The Patna High Court has directed Central GST and Customs authorities to refund Rs 1.24 lakh to a taxpayer, who ended up paying his pre-deposit for an appeal twice.

It has also ordered that the man be repaid with 12% annual interest and Rs 25,000 in litigation costs, observing that the department had failed to act on his complaints and had “unnecessarily” forced him to approach the court.

A division bench of Justices Rajeev Ranjan Prasad and Sunil Dutta Mishra, in an order dated September 28, directed the authorities to make the payments within four weeks. It also allowed the department to identify the officials responsible for the delay and recover the interest and litigation costs from them.

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The case arose from a service tax demand of Rs 16.56 lakh imposed on Patna resident Shashi Kant Singh by the Joint Commissioner, CGST and Central Excise, Patna-I, in September 2022.

Singh challenged the demand before the Commissioner (Appeals) in November that year and was required to make a pre-deposit to pursue the appeal.

Advocate Kumaresh Singh, who represented the petitioner, told that the dispute arose after the petitioner’s first payment was debited but was not acknowledged by the ICEGATE (Indian Customs Electronic Gateway) portal.

“Singh paid the amount through the ICEGATE portal using SBI internet banking on June 16, 2023. The money was debited from his account, but the portal displayed an error stating that the client did not exist and the bank had provided an incorrect client ID,” the lawyer said. With no confirmation of receipt and the deadline approaching, he made a second payment through RTGS on the same day, the lawyer said.

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Advocate Singh said his client contacted ICEGATE and was assured that the amount would be refunded within 72 hours, which did not happen.

‘Things were very simple’

Criticising the department’s handling of the matter, the court observed that it “has not shown its bonafide by keeping the matter pending at their end”. It said that “the things were very simple” and the money should have been refunded once the complaints were received, rather than the department filing a counter-affidavit relying on Section 11B of the Central Excise Act, 1944.

Noting that Singh had been “unnecessarily compelled to approach this Court”, the bench allowed the writ petition. It ordered the refund of Rs 1,24,175 with interest at 12% per annum from the date of the second receipt until payment, along with Rs 25,000 as litigation costs, within four weeks.

The court said the respondents could determine where the matter had remained pending and directed that the interest and costs be recovered from the “erring officials”.