. 

[KASTURI SETHI]

(i) Such refund is admissible. Section 54 (8)(e) covers “any other amount”. Govt. cannot retain any amount without any authority of law.

(ii) You will have to prove that you were forced to pay such amount by creating phobia of GST laws which were not contravened by you.

(iii) You can take shelter of the following case laws. Although these case laws pertain to recovery of tax without any authority of law, yet these can be very helpful to you in drafting application for refund claim.

TMI ID : 441712, 234420, 370345

AI Summary

Refund of wrongly paid penalty: claimable where payment lacked statutory demand and was made via verifiable banking channel. Where a penalty was paid in response to a verbal or undocumented demand and no formal demand order exists, a refund application can be filed if the payment was made through a verifiable banking channel; the payment may be treated as an erroneous or unauthorised payment recoverable under the statute's provision for any other amount paid without legal basis, subject to the taxpayer proving the payment was made under coercion or without statutory authority.