👍Company Director forcibly taken to GST office to Deposit GST Demand: P&H HC orders to Refund Sum with Interest

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In a recent decision, Judge Ritu Bahri and Justice Manish Batra of the Punjab and Haryana High Court bench concluded that the respondent had forced the petitioner to deposit a Goods and Services Tax (GST) demand.

Thus, the bench directed to refund the amount of ₹1,99,90,000 deposited with an interest of 6%. It was observed that the amount collected from the company is in violation of Article 265 and 300A of the Constitution of India.

The petitioner filed the writ petition in accordance with Article 226 of the Indian Constitution in order to direct the respondent (GST Authority) to refund the sum of Rs. 1,99,90,000 plus interest. Additionally, it was requested to unblock an input tax credit worth Rs. 24,18,516.

The succinct fact is that the petitioner, Diwakar Enterprises Pvt. Ltd., engaged in manufacturing lead and lead related products. The Respondent authority blocked input tax credit amounting to Rs,.24,18,516/- lying in the electronic ledger of the petitioner, to which he filed his objections.

As well, the petitioner’s property was searched. During the search, the petitioner’s director was interrogated, and he was then forcibly taken to the respondent’s office where he was detained there for two days.

The company director was under pressure to deposit the money, so he did so, depositing Rs. 1,99,90,000. The authorities thereafter further searched the premises of the petitioner and got deposited another Rs.25 lakhs forcibly from the petitioner.

The bench observed that the petitioner voluntarily deposited the impugned amount and from the FORM GST DRC-03 (P-4) wherein against Sr. No. 3-Cause of payment, the petitioner has stated as ‘Voluntary’.

Although the respondent Commissioner, CGST claimed in an affidavit that the deposit made was “voluntary,” it was also noted that the firm director refuted this in his submission.

The Petitioner was then issued a show cause notice raising demand of Rs.4,04,42,761, to which he filed his reply and the respondent confirmed the demand of Rs.2,34,47,685.

The HC mentioned in the judgment that if the tax is collected without legal authorization, this would amount to taking someone’s property without legal authorization and would violate that person’s right under Article 300A of the Constitution.

The division bench observed that “In the present case, no receipt was given by the Proper Officer after accepting the impugned amount. Thus, the amount deposited by the petitioner under protest were liable to be refunded in view of the above mentioned judgments, as the petitioner has been deprived of his right.”To Read the full text of the Order CLICK HERE

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Diwakar Enterprises Pvt. Ltd. vs Commissioner of CGST and anr.

Counsel for Appellant:   Mr. Naveen Kumar Bindal

Counsel for Respondent:   Mr. Anshuman Chopra

CITATION:   2023 TAXSCAN (HC) 621

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