HC directs GST Directorate to refund illegally collected ₹27.51 crore to Swiggy

 









The High Court of Karnataka has directed the Directorate of Goods and Services (GST) to refund ₹27.51 crore to M/s Bundl Technologies Pvt. Ltd., which operates food delivery e-commerce platform Swiggy while observing that the amount was collected illegally during the pendency of an investigation.

A division bench comprising Justice Alok Aradhe and Justice M.G.S. Kamal issued the direction while dismissing an appeal filed by the GST Directorate questioning the September 16, 2021, order of a single judge bench, which had asked the directorate to consider company’s plea for refund.


The Director General of Goods and Services Tax Intelligence, Hyderabad zonal unit, had on November 28, 2019, searched the premises of Swiggy in Bengaluru on the suspicion that the company had allegedly indulged in fraudulent claims on GST input credit.

The contention of the Directorate was that Swiggy claimed to have entered into an agreement with a company called Green Finch Team Management (P) Ltd. for availing services of temporary delivery executives.

And the investigation was initiated on the claim that, “Green Finch was a non-existent entity and accordingly, the input tax credit availed by the Company and the GST component paid by it to Green Finch against the invoices raised by Green Finch were fraudulent.”

However, it was alleged by the company that the directorate compelled to deposit ₹15 crore at about 4 a.m. on November 30, 2019, and a sum of ₹12.51 crore on December 27, 2019 at about 1 a.m. under coercion and threat of arrest of its directors, who were detained till late night. Swiggy has also claimed that Green Finch was a registered and existing company.

On the other hand, the GST Directorate had denied the allegations and claimed that amount was voluntarily deposited by the company during the course of investigation, and had clarified that law does not empower the officers to arrest the directors.

However, the court found from the records that ₹27.51 crore was not deposited voluntarily as per Section 74(5) of the CGST Act as the company in its communication to the Directorate, had clearly stated that it reserves rights to claim the refund and the same cannot be treated as admission of its liability.

The court left the contentions about alleged threat and coercion to be agitated in an appropriate proceedings as it involves question of facts.

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