Patna High Court Imposes ₹25,000 Costs On Taxpayer For Challenging GST Undertaking After Accepting Its Benefits

The Patna High Court, in the facts of the case, has held that a taxpayer who voluntarily furnishes an undertaking to obtain relief from GST authorities cannot subsequently challenge its validity after accepting the benefits flowing from it.

It dismissed the writ petition filed by Umagaurav Private Limited and imposed costs of ₹25,000.

A division bench of Justice Rajeev Ranjan Prasad and Justice Kumar Manish held that the petitioner, having secured the removal of restrictions on its bank account and permitted one of the post-dated cheques to be encashed pursuant to the undertaking, could not later contend that the undertaking was invalid or obtained under duress.

The dispute arose after GST authorities attached the petitioner's bank account during proceedings. To secure removal of the attachment, the petitioner furnished an undertaking and submitted three post-dated cheques. The bank account restrictions were thereafter lifted, enabling the petitioner to operate the account.

Before the High Court, the petitioner contended that the undertaking had been obtained under pressure because of the attachment of its bank account and, therefore, should not bind it. It also challenged the show cause notice and the consequential summary order passed under the GST law.

Rejecting the plea, the Court noted that the petitioner never complained to the department immediately after executing the undertaking that it had been obtained under coercion. Instead, it accepted the benefit of the removal of the bank account restriction and remained silent for more than three months before approaching the court.

The bench observed that there was nothing on record to indicate that the undertaking or the post-dated cheques had been furnished under protest or compulsion.

"...the petitioner never represented to the department that the undertaking was wrongly given by him under duress, rather he allowed one of the cheques to be cleared by the bank and took advantage of the removal of the withholdment of the account by the department", the bench noted.

The Court further noted that the writ petition was filed only after a considerable delay and found no explanation as to why the petitioner had not challenged either the undertaking or the GST proceedings immediately.

It opined that, in the absence of any contemporaneous protest or complaint alleging coercion, the plea that the undertaking had been obtained under pressure was held to be a mere afterthought.

Holding that writ jurisdiction is discretionary and available only to litigants who approach the court with clean hands, the High Court declined to exercise its extraordinary jurisdiction.

It dismissed the writ petition with costs of ₹25,000, directing the amount to be deposited with the Patna High Court Legal Services Committee within one month.

For Petitioner: Anubhav Khowala, Advocate

For Respondent: Pratik Kumar, AC to GA-11