Hirenkumar Valjibhai Sankhalava Vs Deputy Commissioner of State Tax (Supreme Court of India)
Summary : The Supreme Court dismissed as not pressed the Special Leave Petition filed by Hirenkumar Valjibhai Sankhalava against the State Tax authorities, after counsel sought liberty to pursue a statutory appeal. It granted the petitioner four weeks to prefer that appeal before the Appellate Authority. The supplied Supreme Court order contains no adjudication of the refund dispute or endorsement of the High Court’s reasoning. The substantive findings below belong to the related Gujarat High Court judgment.
The petitioner and other persons managed “Alpha-1 Tuition Classes and Hostel”, providing coaching to Gujarati-medium students in the fourth and fifth grades. GST authorities searched the premises from 6 to 10 October 2023 under Section 67(2) of the Gujarat Goods and Services Tax Act, 2017, seized documents and recorded statements and panchnamas. The petitioner alleged that ₹1,96,25,330 was recovered towards tax, interest and penalty for FY 2018-19 to FY 2023-24 under threat and without adjudication, and that payment through GST DRC-03 was under protest. On 28 August 2025, he sought refund under Section 54(1) through GST RFD-01. GST DRC-04 acknowledging voluntary payment followed on 19 November 2025; refund was rejected through GST RFD-06 dated 3 February 2026 after show-cause proceedings and an opportunity of hearing.
Before the High Court, the petitioner challenged the delayed acknowledgement, absence of a notice under Sections 73 or 74, temporary registration allegedly created without prior notice, and non-compliance with the Circular dated 18.11.2019. He relied on Suraj Mangar, Radhika Agarwal and Gunnam Infra Projects to support his challenge to the alleged coercive recovery and refund rejection. The State relied on the contemporaneous panchnamas and statements, maintained that payment was voluntary, and objected that an appeal under Section 107 was available. Although the High Court initially indicated that the petitioner should use that remedy, he expressly requested a decision on merits.
The High Court recorded admissions that the institute lacked GST registration, that fees of ₹35,000 were collected while receipts reflected ₹30,000, and that the cash component was omitted from the books. It relied on the undertaking consenting to temporary registration, acceptance of quantified liability, willingness to pay, and the signed statement disclaiming pressure or coercion. It also relied on the absence of a complaint to departmental superiors or police for almost two years. Following Innovators Facade Systems, it treated the coercion allegation as an afterthought and observed that disputed factual questions about coercion ordinarily could not be conclusively examined in writ proceedings under Article 226.
Referring to Section 74(8), the High Court treated the proceedings as concluded upon voluntary payment on 10 October 2023. It held that GST DRC-04 under Rule 142 acknowledged payment, that the Rules prescribed no specific time limit for its issuance, and that the delay caused no prejudice on these facts. For refund under Section 54 read with Rules 89 and 92, it required the petitioner to establish that tax was not payable or had been paid in excess. It found that liability had been quantified from the seized records, student numbers and fees accepted by the petitioner. It distinguished Gunnam Infra Projects on the evidence of voluntary payment and quantification; Radhika Agarwal on its arrest-power context; and Suraj Mangar on its refund-processing and business-premises issues. It held that the electronic-refund circular did not assist the petitioner and rejected the writ petition.
The supplied High Court text separately records a refund claim comprising tax of ₹1,12,74,296, interest of ₹66,59,890 and penalty of ₹16,91,144, while paragraph 5.7 reproduces different liability figures from the questionnaire. Those figures are not reconciled in the supplied source. The later Supreme Court order grants liberty and time to file the statutory appeal; it does not direct a refund, remand the dispute, or expressly set aside the High Court’s merits findings.
Cases Discussed
- Gunnam Infra Projects (P.) Ltd. Vs. Union of India — [2025] 180 taxmann.com 492 (Karnataka High Court). Relied upon by the petitioner; distinguished by the High Court on voluntary payment, examination of records and quantification of liability.
- Suraj Mangar Vs. Assistant Commissioner of West Bengal State Tax — [2025] 176 taxmann.com 951 (Calcutta High Court). Cited by the petitioner; distinguished as concerning refund-processing timelines and objections to business premises.
- Radhika Agarwal Vs. Union of India — [2025] 171 taxmann.com 832 (Supreme Court of India). Cited against coercive recovery; the High Court declined to apply it, referring to its Customs arrest-power context.
- Innovators Facade Systems Ltd. Vs. Assistant Additional Director General of GST Investigation — [2024] 160 taxmann.com 747 (Bombay High Court). Relied upon by the State and followed by the High Court concerning contemporaneous complaints and disputed allegations of coercion in writ proceedings.
- Shri. Nandhi Dhall Mills India (P.) Ltd. Vs. Senior Intelligence Officer, Director General of Goods & Service Tax, Trichy — [2021] 127 taxmann.com 31 / 86 GST 649 (Madras High Court). Appears in the quoted Innovators Facade Systems decision, which distinguished it on its facts.
Related Gujarat High Court Judgment: Before approaching the Supreme Court, the petitioner had challenged the rejection of his GST refund claim before the Gujarat High Court. The High Court rejected the allegation of coercive recovery after examining the contemporaneous records and circumstances. Read the Gujarat High Court judgment on alleged coercive GST recovery and refund rejection. The Supreme Court subsequently dismissed the SLP as not pressed and granted liberty to pursue the statutory appeal without deciding the merits.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. After arguing the matter for some time, the learned counsel appearing for the petitioner states that he does not want to press this petition with liberty to prefer Statutory Appeal before the Appellate Authority. We grant four weeks’ time to the petitioner to prefer the Statutory Appeal
2. In view of the aforesaid, the Special Leave Petition is dismissed as not pressed with the aforesaid liberty.
