Tax experts said this would also mean that if a taxpayer has deposited money with the tax department, it cannot be used as an acknowledgment of an offense against the taxpayer.
Bundle Technology, an operating e-commerce platform of Swiggy, had approached the court seeking refund of Rs 27.51 crore. indirect tax department.
The Directorate General of Goods and Services Tax (Intelligence), the investigation arm of the indirect tax department, is probing Swiggy for alleged input tax credit fraud.
The court directed the revenue department to refund the money which was “forcibly collected from the assessee (Swiggy) during the course of investigation”.
The investigation is on whether the company wrongly availed input tax credit without actual receipt of services.
Under the GST framework, input tax credit is essentially a tax paid on raw materials (or input services). This can be used to offset future GST liability.
Tax experts say the decision will also impact similar tax disputes involving other companies.
“During GST scrutiny, it is common for companies to deposit tax at the behest of the authorities without clarifying about their tax liability. Harpreet Singh, Partner, KPMG India said, “This High Court judgment will surely bring relief to many companies, where their money was stopped due to such hasty deposit, as they are now considering filing for refund. can.
The High Court also came down heavily on the manner of investigation by the tax department officials.
The court observed that the manner in which Swiggy was asked to deposit the money “reflects a nexus between investigation and contemporaneous payments”.
investigation which “instills an apprehension in the mind of any person by closing the physical gates in the late hours of the night and early morning hours”, and the “fear of the police forces” is such that it will shake a man’s position in society. Regardless of the situation, the order said.
As per the details of the case, the DGGI had raided Swiggy’s Bengaluru premises in November 2019.
After the raid, the food ordering and delivery company was asked to deposit the amount.
When Swiggy approached the tax department to refund the money, it was denied saying it could not be refunded as the investigation was on.
The High Court said the revenue department’s contention that the inquiry is pending shows that the self-identification plea made by it is an “after thought” and has been put forward as a defense of the petitioner’s claim that The payment has been made involuntarily, the High Court said.