Picture this: The GST authorities knock on your door, demanding provisional tax. But wait! They didn't give you a show-cause notice. Unlawful, right?

But don't just take my word for it. Punjab and Haryana High Court declared exactly this in M/s Parsvnath Traders v. Principal Commissioner, CGST. [CWP No.10923 of 2021 dated July 27, 2023]

Next step: Let's distill this legal enlightenment into a blog post or a series of tweets to shed more light on the significant court rulings. Interested?

In this case, the assessee, M/s Parsvnath Traders, was visited by the GST authorities for a search and seizure operation. During the search, the authorities demanded that the assessee deposit an amount of Rs. 10 lakhs as provisional tax.

The assessee complied with the demand and deposited the amount. However, the assessee later challenged the demand for provisional tax in court.

The assessee argued that the demand was illegal as no show-cause notice had been issued to them before the demand was made. The assessee also argued that the amount deposited was not voluntary and was made under coercion from the GST authorities.

The High Court agreed with the assessee's arguments and held that the demand for provisional tax was illegal. The Court also directed the GST authorities to refund the amount of Rs10 lakhs along with interest @ 6% per annum from the deposit date till the refund amount is released

The judgment of the Punjab and Haryana High Court is significant as it clarifies the law on the issue of provisional tax under the GST Act. The judgment makes it clear that the GST authorities cannot demand provisional tax without issuing a show-cause notice to the assessee.

The judgment also makes it clear that any amount deposited by the assessee under coercion cannot be considered as voluntary and must be refunded with interest.