BENGALURU: The Karnataka High Court on Friday directed the Union Government to refund Goods & Services Tax (GST) of Rs 27.51 crore to BundL Technologies Pvt Ltd, which operates the e-commerce platform Swiggy. The GST amount was reportedly collected during the course of investigation without following the procedures prescribed under the CGST Act.
A division bench of Justices Alok Aradhe and M G S Kamal passed the order while dismissing an appeal filed by the Union Government, Directorate General of Goods and Services Tax Intelligence and others against the order of a single-judge bench.
The Centre had sought setting aside of a single-judge bench order of September 14, 2021, directing that Swiggy’s applications for refund be considered. “Article 265 mandates that collection of tax has to be by the authority of law. If the tax is collected without any authority of law, it will amount to depriving a person of his property and infringe on his right under Article 300A of the Constitution of India as well,” the court said.
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“In the present case, the only provision which permits depositing an amount during the pendency of an investigation is Section 74 (5) of the CGST Act, which was not applied in the case. Therefore, it is evident that the amount has been collected from Swiggy in violation of Articles 265 and 300-A of the Constitution. Therefore, the contention of the Department that the amount be made subject to the outcome of the pending investigation cannot be accepted.
The Department, therefore, is liable to refund the amount to the company”, the court said. The tax amount collected from Swiggy was deposited with the government, pending investigation with regard to services provided to the company by a third party, Green Finch Team Management (P) Ltd.
An investigation was initiated by the Director General of Goods and Services Tax Intelligence (DGCI), Hyderabad zonal unit, with regard to services provided to Swiggy by Green Finch as per a 2017 agreement.
The investigation was launched on the ground that Green Finch was a non-existent entity and accordingly, the input tax credit availed by Swiggy and the GST component paid by it against the invoices raised by Green Finch were fraudulent. During the course of the investigation, Rs 15 crore was deposited by Swiggy under the GST and also Rs 12.51 crore to secure the release of three directors of the company.