Court orders Rs. 2 crore refund due to lack of due process under CGST Act.

The court granted the writ petition, ordering the refund of Rs. 2 crores to the petitioner within four weeks. It emphasized the importance of following due process and statutory provisions under the CGST Act, 2017, highlighting that tax authorities must act fairly and avoid coercion during investigations. The court found that the tax payments were not voluntary and were made under duress, leading to the conclusion that no tax collection should occur without issuing a show cause notice and determining liability.

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Issues Involved:
1. Harassment by tax authorities.
2. Refund claim of Rs. 2 crores with interest.
3. Legality of tax demand without due process.
4. Validity of documents seized during the search.
5. Voluntariness of tax payment during investigation.
6. Compliance with GST laws and procedures.
7. Allegations of coercion and high-handedness by tax authorities.
8. Legal provisions under Section 74(5) of the CGST Act, 2017.
9. Requirement of show cause notice before tax collection.

Issue-wise Detailed Analysis:

1. Harassment by Tax Authorities:
The petitioner sought a mandamus to restrain the first respondent from harassing them without addressing their grievance petition and refund claim. The court noted that the petitioner alleged high-handedness by the authorities during the search and claimed that the tax liability admission was not voluntary but coerced.

2. Refund Claim of Rs. 2 Crores with Interest:
The petitioner requested a refund of Rs. 2 crores paid during the investigation, alleging that the payment was made under coercion. The court granted the mandamus, ordering the refund of Rs. 2 crores within four weeks, emphasizing that no collection should be made before the final determination of liability.

3. Legality of Tax Demand Without Due Process:
The court highlighted that any demand for tax must follow due process, including the issuance of a show cause notice. The court found that the payments made by the petitioner were not voluntary and were retracted, thus failing the requirement of 'ascertainment' under Section 74(5).

4. Validity of Documents Seized During the Search:
The petitioner's documents and registers were seized during the investigation. The court did not delve deeply into the validity of the seizure but focused on the legality of the tax collection process.

5. Voluntariness of Tax Payment During Investigation:
The petitioner argued that the tax payments were made under coercion and were not voluntary. The court agreed, noting that the payments were made under stress and were retracted, thus not constituting a valid self-ascertainment under Section 74(5).

6. Compliance with GST Laws and Procedures:
The court examined the compliance with GST laws, particularly Section 74 of the CGST Act, 2017. It emphasized that the scheme of assessment under Section 74 does not permit advance tax collection without proper ascertainment and issuance of a show cause notice.

7. Allegations of Coercion and High-handedness by Tax Authorities:
The petitioner alleged that the tax authorities acted with coercion and high-handedness, especially during the festive season, causing distress to the petitioner's employees and family. The court took these allegations seriously and found that the payments were made under duress.

8. Legal Provisions Under Section 74(5) of the CGST Act, 2017:
The court analyzed Section 74(5) and concluded that it does not provide statutory sanction for advance tax payment pending final determination. The court emphasized that any payment under Section 74(5) must be voluntary and based on self-ascertainment or proper officer's ascertainment, which was not the case here.

9. Requirement of Show Cause Notice Before Tax Collection:
The court reiterated that no tax collection should occur before issuing a show cause notice and determining the liability. The court cited various judgments supporting this principle and found that the petitioner's payments were prematurely collected without following due process.

Conclusion:
The court allowed the writ petition, ordering the refund of Rs. 2 crores to the petitioner within four weeks and emphasizing the importance of following due process and statutory provisions under the CGST Act, 2017. The court also highlighted the need for tax authorities to act fairly and avoid coercive measures during investigations.

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