Diwakar enterprises Vs CCGST- No tax without authority of law

Petitioner- Diwakar Enterprises Pvt. Ltd.

Respondent-Commissioner of CGST and anr. 2020

Court- Punjab & Haryana (Chandigarh)

In this case, the input credit ledger of the taxpayer was blocked. A search was conducted at the business place and the director was carried to the respondent’s office. He was forced to pay an amount of Rs.Rs.1,99,90,000/- along with interest. The present petition is filed for the refund of the amount deposited forcefully.

The respondent stated that it is wrong to say that Rs.1,99,90,000/- was forcibly got deposited by respondent No. 1. The petitioner voluntarily deposited the impugned amount and the said fact is clear from the FORM GST DRC-03 (P-4) wherein against Sr. No. 3-Cause of payment, the petitioner has stated as ‘Voluntary’. It is further denied that Mr. Sahaya, Director of the petitioner company was forcibly taken to the office of respondent

No. 1. It has been found that the petitioner took the wrong ITC in respect of invoices issued by M/s Grover Metal Industries, and M/s Server Metal Industries. The investigation conducted by respondent No. 1 is not in respect of the purchases from these units but is in respect of other units. Now respondent No. 1 is investigating regarding purchase from M/s Vasuka Metals, M/s Khali Tradi Company, M/s Jay Trading Co, M/s Shiv Shakti Industry, M/s Shree Shyam Enterprises, which has nothing to do with the investigation and order passed by respondent

No. 2. It was decided on the following lines- Reference at this stage can further be made to the judgment of Karnataka High Court in a case of Union of India and others vs. Bundl Technologies Pvt. Ltd and others, ILR 2022 Karnataka 3077, wherein the question was that whether the amount was voluntarily paid during an investigation by a company under Section 74 (5) of the Act. The appeal was dismissed and it was held that Article 264 of the Constitution of India mandates that collection of tax has to be by authority of law.

Therefore, it is evident that the amount has been collected from the Company in violation of Articles 265 and 300-A of the Constitution. Therefore, the contention of the Department that amount under deposit be made subject to the outcome of the pending investigation can not be accepted.

In view of the above, the writ petition is partly allowed and respondent No. 1 is directed to refund a sum of Rs.1,99,90,000/- along with 6 % interest.

finally, the petitioner was given relief.

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