In a major relief to Swiggy, the Karnataka High Court allowed the GST Refund as payment made to GST Department as a goodwill gesture during an investigation cannot be taken as self-ascertained tax.
The Petitioner, M/s. Bundl Technologies Private Limited operates an e-commerce platform under the name ‘Swiggy’ and is registered under the Central Goods and Services Tax Act, 2017. It was submitted, by the Petitioner, that the delivery of food is done through delivery partners that include electronic pick-up by those who are engaged by the Petitioner. It was further stated that during the festivities owing to a spike in food orders, the third-party service providers are engaged. As per the submissions of the Petitioner, it appears that the third-party service providers charge consideration for delivery and supply of food along-with Goods and Services Tax (GST), and the GST paid by the Petitioner to the third-party service providers is availed as Input Tax Credit (ITC)by the Petitioner.
The case of the Petitioner was taken for investigation by the Directorate General of Goods and Services Tax Intelligence, Hyderabad Zonal Unit (DGGI) on the ground that third party service provider of the Petitioner i.e. “Greenfinch” was a non-existence entity, and accordingly the ITC availed by the Petitioner were fraudulent.
The Petitioner asserted that on November 29, 2019, during the investigation, the Petitioner was forced to make payment of Rupees 15 Crore under the threat of arrest. The Petitioner further submitted that on December 27, 2019, the Petitioner was forced to make a further payment of tax of Rupees 12,51,44,157/-. All in all, the Petitioner alleged that a sum of Rupees 27, 51, 44,157/- was illegally collected under threat and coercion. Furthermore, the Petitioner asserted that no Show Cause Notice was issued by the DGGI.
As opposed to the contentions made by the Petitioner, the Respondents asserted that the question of exercise of Coercion and Threat was not made out by them. The Payments even as per the communication of the Petitioner was made as a goodwill gesture and that the payments made are to be construed as payment of tax in furtherance of self-ascertainment as given under Section 74(5) of the CGST Act.
The single-judge bench of Justice Sunil Dutta Yadav held that time limit could be prescribed for completion of the investigation and on failure to do so the court could consider a request for a refund. It must be noticed that the court does not desire to place any sort of fetter on the power of investigation and it would be unwise to impose any kind of time limit, for it is the authority which should be permitted to complete its investigation in a manner as may be desired by it as is permissible.
The court said that the right of refund in the present factual matrix would be independent of the process of investigation and the two cannot be linked together.
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