Relief to Swiggy: Karnataka HC orders GST refund of ₹27 crore illegally collected

Karnataka High Court in the matter of Union of India vs. M/s Bundl Technologies Pvt Ltd. directed the revenue department refund GST of ₹27.4 crore collected illegally from Bundl Technologies Pvt Ltd., the holding company of food delivery app Swiggy.

The Respondent Bundl Technologies, offers an e-commerce platform under the brand name ‘Swiggy,’ via which clients can place orders for food delivery from surrounding eateries. Swiggy’s input tax credit and the GST paid to Green Finch were deemed fraudulent by the department. It was claimed that the Swiggy officers were forced to deposit more money at around 1 AM in order to secure the release of the three Directors, and that a total of $27,51,44,157 was illegally collected from them during the course of the investigation under threat and coercion, without following the procedure prescribed under the CGST Act. Swiggy then filed an application with the jurisdictional GST office, but received no answer. They subsequently filed a petition for a writ of mandamus directing the Department to refund the amount of $27,51,44,157 plus interest at the rate of 12% from the date of deposit to the date of refund.

The Court found that the money paid by the company over the course of the investigation was made involuntarily.

Also, “a statutory power must be exercised within a system of restrictions and must be exercised in accordance with relevance and reason. It bears repeating that a statutory power should not be exercised in such a way as to instil fear in the mind of a person,” the Court stated, adding that the issue of whether Green Finch is a legitimate entity and whether Swiggy rightfully claimed input tax credit does not need to be considered by the High Court because the investigation is ongoing.

The Court further emphasised that Article 265 of the Constitution (responsibility of the States and Union) requires revenue collection to be done under the power of law. “If a tax is collected without the authority of law, it amounts to depriving a person of his property without the authority of law and violates his right under Article 300A (persons not to be deprived of property except by the authority of law) of the Indian Constitution”, according to the Court.

The High Court rule out that, “While dismissing the appeal, the Court changed the single-order judge’s and specifically ordered the government to repay the sum-

According to Article 265 of the Constitution, tax collection must be done by the use of legal authority. If a tax is collected without the authority of law, it is tantamount to depriving a person of his property without the authority of law, and it also violates his right under Article 300A of the Indian Constitution. In the instant case, the only provision that allows deposit of an amount during the pendency of an investigation is Section 74(5) of the CGST Act, which is not applicable in the facts of the case. As a result, it is clear that the sum was obtained from the company in violation of Articles 265 and 300-A of the Constitution. As a result, the Department’s claim that the sum under deposit be made contingent on the outcome of the ongoing investigation cannot be accepted. As a result, the Department is obligated to reimburse the sum to the Company.”

The Judgment was made by Hon’ble Justice Mr. Alok Aradhe and Hon’ble Justice Mr. M.G.S. Kamal.

The Petititoner was represented by Mr. M.B. Nargund and Respondent was represented by MR. Lakshmi Kumaran.

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