Punjab and Haryana High Court has held that without any authority of law, the tax collected would mean depriving a person of his property, which would infringe his rights under articles 265 and 300A of the Indian constitution.
A bench of Justice Ritu Bahari and Justice Manisha Batra gave this judgement after hearing a petition, where the petitioner had deposited the amount but did not get a receipt from a proper officer. The amount deposited by the petitioner was liable to be refunded to him with 6% interest.
The petitioner has a manufacturing lead and lead-related products business. The commissioner of the CGST department (respondent) blocked input tax credits of Rs. 24,18,516 that were recorded in the petitioner’s computerized ledger and to which he had raised objections. Moreover, the petitioner was forcibly taken to their office where he was kept detained for two days and was pressurized to deposit the amount of Rs.1,99,90,000 which he deposited and now the petitioner lodged a protest regarding the said deposit.
In its response, the department submitted that the petitioner voluntarily deposited the amount, as it is clear from the FORM GST DRC- 03(P.- 4) in which against serial number 3.- cause of payment. The petitioner has written voluntarily.
Citing previous judgments of Delhi High Court and. Karnataka high court, the judges held that the petitioner was liable for the refund of Rs.1,99,90,000 with 6% interest as the department’s argument that the amount deposited is contingent on how the ongoing investigation turns out cannot be accepted. Further, in this case, it was observed that the petitioner deposited the amount voluntarily, and there was a proper procedure that was followed but Article 265 of the constitution of India lays down that the collection of tax must be by authority of law and in this case, no receipt was given by the proper officer after accepting the Impugned amount.
Also, the only provision by which the deposit of the amount during the pendency of the investigation is valid is section 74(5) CGST Act, which was not attractive here.
Case Title: Diwakar Enterprises Pvt. Ltd. Versus Commissioner of CGST Citation: CWP-23788-2021
Date: 14/03/2023
Written by Vaishnavi Goel, 6th semester, Punjab School of Law, Punjabi University, Patiala
