A thread on Lupin Forging Pvt. Ltd. vs Union of India & Ors. 🧵
1/ The Facts
On 18.12.2025, DGGI officers searched the factory and residential premises of a Jaipur-based company manufacturing MS Angles, Iron Channels etc. The factory search ended in a few hours — but the residential search ran for over 30 HOURS, concluding only on 19.12.2025.
2/ The Deposit
During the search, officers allegedly told the taxpayer the premises wouldn’t be released until tax “computed on rough estimates” was deposited. The company arranged ₹5,28,00,000 from family & friends. It was deposited via Form DRC-03 — allegedly filled by officers themselves, without explanation.
3/ The Pushback
Just 6 days later (24.12.2025), the company wrote to the Department seeking a refund, stating the deposit was made “under pressure and not with free will,” denying fraud/suppression, and offering full cooperation in adjudication.
4/ Round 1 — Rajasthan High Court (17.08.2026)
The company filed a writ petition seeking refund + quashing of statements recorded during the search. But instead of deciding the refund question, the HC:
- Sent the matter back to the “competent authority” (ADG, DGGI) to pass a speaking order
- Gave 4 weeks’ timeline
- Left all contentions open
5/ Why That HC Order Mattered
The HC did flag an important point — 8+ months had passed with:
❌ No SCN issued
❌ No demand crystallised
❌ No proceedings initiated
Yet the money stayed with the Department. The HC directed the authority to explain WHY.
6/ Round 2 — Supreme Court (21.09.2026)
Not satisfied with being sent back to the very department it alleged coercion against, the company approached the Supreme Court by SLP.
Core arguments:
⚖️ Article 265 — “No tax shall be levied or collected except by authority of law”
⚖️ Article 300A — No deprivation of property without authority of law
⚖️ The writ court itself should’ve decided the refund, not remanded it to the department
7/ The SC Order
Justices Sanjay Kumar & Sanjeev Sachdeva:
✅ Issued notice, returnable 05.11.2026
✅ STAYED operation of the HC’s 17.08.2026 order
✅ As a consequence, the Department cannot pass any order on the taxpayer’s representation till the next hearing
8/ Why This Is a Big Deal
The HC order itself noted this isn’t an isolated case — similarly placed assessees have deposited amounts aggregating to ~₹160 CRORES under comparable circumstances. A final ruling here could set precedent for a much wider set of GST search-related deposits.
9/ The Legal Question at the Heart of It
Can GST authorities retain money “voluntarily” deposited during a search — for months, with no SCN, no adjudication, no crystallised demand — without violating Article 265 & 300A?
This case could become a key precedent on:
🔹 Voluntariness of DRC-03 deposits during search
🔹 Limits on GST search powers under Sec 67(2) CGST Act
🔹 Taxpayer rights against “collect now, adjudicate later” practices
10/ Bottom Line
This is now a live constitutional question before the Supreme Court, and every GST-registered business, tax professional, and litigator should be watching CW-7004/2026 → SLP(C) No. 33253/2026 closely.
Next hearing: 05.11.2026. Will post updates. 🔖
#GST #GSTIndia #CGST #TaxLaw #SupremeCourtOfIndia #IndirectTax #TaxTwitter #ArticleOfIndia #DGGI #TaxLitigation
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FCA, CWM (AAFM-US), CBV, CIFRS, R-ID, B.COM (H), RV* (IBBI)
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