Seeking Guidance on Making GST Payments

[Ramanathan Seshan]

Dear experts,

I recently came across the case Shyama Power India Ltd. vs. State of Himachal Pradesh and Ors. (2025 (6) TMI 1571 - HIMACHAL PRADESH HIGH COURT), which discusses the concept of making GST payments 'under protest.' However, the GST Act does not explicitly provide a provision for such payments

Could anyone clarify the steps to follow when making a payment under protest under the current GST framework? Specifically:

1. Procedure: Is it advisable to submit a letter to the jurisdictional proper officer indicating that the payment is made under protest? If so, should this letter be acknowledged by the officer?

2. Acknowledgment: What if the proper officer refuses to acknowledge the letter or provide any confirmation of the payment being under protest?

3. Legal Standing: Given that the GST Act lacks a specific provision for payments under protest, how do courts view such payments? Are there precedents where payments made under protest were considered valid?

I understand that under the previous Central Excise regime, Rule 233B allowed for payments under protest. With the introduction of GST, this provision was not carried forward, and the current framework does not explicitly address this practice. 

Regards,

S Ram

[Sadanand Bulbule]

Dear Sir

Looking at the contents of three queries, you have also answered them properly. In my opinion, you can proceed accordingly.

[Ramanathan Seshan]

Sir, 

Can you please elaborate 

[Sadanand Bulbule]

Dear Sir 

Payment of tax under protest” under the GST regime is not explicitly mentioned. However, this concept is legally recognized through judicial precedents and it can still be applied under GST in suitable situations. The law is settled on this point. 

The vantage point of “Payment under protest” is to avoid adverse consequences like interest, penalty, or coercive recovery while stanching its dispute. This clearly demonstrates that the taxpayer does not accept liability on its own  but is paying temporarily to protect himself from further levy of penalties, interest, recovery proceedings and to later seek a refund,  if the dispute is resolved in favour of the appellant. 

So the payment of tax under protest should be registered in written submission with justifiable cogent evidences before the concerned authority.  And there is no bar under the GST Act for payment of tax/ penalty/ interest under protest. Significantly the judicial courts consider the plea for refunds when payments are made under protest. Therefore the authorities cannot refuse to accept any payments made under protest. 

[Ramanathan Seshan]

Thanks for your detailed explanation sir 

[KASTURI SETHI]

Covered in the scope of principles of natural justice. Various courts have given the benefit of "Under Protest" to the taxpayers even in GST regime. Case laws can be easily traced out. 

Perfect reply by Sh. Sadanand Bulbule Sir.  Beautifully drafted and expressed the exact message. 

[Sadanand Bulbule]

Dear Sirji

I am abundantly  blessed by your generous support.

[KASTURI SETHI]

Dear Querist,

1. Procedure: Is it advisable to submit a letter to the jurisdictional proper officer indicating that the payment is made under protest ? If so, should this letter be acknowledged by the officer ?

Ans. YES. Must get dated acknowledgment with signature and stamp of the office. Sometimes, the dealing Inspector or other official does not put signature properly. So also write the name and designation of the officer who receives your letter. (below his/her signature in your office copy). Courts demand such proof.

2. Acknowledgment: What if the proper officer refuses to acknowledge the letter or provide any confirmation of the payment being under protest ?

Ans. The Officer cannot refuse. There are Boards instructions to this effect. However, if the dealing officer refuses, you can send the letter through Registered Post A.D. (not through speed post). However, there is a judgment of the Tribunal wherein it has been held that even filing of an appeal with the Appellate Authority is itself a protest.

3. Legal Standing: Given that the GST Act lacks a specific provision for payments under protest, how do courts view such payments? Are there precedents where payments made under protest were considered valid ?

Ans. In the interest of the principles of natural justice, High Courts and other Appellate Authorities accept the "under protest" procedure. Such protest falls in the definition, meaning and scope of principles of Natural Justice. Yes. There are precedents where payment of tax made under protest were considered as valid.

4. I understand that under the previous Central Excise regime, Rule 233B allowed for payments under protest. With the introduction of GST, this provision was not carried forward, and the current framework does not explicitly address this practice.

Ans. Central Excise Rules, 1944 were saved vide Section 38A of the Central Excise Act and Central Excise Act stands saved vide Saving Section 174 of CGST Act. Read Section 174 (2) of CGST Actword for word.In my view, this is legal backing in addition to the shelter of Principles of Natural Justice.

There is FAQ wherein CBIC has mentioned that there is no provision for making payment of tax under protest. FAQ has no legal force. That is why Courts are accepting the payment of tax under protest You yourself have mentioned the latest judgment of H.P. High Court.

[Shilpi Jain]

Payment under protest is a right which is available irrespective of whether mentioned in the law or not. Just like principles of natural justice.

This is a very good decision for the taxpayers that you have referred to

AI Summary

GST payments under protest allowed despite no explicit statutory provision, courts recognize through judicial precedents A taxpayer sought guidance on making GST payments under protest, referencing a recent court case. The discussion clarified that while the GST Act lacks explicit provisions for payments under protest, courts recognize this concept through judicial precedents and principles of natural justice. Experts advised submitting written documentation to proper officers indicating protest status, obtaining acknowledgment, and noted that officers cannot refuse such payments. The practice protects taxpayers from penalties and interest while preserving their right to seek refunds if disputes are resolved favorably. Courts consistently accept this procedure despite the absence of specific statutory provisions in the GST framework.