M/S Dpk Engineers Private Limited vs. Union Of INDIA

Held

The Court granted limited reprieve to the petitioner, holding that the appropriation of money, being a mode of recovery under the Central Goods & Services Act, 2017, could not have been done without notice to the assessee. This contravened the principles of natural justice, and a unilateral decision as to appropriation ought not to have been made. The Court found force in the petitioner's contention that statutory authorities need to practice fairness, and the unilateral recovery by appropriation fell short of these standards. While acknowledging the revenue's contention that the Act vests power for recovery, the Court stated that the existence of power is distinct from its exercise, and the existence per se does not justify the exercise without adhering to procedural fairness. The Court found no case made out for excluding an opportunity of hearing to the assessee before making the impugned order. Consequently, that part of the impugned order which appropriated a portion of the refundable amount was set aside. The matter was remitted to the respondent for fresh consideration after hearing the petitioner or his agent within eight weeks. The respondents were permitted to solicit necessary information or documents but were cautioned against causing delay. The respondent was directed to inform the petitioner of the result of the fresh consideration, with failure to do so to be viewed seriously.

Facts

The petitioner, M/s. DPK Engineers Private Limited, filed a writ petition challenging a portion of the refund sanction order dated June 13, 2018, passed by the Assistant Commissioner of Central Tax (Respondent No. 3). The grievance was that the respondent unilaterally adjusted a part of the sanctioned refund amount towards disputed interest liability for other assessment year(s). The petitioner sought to quash this specific portion of the order and direct the release of the refund amount of Rs. 13,33,069/-. The respondents, represented by the Union of India and its revenue authorities, resisted the petition, justifying the impugned order.

Key Issues

1. Whether the appropriation of a part of the refundable amount towards disputed interest liability, without prior notice to the assessee, violates the principles of natural justice, as contended by the petitioner? 2. Whether the unilateral recovery by way of appropriation by statutory authorities meets the standards of fairness expected from them, as argued by the petitioner? Petitioner's Arguments: The petitioner argued that the unilateral appropriation of a part of the refundable amount towards disputed interest liability was done without providing an opportunity of being heard, thus violating the principles of natural justice. They contended that statutory authorities must act with fairness, and this unilateral recovery fell short of such standards. The petitioner relied on the principle that appropriation of money, being a mode of recovery, requires notice to the assessee. Revenue's Arguments: The revenue contended that the Central Goods & Services Act, 2017, vests the power in the respondents to take measures for the recovery of tax, interest, and penalties that have fallen due. They argued that the existence of this power justified the action taken.