2023 (6) TMI 745 - HC - GST

Refund of accumulated input tax credit - export of services by operation - revenue department is in process of issuing a notice under Section 74(1) of the CGST Act. HELD THAT - This very issue has been examined by this Court in Ditwakar Enterprises Pvt. Ltd. s case 2023 (4) TMI 207 - PUNJAB AND HARYANA HIGH COURT and Modern Insecticides Ltd s case 2023 (4) TMI 1184 - PUNJAB AND HARYANA HIGH COURT . In these cases, this Court while relying upon the judgment passed by the Delhi High Court in case titled as Vallabh Textiles vs. Senior Intelligence Officer and others, 2022 (12) TMI 1038 - DELHI HIGH COURT and judgment passed by the Karnataka High Court in case titled as Union of India and others vs. Bundl Technologies Pvt. Ltd and Others 2022 (3) TMI 625 - KARNATAKA HIGH COURT , has observed that any amount deposited voluntarily by the petitioner during search would not amount to collection of tax under Article 265 of the Constitution and an amount collected without authority of law, would not amount to collection of tax and the same would amount to depriving a person of his property without any authority of law and would infringe his rights under Article 300A of the Constitution of India as well. Since, the respondents have failed to place any material on record to show that they got deposited amount of Rs.83,89,196/- from the petitioners with any authority of law, therefore, we hereby, allow this petition and a direction is being given to the respondents to refund the amount of Rs.83,89,196/- along with the interest @ 6% from the date of filing of this petition, within a period of 30 days after the receipt of certified copy of this order. Application disposed off.

Summary

Issues:
The issues involved in the judgment are the refund of input GST claimed by the petitioners for export of services, the conduct of an illegal search by the revenue authorities resulting in the deposit of a certain amount by the petitioners, and the subsequent request for refund of the deposited amount.

Refund of Input GST:
The petitioners claimed refund of input GST for providing Export of Business Support Services to a company in Hong Kong, citing compliance with the Integrated Goods and Service Tax Act, 2017. They submitted refund claims for two periods, which were initially sanctioned and disbursed by the revenue authorities. However, a search conducted on the petitioners' premises led to the deposit of the refunded amount under protest. Despite the petitioners' request for reinstatement of the amount in their Input Tax Ledger, it was not done, prompting them to seek a writ of mandamus for the refund of the amount along with interest.

Illegal Search and Deposit:
A search conducted by the revenue authorities at the petitioners' premises resulted in the deposit of a specific amount by the petitioners under protest. Subsequent requests for the refund of this amount were not considered by the authorities, even after a lapse of two years. The petitioners alleged that no proceedings under Section 74(1) of the CGST Act had been initiated, yet the input tax credit was not reverted in their ledger. The petitioners sought a writ of mandamus to direct the respondents to refund the deposited amount along with interest.

Judicial Decision:
The court noted that the petitioners had restricted their prayer to the refund of the deposited amount only. It observed that no proceedings had been initiated by the revenue authorities for penalty or fresh demands. Citing precedents, the court emphasized that any amount deposited voluntarily during a search does not amount to tax collection under the Constitution. As the respondents failed to demonstrate the legal authority for the deposit, the court allowed the petition and directed the respondents to refund the amount along with interest within 30 days of the order.