The Patna High Court has ruled that a taxpayer cannot challenge an undertaking after voluntarily accepting the benefits arising from it. In this GST Undertaking Challenge Dismissed case, the Court rejected 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 accepted the lifting of restrictions on its bank account and later attempted to disown the very undertaking that secured the relief.
Background of the Dispute
The dispute began after GST authorities attached the petitioner’s bank account during proceedings.
To secure the removal of the attachment, the petitioner submitted an undertaking to the department. It also handed over three post-dated cheques. Based on these commitments, the department lifted the restrictions on the bank account, allowing the company to resume normal banking operations.
Several months later, the petitioner approached the High Court. It claimed that the department had obtained the undertaking under pressure because the bank account remained attached. The company also challenged the GST show cause notice and the related summary order.
Petitioner’s Arguments
The petitioner argued that it did not execute the undertaking voluntarily. According to the company, the attachment of its bank account forced it to sign the undertaking and issue post-dated cheques.
Therefore, it requested the Court to declare the undertaking invalid. It also sought to quash the show cause notice and the consequential GST order.
High Court Rejects the Plea of Coercion
The High Court found no evidence to support the allegation of coercion.
The Bench noted that the petitioner never protested when it executed the undertaking. It also failed to complain immediately after receiving relief from the department.
Instead, the petitioner accepted the benefit of the undertaking. It allowed one of the post-dated cheques to be encashed without objection. Furthermore, it continued to use its bank account after the restrictions were removed.
The Court also observed that the petitioner waited for more than three months before filing the writ petition. It offered no satisfactory explanation for this delay.
Consequently, the Bench held that the allegation of duress appeared to be an afterthought rather than a genuine grievance.
Court Refuses to Exercise Writ Jurisdiction
The High Court reiterated that Article 226 provides discretionary relief. Therefore, litigants must approach the Court with clean hands and make full disclosure of relevant facts.
Since the petitioner accepted the benefits arising from the undertaking, the Court refused to entertain its later challenge.
Accordingly, the Bench dismissed the writ petition. It also directed the petitioner to deposit ₹25,000 with the Patna High Court Legal Services Committee within one month.
Significance of the Judgment
The GST Undertaking Challenge Dismissed ruling reinforces the principle that a party cannot accept the benefits of an undertaking and later deny its validity. The judgment also sends a clear message to taxpayers that courts expect prompt and documented objections if they believe authorities obtained an undertaking under coercion. Delayed claims of duress, especially after enjoying the benefits, are unlikely to succeed in writ proceedings.
