Khushi Doshi
Published on: March 12, 2022 at 12:26 IST
The Karnataka High Court has ordered the Goods and Services Tax department to Refund Rs. 27 crore that was illegally collected from Swiggy. While dismissing the Central Government’s plea, the Division Bench of Justice Alok Aradhe and Justice M. G. S. Kamal observed,
“Article 265 of the Constitution mandates that Tax Collection must be by the Authority of Law.”
The Court went on to say that collecting a Tax without the authority of the law would be tantamount to depriving a person of his property without the authority of the law, as well as infringing on his right under Article 300A of the Indian Constitution.
“Section 74(5) of the CGST Act, which is not attracted by the factual situation of the case, is the only provision that permits deposit of an amount during the pendency of an investigation.” “As a result, it is clear that the amount was obtained from the company in violation of Articles 265 and 300-A of the Constitution,” the Court stated.
Under the brand name “Swiggy,” the Respondent/Assessee operates an E-Commerce Platform. Consumers can order food from nearby Restaurants through Delivery Partners, which include pick-up and Delivery Partners (PDPs) who are directly Employed by the company as well as temporary delivery executives (Temp DEs) whose services are procured by the company through third-party service providers.
Green Finch agreed to provide the company with temporary DEs at a Cost-Plus markup and to charge GST on the Entire Sale consideration.
The Respondent claimed that they were present until late hours, were locked in the office, and were threatened with Arrest. They couldn’t leave until early the next morning. At around 1 a.m., the company’s officers paid a further sum of Rs. 12,51,44,157 to secure the release of three directors.
Under threat and coercion, a total of Rs. 27,51,44,157 was illegally collected from the company during the course of the investigation without following the procedure prescribed by the CGST Act.
Counsel for the Appellants/Department stated that the Department received information indicating that Green Finch is a Non-Existent Company and that a large input tax credit is being credited to the company. The respondent did not receive any services from Green Finch or its inward suppliers and thus does not qualify for input tax credit.
The Division Bench relied on the delaid out to limit the powers of officers conducting searches and seizures and to protect the assessee’s interests. The Court ruled that the amount was not voluntarily paid because the department did not follow the guidelines.
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