2022 (3) TMI 444 - HC - GST

Refund of GST alongwith interest - it was claimed that the amount was paid under coercion - conduction of enquiry for determination of tax liability - HELD THAT - The appellants are directed to issue a show cause notice calling upon the writ petitioner/first respondent to produce documents to prove that they are not liable to pay any tax under the Act or they have paid the entire tax due to the department, within a period of four weeks from the date of receipt of a copy of this order - On receipt of such notice, the writ petitioner/first respondent shall submit their objections, if any, along with documentary evidence, within a period of two weeks thereafter. Appeal disposed off.

Summary

Issues involved:
1. Refund of Goods and Service Tax
2. Allegations of coercion and duress in tax payment
3. Guidelines for recovery of tax during search/inspection proceedings

Analysis:
1. The first issue pertains to the refund of Goods and Service Tax (GST) amounting to ?2 crores, as directed by the learned Judge in the order dated 07.04.2021. The appellant, a private limited company engaged in the supply of pulses, dhall, and flour, filed a Writ Petition seeking a refund of the said amount along with statutory interest under the CGST Act, 2017. The appellant alleged that the amount was paid under coercion, threat, and duress during a search conducted on their premises. The respondents, however, contended that the amount was paid voluntarily by the appellant towards admitted tax liability. The court, after considering the facts and guidelines from a similar case, directed the appellants to refund the amount to the appellant.

2. The second issue revolves around the allegations of coercion and duress in tax payment made by the appellant. The appellant claimed that the tax amount was paid under pressure during the search conducted on their premises. On the other hand, the respondents argued that the payment was voluntary, and the appellant retracted their statement later. The court examined the circumstances, including the voluntary nature of the payment and the alleged harassment by the inspection team. The court found merit in the appellant's claim of coercion and duress, leading to the direction for a refund of the tax amount.

3. The third issue focuses on the guidelines for recovery of tax during search/inspection proceedings, as highlighted in a decision by the Division Bench of the Gujarat High Court. The guidelines emphasized that no recovery should be made during search proceedings, even if the assessee voluntarily offers payment. The court applied these guidelines to the case at hand and directed the appellants to refund the tax amount to the appellant. This decision underscores the importance of following due process and avoiding coercive measures during tax recovery proceedings.

In conclusion, the judgment addresses the issues of GST refund, allegations of coercion in tax payment, and the application of guidelines for tax recovery during search/inspection proceedings. The court's direction for a refund and the emphasis on procedural fairness highlight the significance of upholding legal principles in tax matters.