• Dated 07^th May, 2025

High Court Protects Taxpayer Against Procedural Error by NOIDA

Key Issue:

The taxpayer, paid GST along with a lump-sum lease rent to NOIDA. Although NOIDA collected the GST amount, it erroneously deposited the tax under the wrong head (B2C), leading to non-reflection of the tax credit and consequent proceedings under Section 73 of the CGST Act against taxpayer. Despite his submissions and evidence, the authority had imposed tax liability and penalty, compelling Petitioner to challenge the orders through a writ petition.

Petitioner's Contentions:

Valid Payment Made: The petitioner argued that he had paid ₹97,18,500 as lease rent and ₹17,49,330 as GST @18% to NOIDA, and the same was duly supported by tax invoices and challans.

Filing of Returns: The petitioner had duly filed his GST returns under Section 39 of the CGST/UPGST Act.

Mistake by NOIDA: Due to a mistake by NOIDA, the GST collected was not properly reflected in the GSTR-3B, causing a mismatch.

Documentary Evidence: Detailed replies were submitted during the proceedings under Section 61 and Section 73, attaching proofs of payment and communication from NOIDA.

Double Jeopardy: The petitioner contended that after paying GST to NOIDA, he should not be subjected again to tax and penalty proceedings due to NOIDA's internal errors.

Responsibility of NOIDA: Since NOIDA admitted in its counter affidavit that the GST was wrongly deposited under the wrong accounting head (due to tax consultant's advice), the petitioner argued that he should be compensated and not made to suffer.

Court's Findings:

• It was undisputed that the petitioner paid the GST amount to NOIDA, and NOIDA had accepted it. The GST was deposited with the government, albeit under the wrong accounting head.
• The Court held that the error was purely on the part of NOIDA, and the taxpayer, having fulfilled his obligation U/s 16(2), could not be penalized for it.
• The petitioner could not be made double jeopardized - once by paying the GST, and again by facing recovery and penalty actions.
• The Court ordered NOIDA to compensate the petitioner by paying ₹19,22,778/- (the amount of tax and penalty imposed) within 15 days. If NOIDA fails, the District Magistrate, Gautam Buddha Nagar, must recover and pay the amount to the petitioner.

Conclusion:

This landmark ruling reinforces the principle that a taxpayer who has fulfilled his tax obligations cannot be penalized for administrative mishandling by tax authorities. The judgment mandates both fairness to taxpayers and accountability of government bodies.

Our Comments:

This case serves as a critical reminder that procedural or clerical mistakes by tax-collecting bodies must not override the substantive rights of taxpayers. It also sets a strong precedent for holding authorities financially responsible for their own errors, aligning judicial reasoning with the broader objective of "Ease of Doing Business" under the GST regime.

Surender Gupta vs. Union of India & Ors. – Writ Tax No. 651 of 2023 – Allahabad High Court (Noida Bench), Order dated 26.03.2024

Author: Sneha Nandi

Edited by: Shaily Gupta