2020 (8) TMI 418 - HC - GST

Dismissed appeal upholds legality of GST Act proceedings, search/seizure actions, and bank account attachment. No substantiation for harassment claims.

Suresh Kumar P.P., Mr. Aboobacker Sidhique Versus The Deputy Director, The Assistant Commissioner, Mr. Renn Abraham And Others

Suresh Kumar P.P., Mr. Aboobacker Sidhique Versus The Deputy Director, The Assistant Commissioner, Mr. Renn Abraham And Others - 2020 (41) G.S.T.L. 17 ... Issues Involved:1. Legality of the proceedings initiated under the Central Goods and Services Tax Act, 2017 (CGST Act).2. Validity of search and seizure proceedings under Section 67 of the CGST Act.3. Refund of Rupees One Crore collected by the respondents.4. Liability to pay GST on the revenue share retained by the Local Cable Operator (LCO).5. Compensation for damage to reputation and mental agony.6. Validity of the attachment of bank accounts.7. Simultaneous proceedings of audit and investigation.8. Allegations of harassment and high-handedness by the respondent-officers.Detailed Analysis:1. Legality of the Proceedings Initiated Under the CGST Act:The appellants argued that the entire proceedings were illegal and unauthorized, causing significant distress. They contended that the investigation under Section 67 was initiated without reasonable cause, despite an ongoing audit under Section 65. The respondents countered that the proceedings were within the statutory authority, and the search and seizure operations were conducted lawfully.2. Validity of Search and Seizure Proceedings Under Section 67 of the CGST Act:The appellants challenged the validity of the search and seizure, arguing that the Senior Intelligence Officer (SIO) was not authorized to conduct such operations under Section 67, which mandates authorization by an officer not below the rank of Joint Commissioner. The court found that the SIO was properly authorized under Section 67(2) by an officer of the required rank, and the reasons to believe were duly recorded. The court held that the authorization and subsequent actions were valid and in compliance with the statutory requirements.3. Refund of Rupees One Crore Collected by the Respondents:The appellants claimed that Rupees One Crore was extorted from them under duress, evidenced by Exhibit P3. They argued that the payment was not voluntary and violated CGST Rules, specifically Rule 87. The court found that the cheque was issued voluntarily, albeit under protest, and its receipt was sanctioned by the statute and rules. The court noted that the cheque remained unencashed due to pending legal proceedings and directed that the department could proceed with encashment in accordance with the prescribed procedure.4. Liability to Pay GST on the Revenue Share Retained by the LCO:The court did not specifically address this issue in detail, as it was not the primary focus of the appeal. The appellants can pursue this matter through appropriate legal proceedings if desired.5. Compensation for Damage to Reputation and Mental Agony:The court held that allegations of harassment and high-handedness could not be substantiated in a petition under Article 226 of the Constitution. The court found that the search and seizure operations, although causing discomfort, were lawful and necessary. The court did not express any opinion on the allegations, leaving the appellants to pursue appropriate proceedings if they wish to substantiate their claims.6. Validity of the Attachment of Bank Accounts:The appellants produced orders of attachment of their bank accounts, which were issued after the disposal of the writ petition. The court found that the attachment orders were valid as they were issued in the context of ongoing proceedings under Section 67. The court noted that the attachment was necessary to protect the interest of the revenue and did not require prior notice or hearing.7. Simultaneous Proceedings of Audit and Investigation:The appellants argued that simultaneous proceedings of audit and investigation were not permissible. The court found that audit under Section 65 is a routine procedure, while an investigation under Section 67 is a more onerous procedure initiated based on specific reasons to believe. The court held that there was no infirmity in continuing both proceedings simultaneously, but noted that the audit would not be continued in light of the ongoing investigation.8. Allegations of Harassment and High-Handedness by the Respondent-Officers:The court dismissed the allegations of harassment and high-handedness, stating that such claims could not be substantiated in a petition under Article 226. The court emphasized that the search and seizure operations were conducted lawfully and any discomfort experienced by the appellants was a necessary consequence of the investigation.Conclusion:The appeal was dismissed, with the court upholding the validity of the proceedings under the CGST Act, the search and seizure operations, and the attachment of bank accounts. The court found no evidence of harassment or high-handedness and held that the cheque issued by the appellants was voluntary. The appellants were advised to pursue appropriate legal proceedings if they wished to substantiate their claims further.