The Punjab and Haryana High Court ruled that the tax collection without authority of law would infringe the right under Article 300 A of the Constitution of India.
Facts
The petitioner is engaged in manufacturing lead and lead related products. Respondent blocked input tax credit lying in the electronic ledger of the petitioner, to which he filed his objections. Respondent searched premises of the petitioner and Abhinav Sahaya, director was questioned throughout the search and thereafter, he was forcibly taken to their office where he was kept detained for two days. He was pressurized to deposit the amount and due to this, he deposited some amount. The petitioner lodged a protest regarding the said deposit. Respondent thereafter further searched the premises of the petitioner and got deposited another Rs.25 lakhs forcibly from the petitioner.
Submission
Counsel for the petitioner submitted that as far as the matter involving respondent is concerned, the same now stands infructuous as no claim survives whereby after blocking his account, they have unblocked his account after a period of one year and consequential steps have already been taken against the demand raised by the respondent and an alternate remedy has been availed. As far as unblocking of the account, the issue has come to an end.
Counsel for the respondent has informed the Court that pursuant to summons (P-17), the department has issued letter again to the petitioner-Company directing him to pay the amount along with interest and penalty. The summons were also issued to Rajiv Nandan Sahaya and Abhinav Sahaya under Section 70 of CGST Act 2017 but none has appeared.
Decision
The division bench of Justice Ritu Bahri And Justice Manisha Batra said that if tax is collected without any authority of law, the same would amount to depriving a person of his property without any authority of law and would infringe his right under Article 300A of Constitution.
It further added that the only provision which permits deposit of amount during pendency of investigation is Section 74 (5) of Act, which is not attracted. The amount collected from the company is in violation of Article 265 and 300A of Constitution.
The court observed that no receipt was given by the Proper Officer after accepting the impugned amount. Thus, the amount deposited by the petitioner under protest was liable to be refunded, as the petitioner has been deprived of his right.
Case title: Diwakar Enterprises Pvt. Ltd. v/s Commissioner of CGST and anr.
Citation: CWP-23788-2021
