Order date – 14 March 2023

Parties – Diwakar Enterprises Pvt. Ltd. Vs Commissioner of CGST and anr.

Facts –

• The petitioner, DIWAKAR ENTERPRISES PVT. LTD., is engaged in the manufacturing of lead and lead-related products and had objected to the blocking of input tax credit amounting to Rs. 24,18,516/- by Revenue.
• The petitioner's premises were searched and they lodged a protest regarding the deposit, and respondent No. 2 further searched the petitioner's premises and got deposited another Rs.25 lakhs forcibly.
• The petitioner was issued a show cause notice raising a demand of Rs.4,04,42,761/-, to which he filed a reply, and respondent No. 2 confirmed the demand of Rs.2,34,47,685/-.
• The petitioner has approached this Court seeking a writ of mandamus to direct respondent No. 1 to refund a sum of Rs.1,99,90,000/- along with interest and to direct respondent No. 2 to unblock input tax credit amounting to Rs.24,18,516/-.

Issue –

• Whether Revenue is liable to refund a sum of Rs.1,99,90,000/- along with interest?

Order –

• The Court observed that since the account has been unblocked after a year, and consequential steps have been taken against the demand raised by the respondent, and an alternate remedy has been availed. As far as the unblocking of the account, the issue has come to an end.
• Further, the Court referred to the case of Delhi High Court in Vallabh Textiles vs. Senior Intelligence Officer wherein the court observed that no recovery of tax should be made during search, inspection, or investigation unless it is voluntary, and even if the assessee comes forward to make voluntary payment, he/she should be advised to file the same the day after the search has ended and the concerned officers have left the premises of the assessee.
• The court held that the department was liable to refund the amount collected from the company, as it was in violation of Article 265 and 300A of the Constitution.