Concept of 'under protest'

[KASTURI SETHI]

Dear Experts,

Does the concept of ''under protest' exist in GST regime ? In my view, it exists because saving Section 174 of CGST Act covers Central Excise Act & Rules. Moreover, this concept is included in the scope of Principles of Natural Justice.

There is FAQ which says there is no concept of 'under protest'. FAQ has no statutory force.

Pl. enlighten me on the issue.

Thanks & regards.

[Alkesh Jani]

Shri Kasturiji Sir,

In my view, the claim that the payment has been made "under protest" does not hold under the current GST framework.

It is important to recall that under the earlier Central Excise Act, 1944, there was a specific provision — Rule 233B of the Central Excise Rules, 1944 — which laid down a clear procedure for making payments under protest. This included not only conditions for such payments but also guidelines for both taxpayers and the department on handling and resolving such claims.

However, under the GST regime, there is no corresponding provision or mechanism. The GST law does not recognize the concept of payment "under protest."

Payments under GST are generally made through Form DRC-03, which is specifically titled "Intimation of payment made voluntarily or made against the show cause notice (SCN) or statement." The form does not provide any option for indicating that a payment is made under protest. As such, any payment made through DRC-03 is to be treated either as:

• a voluntary payment under Section 73 or Section 74 of the CGST Act,

or

• a payment of an amount ascertained by the proper officer.

Given this framework, a taxpayer cannot claim that a payment made via DRC-03 is "under protest." Once a taxpayer chooses to pay the amount through DRC-03, it is treated as a voluntary acceptance of liability under the relevant provisions.

Accordingly, I am of the considered opinion that the payment made by the taxpayer may be treated as a voluntary payment under Section 73/74 of the CGST Act, 2017, and not as a payment under protest.

Thanks 

with Due Regards

[Alkesh Jani]

Sir, in addition to my earlier reply,

Moreover, while some may argue that Section 174 of the CGST Act, 2017 (which deals with repeal and saving clauses) preserves the provisions of the previous laws, I believe this section cannot be extended to read into the GST law something that has not been explicitly provided. Section 174 is intended to protect rights and proceedings under the repealed laws, but it cannot be invoked to introduce or imply a concept such as "payment under protest" in the GST regime when the current law is silent on the matter.

Therefore, in the absence of a specific legal framework supporting the concept of "payment under protest" under GST, any payment made through DRC-03 must be treated as a voluntary payment, and in this case, under Section 73 or 74 of the CGST Act.

Thanks,

With Due Regards

[KASTURI SETHI]

Sh.Alkesh Jani Ji,

Thanks a lot for your quick and valuable response. A few months ago I have read a judgement  wherein it was held that filing an appeal against an Adjudication Order is itself a protest.  

[Sadanand Bulbule]

 Dear Sir

While welcoming the explanation of our dear friend Sh. Alkesh ji, I wish to add here that the basic concept of "under protest" is wider than what it was in the subsumed Acts. The judicial courts certainly take cognizance of such concept when it is established that there is gross abuse of power by the authorities in forcefully getting the payments made via DRC-03, despite no liability. And Courts have ordered to refund such payments with interest as well.

Mere its absence in the GST Act does not take away the right of the taxpayers to pay tax only it is legally payable under Section 9. Therefore the weapon of "under protest" works sharply in genuine cases and I suggest to use the same wisely wherever it fits.

[KASTURI SETHI]

Sh.Sadanand Bulbule Ji,

Sir,  Thank you very much for your response. As advised by you, I shall use the legal weapon in the interest of fair justice for my client.

[YAGAY andSUN]

Note on the Concept of "Payment Under Protest" in the GST Regime

Background:

Under the erstwhile indirect tax framework, particularly the Central Excise Act, 1944, Rule 233B of the Central Excise Rules explicitly provided a statutory mechanism for making payments "under protest." This concept allowed assessees to remit duty while reserving their right to dispute liability, which played a pivotal role in safeguarding legal and procedural rights, especially during adjudication and appellate processes.

Present Legal Position Under GST:

With the introduction of the Central Goods and Services Tax Act, 2017, the legislative framework underwent a comprehensive overhaul. Notably, the GST law does not expressly provide for the concept of payment "under protest." The prescribed form for voluntary payment—Form DRC-03—does not offer any column or check-box indicating that a payment is being made under protest.

Payments made through Form DRC-03 are construed as:

• Voluntary payments under Section 73 (for non-fraudulent cases), or
• Payments under Section 74 (for cases involving fraud, suppression, etc.), as the case may be, and such payments are generally regarded as an acceptance of tax liability.

While Section 174 of the CGST Act contains repeal and saving provisions, intended to protect vested rights or ongoing proceedings under the repealed laws, it cannot be interpreted to extend provisions (such as Rule 233B) into the GST regime unless the current law expressly incorporates such mechanisms. Jurisprudentially, in the absence of express legislative intent, importing concepts from repealed statutes into the new regime is not tenable.

Judicial Interpretations and Equity Considerations:

Despite the statutory silence, higher judiciary has, in specific cases, recognized the substantive principle behind “payment under protest,” especially in situations involving coercion or absence of tax liability. Courts have held that forced or involuntary payments, particularly when disputed contemporaneously, cannot be treated as final or conclusive, and may be liable to refund along with interest.

For instance, the Madras High Court in Aditya Energy Holdings Pvt. Ltd. (2021 (12) TMI 1223 - MADRAS HIGH COURT) acknowledged the right of the taxpayer to claim refund of amounts paid under alleged coercion during investigation, holding that “mere absence of statutory recognition does not abrogate the constitutional right of a taxpayer to contest unlawful demands.”

Conclusion:

While the GST framework currently does not recognize or provide a procedure for “payment under protest”, the underlying principles remain jurisprudentially relevant, particularly where coercion, absence of legal liability, or abuse of authority can be demonstrated.

Therefore, in exceptional and genuine circumstances:

• A taxpayer may still invoke the doctrine of protest or involuntary payment, supported by contemporaneous records (e.g., written objections, email communication, or legal notices).
• Such an approach may be judicially upheld in refund claims or subsequent litigation.

Recommendations:

• Taxpayers should avoid casual invocation of "under protest" without proper documentation.
• If a taxpayer intends to protect their right to contest payment, they should explicitly record their protest in writing, even if Form DRC-03 lacks a formal provision.
• Legal advice must be sought before making such payments to preserve procedural rights and establish bona fides.

[KASTURI SETHI]

M/s.Yagay and Sun,

         Dear Sirs,  I am indebted to you for your such analytical and fool-proof reply.. 

[Shilpi Jain]

Kasturi sir. I agree with your view in the query. 

The right to breathe is not something to be given specifically under law. It Exists 

[KASTURI SETHI]

Madam, 

I am highly thankful to you for your reply.

You have echoed exactly what is brewing in my  mind.

Your art of expression is par excellence. It is unique in the sense that your one sentence expresses 1000 words. 

[Sadanand Bulbule]

Following is worth reading:

2025 (8) TMI 421 - CALCUTTA HIGH COURT - COMMISSIONER OF CUSTOMS (PREVENTIVE), KOLKATA Versus M/s. RAYMOND APPAREL LIMITED

Time limitation for filing refund claim - refund application was required to be made within one year from the judgment and order of the Hon’ble Supreme Court of India in the case of M/s. SRF Vs. Commissioner of Customs Chennai [2015 (4) TMI 561 - SUPREME COURT] as per provision of sub-section 1B(b) of section 27 of the Customs Act, 1962 or not - applicability of provision of section 27 of the Customs Act, 1962 and Circular No. 24/2004-Cus. Dated 18/03/2004.

HELD THAT:- The co-ordinate Bench of the Tribunal in the case of Commissioner of Commissioner of Customs, Tuticorin vs. Sakthi Sugars Ltd., [2020 (4) TMI 840 - CESTAT CHENNAI] held that the marking of protest itself gives information to the department that there is no requirement for reassessment. The assessment under Section 17 of the Customs Act, 1962 cannot be said to be finalised when the respondent therein has marked the protest while paying duty. It was further held that mark of protest is an information to the department that the assessee is not making payment of cess/duty voluntarily and then department has to initiate proceedings to vacate the protest and pass speaking order of reassessment. Similar view was taken by the co-ordinate Bench of the Tribunal in HDFC Bank Ltd. Vs Principal Commissioner of GST & CE, [2020 (7) TMI 362 - CESTAT CHENNAI].

AI Summary

Section 174 CGST Act Upholds Validity of 'Under Protest' Payments to Trigger Reassessment The concept of 'under protest' is recognized in the GST regime, supported by Section 174 of the CGST Act, which preserves provisions from the Central Excise Act and aligns with principles of natural justice. Although some FAQs state there is no such concept, these lack statutory authority. Judicial decisions affirm that marking a protest during duty payment signals the department that the payment is not voluntary, preventing finalization of assessment and necessitating reassessment proceedings. Tribunals have held that such protests inform authorities to initiate reassessment and issue a speaking order, reinforcing the legitimacy of 'under protest' payments under GST and customs laws.