If tax is collected without any authority of law, the same would be depriving a person of his property: Punjab High Court.

The Punjab High Court, in Diwakar Enterprises Pvt Ltd v/s Commissioner of CGST and anr. (CWP-23788-2021), delivered on 14th March 2023, held that tax collected without any authority of law would amount to depriving a person his property. The judgement was presided by Honorable Ms. Justice Ritu Bahri and Honorable Mrs. Justice Manish Batra.


The petitioner contended that he was forcibly pressurized to deposit an amount of Rs. 1,99,90,000/- and filed a petition regarding the same. The petitioner was engaged in manufacturing of lead and lead related products. The respondent also blocked an amount of Rs. 24,18,516/- of input tax credits. The director was detained and questioned for 2 days, on account of which he was coerced to pay the amount of  Rs.1,99,90,000/-

Thereby, the department contended that the petitioner voluntarily deposited the amount, as is clear from the Form GST DRC-03 (P-4), in which, against Sr. No. 3 Cause of Payment, the petitioner has stated voluntary.


The Court dismissed the argument put forth by the department. The Court held that only Section 74(5) permits the deposit of any amount, and the particular section was not applicable in the given situation. It was further held that the amount collected was a violation of Articles 265 and 300A of the Constitution. The Court also laid a reference to Union of India and others vs. Bundl Technologies Pvt. Ltd and others, (ILR 2022 Karnataka 3077).


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