Punjab And Haryana High Court Directs To Refund Tax Collected Illegally With 6% Interest

The Punjab and Haryana High Court has held that if the tax is collected without any authority of law, the same would amount to depriving a person of his property without any authority of law and would infringe on his right under Article 300 A of the Constitution of India.

The bench of Justice Ritu Bahri and Justice Manisha Batra has observed that no receipt was given by the proper officer after accepting the amount. The amount deposited by the petitioner under protest was liable to be refunded as the petitioner was deprived of his right.

The petitioner/assessee is engaged in manufacturing lead and lead-related products. The department/respondent blocked input tax credits amounting to Rs. 24,18,516 lying in the electronic ledger of the petitioner, to which he filed his objections.

The department searched the premises of the petitioner, and the director was questioned throughout the search. The director was forcibly taken to their office, where he was detained for two days. He was pressured to deposit the amount, and due to this, he deposited Rs. 1,99,90,000.

The petitioner lodged a protest regarding the deposit. The department searched the premises of the petitioner and got another Rs. 25 lakhs forcibly from the petitioner.

The department contended that the petitioner voluntarily deposited the amount, as is clear from the Form GST DRC-03 (P-4), in which, against Sr. No. 3-Cause of Payment, the petitioner has stated voluntary.

The court did not accept the contention of the department that the amount under deposit be made subject to the outcome of the pending investigation. The only provision that permits the deposit of an amount during the pendency of an investigation is Section 74(5) of the Act, which is not attracted. The amount collected from the company is in violation of Articles 265 and 300A of the Constitution.

The court directed the department to refund a sum of Rs. 1,99,90,000 along with 6% interest.

Case Title: Diwakar Enterprises Pvt. Ltd. Versus Commissioner of CGST Citation: CWP-23788-2021

Date: 14/03/2023

Citation: 2023 LiveLaw (PH) 57

Counsel For Petitioner: Naveen Kumar Bindal

Counsel For Respondent: Anshuman Chopra

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