At a time when many taxpayers are waiting for GST refunds involving relatively smaller amounts, the Centralised Refund Processing Unit under the GST Department refunded ₹4.5 crore to a trader whose cash was seized by its Intelligence Wing during an investigation.

The refund, processed without consulting the Intelligence Wing, has triggered a controversy, prompting the GST Department to convene an emergency meeting at its headquarters on Monday. The episode has also exposed the alleged lack of coordination between different wings of the department, which officials say resulted in the refund being processed.

The ₹4.5 crore was seized from the residence of Abdul Latheef, owner of Calicut Halwa and Bakery, during a search that continued till midnight on October 17, 2024.

Following the seizure, Latheef moved the Kerala High Court, alleging that GST officials had threatened him with arrest and coerced him into giving a statement. In the petition, he also accused the GST department of forcing him to disclose the user ID and password of his bank account.

The High Court dismissed the petition but observed that the petitioner was entitled to apply for a refund within two years. The GST Department processed the refund soon afterwards.