Tax Authorities Barred from Coercive Measures Without Proper Legal Procedure Under CGST Act Sections 73, 74, and 79

HC ruled that tax authorities cannot employ coercive measures against the petitioner without following prescribed legal procedures under CGST Act. The court directed that no compulsory tax deposit would be permitted without adhering to Sections 73, 74, and 79 of the Act. Any potential tax payment would require prior court permission, ensuring procedural safeguards against arbitrary taxation.

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Issues involved:
The issues involved in the judgment are coercive measures taken by the Respondent without authority of law, refund of amount collected through coercive measures, determination of tax amount due from the petitioner, and compliance with the Central Goods and Services Tax Act, 2017.

Coercive Measures without Authority of Law:
The petitioner filed a petition seeking a writ of certiorari to quash the summons dated 18 October 2023 issued by the Respondent, as well as a writ of mandamus to restrain the Respondent from adopting coercive measures without issuing a show cause notice as per the CGST Act. The petitioner's counsel argued that the petitioner was threatened and coerced, with a co-director being forced to deposit a sum of &8377;1 crore without any legal basis. The counsel contended that the summons were a tactic to pressure the petitioner into depositing more tax without proper determination.

Refund of Amount Collected:
The petitioner also sought a refund of the amount collected through coercive measures. However, the court noted that there was no specific prayer for such relief in the petition. It was highlighted that the amount was not deposited by the petitioner but by another director of the company. As a result, the court concluded that no relief could be granted regarding the refund of the amount.

Determination of Tax Amount Due:
The Respondent's counsel argued that the determination of any tax amount due from the petitioner could only be done in accordance with Section 74 and 79 of the CGST Act. It was emphasized that if the petitioner did not wish to voluntarily deposit any tax, there would be no compulsion to do so. The Respondent assured that the petitioner would not be forced to deposit any tax without following the prescribed procedure under the CGST Act.

Compliance with CGST Act:
The court addressed the petitioner's apprehension of being coerced into depositing further tax by directing the Respondents not to accept any tax amount from the petitioner since the petitioner clearly stated a lack of intention to voluntarily deposit tax. It was clarified that the petitioner could not be compelled to deposit tax without following the procedure outlined in Sections 73, 74, and 79 of the CGST Act. The court concluded that if the petitioner intended to deposit tax, permission from the court would be required.

Disposition:
The petition was disposed of with the direction that the petitioner would not be compelled to deposit tax without following the procedure under the CGST Act. If the petitioner decided to deposit tax, permission from the court would be necessary.

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