Karnataka HC shuns Coercive Extraction of 2.5 Crores CGST by Intelligence Officer, orders Refund with Interest

The Karnataka High Court ordered the refund of Rs. 2.5 crores, along with interest, which was coercively extracted as Central Goods and Services Tax (CGST) by intelligence officers from Kesar Colour Chem Industries. The court found that the extraction was done under duress and without proper self-ascertainment of tax liability by the petitioner. The intelligence officers had claimed that the amount was paid based on a statement from a partner of Raj Chemicals, which was under investigation. However, the court ruled that the recovery violated Article 265 of the Constitution of India, which mandates that no tax shall be levied or collected except by the authority of law. This decision highlights the importance of due process and the protection of taxpayers’ rights against coercive actions by tax authorities.