Allahabad High Court rules in favor of the petitioner

Allahabad High Court rules in favor of the petitioner

It orders the Goods and Services Tax department to refund the unlawfully collected amount and also pay interest on it

The division bench of the Allahabad High Court presided by Justice Surya Prakash Kesarwani and Justice Jayant Banerji has directed the Goods and Services Tax (GST) department to refund the amount unlawfully collected along with interest on the delayed refund.

The petitioner, Alok Traders, is a registered company dealing in tobacco. While certain goods sold by it were being transported through vehicles, it was intercepted by the Assistant Commissioner, Mobile Squad Unit.

The officer demanded a tax and a penalty of Rs.4,70,400 under the Uttar Pradesh Goods and Services Tax (UP GST) Act, 2017. He created a temporary ID and released the goods on deposit of the demanded amount by the petitioner by an account payee bank draft.

However, the appellate authority allowed the appeal against the order demanding a tax and a penalty. Thereafter, several refund applications were made along with a copy of the appellate order by the petitioner, but no action was taken by the respondents.

Aggrieved, the petitioner filed a writ petition before the Allahabad High Court. Subsequently, the refund was sanctioned and paid by the respondents, but it was done without paying any interest on the amount.

The petitioner submitted that the Assistant Commissioner was well aware that the petitioner was a registered dealer of Gujarat state and that the provisions of the Integrated Goods and Services Tax (IGST) Act were applicable. Also, since he had all details relating to the petitioner, there was no need to create a temporary ID for him.

The court observed that the password of the temporary ID created by the officer was never communicated to the petitioner despite repeated demands made by him.

The appellate authority had directed for a refund and the order was communicated to the respondents by the petitioner in July 2018. The respondents were then bound to refund the amount along with the interest amount under the Central Goods and Services Tax Act (CGST)/UP GST Act.

But not only did they arbitrarily withhold the refund of the petitioner for more than 33 months, but they also did not grant any interest to the petitioner on the delayed refund of the amount.

The court further observed that as per the provision of the Act, if the appellate order had attained finality and refund arisen therefrom was not refunded within 60 days from the date of receipt of an application filed consequent to such an order, interest was to be paid not exceeding 9 percent.

The division bench, thus, ordered the respondent to pay interest to the petitioner within a month. This pertained to the period from September 2018 to March 2022.