Facts of the Case

The petitioner, M/s Sri Sai Krishna Enterprises, challenged an Order-in-Original dated 26.12.2023 passed under Section 73 of the CGST Act, 2017 for the financial year 2017-18, demanding Rs. 3,09,084/- (CGST and SGST combined) with penalty, alongside a bank-attachment notice in Form GST DRC-13 dated 14.10.2025 issued to recover the amount. The petitioner's case was that it could not participate in the adjudication proceedings following the show cause notice dated 25.09.2023, which alleged non-payment of Rs. 2,67,300/- as per GSTR-3B compared to GSTR-1 for July 2017 to March 2018 — but a payment receipt dated 30.07.2018 showed this very amount had already been paid well before the SCN was even issued. A second charge concerned Rs. 41,784/- of ITC availed in GSTR-3B compared to GSTR-2A.

Issues Involved

  1. Whether the petitioner should be permitted to file a rectification application demonstrating that the tax demanded had already been paid prior to the initiation of adjudication, to avoid double taxation.
  2. Whether the recovery notice in Form GST DRC-13, issued to enforce the demand, should be kept in abeyance pending such rectification.

Petitioner's Arguments

  • The payment receipt at Annexure P-6 showed payment of Rs. 2,67,300/- on 30.07.2018, much before the show cause notice dated 25.09.2023 alleging non-payment of the very same amount.
  • Demanding an amount equivalent to tax already paid in 2018 under the 2023 Order-in-Original would tax the petitioner twice, which is impermissible in law; representation seeking to drop the recovery had gone unheeded.

Respondent's Arguments

  • The learned Senior Standing Counsel for CBIC was not able to dispute that the amount shown paid on 30.07.2018 was the same amount alleged in the 2023 SCN for non-payment in GSTR-3B, but pointed out that no Form GST DRC-03 was annexed to independently evidence that payment, and submitted that the facts required verification.

Court Order / Findings

  • Noting that, prima facie, the payment receipt indicated the petitioner had already paid the amount alleged as short-paid in the SCN, the Court held the petitioner should be allowed an opportunity to file a rectification application containing details and proof of payment made much earlier than the initiation of adjudication.
  • Such an application, if filed within two weeks, was directed to be considered by the Proper Officer in accordance with law within a reasonable time, preferably within three weeks thereafter.
  • The writ petition was disposed of on these terms without deciding finally on the merits of double taxation, leaving verification to the Proper Officer.

Important Clarification

  • Where an assessee can show, even prima facie, that tax alleged as short-paid in a Section 73 SCN was in fact already paid before the SCN was issued, courts will direct the Proper Officer to examine a rectification application on that basis rather than allow enforcement of a potentially duplicative demand.
  • Absence of a formal Form GST DRC-03 evidencing the earlier payment does not defeat the claim outright — it goes to verification by the adjudicating authority, not to maintainability of the rectification request.

Sections Involved

  • Section 73, CGST Act, 2017 — determination of tax not paid/short paid, under which the Order-in-Original was passed.
  • Section 50, CGST Act, 2017 — interest on delayed payment, part of the disputed demand.
  • Section 122(2)(a), CGST Act, 2017 — penalty for tax short-paid.

Decision – In Favour of

Disposed of with directions, in favour of the Assessee — the petitioner was permitted to file a rectification application demonstrating prior payment, to be considered by the Proper Officer.

Case Details

Court: High Court for the State of Telangana at Hyderabad
Case No.: Writ Petition No. 5735 of 2026
Coram: Hon'ble the Chief Justice Sri Aparesh Kumar Singh and Hon'ble Sri Justice G.M. Mohiuddin
Date of Order: 06.04.2026

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