Court Orders Prompt Refund Despite Coercive Tax Collection

The High Court directed the respondents to process the refund application of Rs. 27,51,44,157 within four weeks, despite the pendency of a statutory refund application. The court held that the tax collected under coercion should be refunded, emphasizing the petitioner's right to dignity as a bona fide taxpayer. Additionally, the court rejected the argument of self-ascertainment under Section 74(5) of the CGST Act, highlighting the lack of voluntary payment and coercion during the investigation. The court also mandated video recording of future interrogations for transparency and accountability, granting substantial relief to the petitioner without addressing all prayers sought.

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Issues Involved:
1. Refund and alternative remedy.
2. Self-ascertainment under Section 74(5) of CGST Act.
3. Amount paid under coercion.
4. Right of bona fide taxpayer to be treated with dignity.
5. Video recording of investigation.
6. Other prayers.

Detailed Analysis:

A) Refund and Alternative Remedy:
The petitioner filed for a refund of Rs. 27,51,44,157, which was allegedly collected under coercion. The court considered whether the writ petition was maintainable given that the petitioner had already filed a statutory refund application. The court noted that the Department's communication merely deferred the refund, citing ongoing investigations. The court held that even if a refund application is pending, the High Court has the power to issue directions for refund if the tax was collected without authority of law, as established in the case of Godavari Sugar Mills Ltd. v. State of Maharashtra.

B) Self-ascertainment under Section 74(5) of CGST Act:
The respondents argued that the payment was voluntary and should be considered as self-ascertainment under Section 74(5) of the CGST Act. The court examined the letters from the petitioner, which indicated that the payments were made under protest and not as an admission of liability. The court concluded that mere payment of tax does not constitute self-ascertainment under Section 74(5) as it requires a specific procedure, including the issuance of a show-cause notice and acceptance by the proper officer. The court rejected the respondents' contention of self-ascertainment.

C) Amount Paid Under Coercion:
The court analyzed the sequence of events, noting that the payments were made during the investigation when the petitioner's directors were present and under the threat of arrest. The court found that the circumstances, including late-night investigations and the locking of premises, indicated coercion. The court held that the payments were not voluntary and that the retention of the amount by the Department was unjustified.

D) Right of Bona fide Taxpayer to be Treated with Dignity:
The court emphasized the need to treat bona fide taxpayers with dignity, citing the substantial taxes paid by the petitioner. The court referred to the Apex Court's observations in Dabur India Limited v. State of Uttar Pradesh, which condemned coercive tactics by the government. The court reiterated that the right to dignity under Article 21 of the Constitution extends to bona fide taxpayers and should not be compromised during investigations.

E) Video Recording of Investigation:
The court referred to the Supreme Court's judgment in Paramvir Singh Saini v. Baljit Singh, which mandated the installation of CCTV cameras in offices where interrogations are conducted. The court directed that further interrogations be video recorded to ensure transparency and accountability.

F) Other Prayers:
The court left it to the respondents to consider providing copies of statements recorded during the investigation as per law. The court refrained from adjudicating the constitutional validity of Section 16(2)(c) of the CGST Act, as the primary relief sought by the petitioner was granted.

Conclusion:
The court directed the respondents to process the refund applications within four weeks, considering the observations made. The petition was disposed of, providing substantial relief to the petitioner without placing any fetters on the ongoing investigation.

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