REFUND OF AMOUNT PAID DURING INVESTIGATION UNDER GST

The article contains how the refund of amount paid during investigation may be claimed on the basis of *High Court Judgment M/s BUNDL TECHNOLOGIES PRIVATE LIMITED Vs THE UNION OF INDIA AND ANR*. I hope the article will be helpful to the readers.

Under this article I would like to analysis the case when the refund may be claimed against deposit of tax, penalty etc.. made during the course of investigation. The investigation team treated that payment made by the person as voluntary payment made even though the said payment was made under circumstances of pressure and compulsion created by the investigating team.

The Hon’ble High Court of Karnatka in the case treated the said deposited made involuntary and directed to consider the refund application and directed to pass the suitable orders within specified time.

In this case the petitioner made payment of Rs.27.51 crore during the course of investigation. The investigation is still going on even nine months elapsed from the initiation of the investigation. In between the petitioner filed a refund application against payment made during the course of investigation. The Department did not consider the refund application by giving his stand that the claim for refund is premature, as the same is made during the course of investigation.

The petitioner has filed the writ petition seeking for issuance of a writ of mandamus directing the respondents to refund an amount of Rs.27,51,44,157/- illegally collected from the petitioner.

To reach the final conclusion the Hon’ble Court would have to decide following matters:

1. Admissibility of the Writ Petition;

2. Payment was made under protest;

3. Illegal Collection from the petitioner during the investigation proceedings under threat and coercion;

4. Self-ascertainment and Section 74(5) of CGST Act and

5. Right of Bona fide Tax Payer to be treated with dignity

The Hon’ble Court cited two supreme judgements in this context.

1.            Dabur India Limited and Another v. State of Uttar Pradesh and Others and connected matters (1990) 4 SCC 113 at Para 31

2.            D.K. Basu V. State of West Bengal – (1997) 1 SCC 416

No doubt, the power of investigation cannot be interfered with nor can the court direct investigation be made in a particular manner, however, during all such investigation, it cannot be held that the Fundamental Rights including the right of a bona fide tax payer to be treated with appropriate dignity as enshrined under Article 21 of the Constitution of India would be kept in abeyance. We would not like to elaborate further but to leave it to the wisdom of the respondents as to the manner in which bona fide tax payers are to be treated.

Conclusion : If the tax-payer makes payment during investigation under pressure and compulsion circumstances, without admission of liability, under protest etc. it shall not be treated payment made either as voluntary or under self-assessment even though DRC-03 has also been furnished. The tax-payer may claim refund in this account before concluding the investigation.

With Warm Regards
Ranjeet Kumar Mundhra
Advocate Cum Financial Planner

9331618264 

TRLC1857@GMAIL.COM