The division bench of the Gujarat High Court has slammed sales tax authority for collecting a revenue from a private firm Micromax Informatics Limited. The High Court has termed the action of state tax authorities to collect revenue from a private firm as “nothing short of extortion”, and ordered the return of Rs 1.49 crore recovered from it along with an interest of six per cent.
A division bench comprising of Justice J.B Pardiwala and Justice A.C Rao said that, “We were inclined to take a very strict view of the matter. This is not the way and the manner to recover tax. The department should not get somuch desperate for the revenue. The revenue is to be collected in accordance with law. The action at the end of the authorities in the present case is nothing short of extortion”.
The Court also ordered that, The amount of Rs.1,49,27,723/ [Rupees One Crore Forty-Nine lakh Twenty Seven Thousand Seven Hundred and Twenty Three only] with interest at the rate of 6% p.a. from the date of 15/02/2019 shall be refunded to the writapplicant within a period of One week from today without fail.
After an audit assessment under provisions of the Gujarat Value Added Tax Act, Micromax was on October 30, 2018, directed by the deputy commissioner of state tax in Ahmedabad to pay Rs 1,49,27,723 as tax.
Following this, the company moved an appeal under Section 73 of the Act to a stay against the assessment order.
On January 25, 2019, the company’s banker received a notice from the sales tax deputy commissioner, demanding the release of the amount, even as the copy of the notice was not served on the company.
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