Security deposit cannot be retained for alleged GST dues; refund with interest was directed on licence expiry.

Security deposit and advance amounts collected on grant of licence could not be retained or subjected to a lien for alleged GST dues, because any tax default had to be pursued by the GST authorities under the applicable enactments. The court held that withholding sums payable to the licensee on expiry of the licence was unjustified, even though the petitioner had GST registration and had produced sales materials for the relevant period. The petitioner was entitled to refund of the deposited amounts with interest at 9% from the date of expiry of the licence, and the respondents were directed to return the sums within the time fixed by the Court.

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Issues: Whether the respondents could retain the security deposit and advance amount collected at the time of grant of licence for adjustment against the petitioner's alleged GST liability, and whether the petitioner was entitled to refund of those amounts with interest.

Analysis: The petitioner had obtained GST registration and had also produced materials relating to the sales made during the relevant period. Any failure to pay tax or any alleged tax evasion could be proceeded against by the GST authorities under the applicable GST enactments. The second respondent, however, could not retain the security deposit and advance amount and claim a lien over it for recovery of the alleged GST dues. The proper course was recovery under the GST law, not withholding monies payable to the petitioner on expiry of the licence.

Conclusion: The retention of the security deposit and advance amount was unjustified, and the petitioner was held entitled to refund of the amounts with interest at 9% from the date of expiry of the licence.

Final Conclusion: The writ petition succeeded, and the respondents were directed to return the deposited sums with interest within the time granted by the Court.

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