Landmark GST Refund Case: Construction Firm Ordered to Deposit Rs.28 Crores and Cooperate with Tax Investigation Probe

HC ruled on a GST refund dispute involving a construction company. The court directed the petitioner to deposit Rs.28 crores in a fixed deposit, withdraw provisional bank account attachments, and cooperate with investigation proceedings. The petitioner must comply with court instructions or face potential legal consequences from tax authorities.

---

---

Issues Involved:
The issues involved in this case are the refund sanction under Section 54(5) of the CGST Act, provisional attachment of bank accounts under Section 83 of the CGST Act, issuance of summons under Section 70 of the CGST Act, and the compliance and cooperation of the petitioners with the investigation.

Refund Sanction:
The petitioner, a company engaged in construction and development, had claimed a refund under Section 54(5) of the CGST Act. Respondent No.4 had sanctioned a refund of Rs.27,54,87,403.00 to the petitioner. Subsequently, respondent No.3 examined the proceedings and passed an order on 04.01.2023. Respondent No.4 appealed before the Joint Commissioner, which is pending. Meanwhile, respondent No.3 issued notices for provisional attachment of the petitioner's bank accounts under Section 83 of the CGST Act due to proceedings under Section 74 of the CGST Act.

Provisional Attachment of Bank Accounts:
Respondent No.3 provisionally attached multiple bank accounts of the petitioner on 08.03.2023, including accounts in Indian Bank, State Bank of India, Indusland Bank, and Kotak Mahindra Bank. The petitioner's senior counsel argued that such attachment should be a last resort and may lead to the economic death of the concern. The counsel highlighted that no stay had been granted on the appeal filed by respondent No.4, questioning the need for the provisional attachment.

Summons and Cooperation:
Respondent No.5 issued summons to the petitioners under Section 70 of the CGST Act on 09.03.2023. The petitioners were urged to cooperate with the investigation. However, the petitioners failed to appear before the summoning authority, leading to concerns raised by the respondents about the legitimacy of the refund order obtained by the petitioners.

Court's Directions:
After hearing both parties, the court directed the petitioners to deposit Rs.28.00 crores in a nationalized bank by fixed deposit and provide the receipt to respondent No.3. The petitioners were instructed to cooperate with any summons related to the proceedings under Section 74 of the CGST Act. The court ordered the immediate withdrawal of the provisional attachment of the petitioner's bank accounts. Non-compliance would empower the respondents to take appropriate legal action.

Conclusion:
The court disposed of the writ petition with the specified directions for compliance by the petitioners. Failure to adhere to the conditions would allow the respondents to take necessary legal actions as deemed fit.

---