2021 (11) TMI 819 - HC - GST

Petition Dismissed, Petitioner to Pay Costs, Emphasized Compliance with CGST Act

The court dismissed the petition, finding no merit in the claims made by the petitioner. The petitioner was ordered to pay costs of ? 25,000 to the Delhi ... Search and seizure - Seeking release of seized cash - Revenue alleges concealment of facts - erroneous recovery by the respondents from the petitioner without proper adjudication - HELD THAT:- Admittedly, the search at the residential premises of the Director of the petitioner company was carried out on 04.03.2021. The petitioner made no complaint to the respondents at the relevant time and till the letter dated 12.10.2021 of non-supply of Panchnama and other documents in respect of the search carried out at the premises. Clearly, this plea is being set up as an afterthought by the petitioner. As far as the power to seize cash is concerned, the same need not be adjudicated in the present petition for the reason that it is an admitted fact that on the basis of the representation/letter dated 24.03.2021 referred, the cash amount so seized was released in favour of the petitioner. The said question, therefore, in the present petition is merely of an academic importance and is, therefore, left open to be adjudicated in an appropriate case. The petitioner clearly stated that the tax liability is being discharged by it ‘voluntarily’ and requested the respondents not to issue any Show Cause Notice in relation to the search and seizure undertaken by it on 04.03.2021. Clearly therefore, the tax amount has been deposited by the petitioner voluntarily and the case of coercion now being set up by the petitioner is an afterthought. The effect of Subsection (5) and (6) of Section 74 of CGST Act is that the assessee can by making voluntary deposit of tax, interest and penalty avail the benefit of restriction of penalty to only 15% of such tax. In the present case, the petitioner availed of this remedy and based thereon, proceedings against the petitioner arising out of the search and seizure activities carried out on 04.03.2021 were closed. The petition is dismissed with costs quantified at ₹ 25,000/- to be deposited with Delhi High Court Legal Services Committee. Issues Involved:1. Seizure of Rs. 65 lakhs from the residential premises of the Director.2. Direction to release the seized amount only for payment of Government dues.3. Erroneous recovery of Rs. 94,65,316 without proper adjudication.4. Non-supply of Panchnama and other documents.5. Alleged illegal detention of the Director.6. Voluntariness of tax deposits made by the petitioner.Issue-wise Detailed Analysis:1. Seizure of Rs. 65 lakhs from the residential premises of the Director:The petitioner challenged the seizure of Rs. 65 lakhs from the Director's residence on 04.03.2021. The petitioner argued that the respondents had no authority under the CGST Act to seize cash and that the Panchnama for the search and seizure was not supplied. The respondents countered that the Panchnama was duly acknowledged by the Director and his wife. The court found that the petitioner had not disclosed the letter dated 24.03.2021, which sought the release of the seized amount and acknowledged the tax liabilities voluntarily.2. Direction to release the seized amount only for payment of Government dues:The petitioner claimed that the condition imposed by the respondent to release the seized amount only for payment of Government dues was extraneous to the CGST Act. The court noted that the petitioner had voluntarily agreed to this condition in the letter dated 24.03.2021 and subsequently deposited Rs. 60,66,082 towards tax, interest, and penalty. The court found this issue to be of academic importance and not open to agitation by the petitioner due to their prior consent.3. Erroneous recovery of Rs. 94,65,316 without proper adjudication:The petitioner argued that Rs. 94,65,316 was erroneously recovered without proper adjudication and sought a direction for the determination of tax liability. The court observed that the petitioner had voluntarily deposited the amount and requested the release of the seized cash to pay the balance tax. The court found no merit in the petitioner's claim of coercion and noted that the petitioner had not raised any grievance until the letter dated 12.10.2021.4. Non-supply of Panchnama and other documents:The petitioner claimed that the Panchnama and other documents related to the search were not provided. The respondents produced a copy of the Panchnama with acknowledgments from the Director and his wife. The court found the petitioner's claim of non-supply to be an afterthought and noted that no grievance was raised until the letter dated 12.10.2021.5. Alleged illegal detention of the Director:The petitioner alleged that the Director was illegally detained overnight without any lawful justification. The court did not find this claim relevant to the main issues of tax liability and seizure of cash, especially since the petitioner had voluntarily deposited the tax amount and sought the release of the seized cash.6. Voluntariness of tax deposits made by the petitioner:The petitioner argued that the tax deposits were made under coercion and not voluntarily. The respondents contended that the petitioner had voluntarily deposited the tax and requested not to issue any Show Cause Notice. The court found that the petitioner had indeed voluntarily deposited the tax and sought to avoid any dispute or coercion with the GST Department. The court dismissed the petitioner's claim of coercion as an afterthought.Conclusion:The court found no merit in the petition and dismissed it with costs of Rs. 25,000 to be deposited with the Delhi High Court Legal Services Committee. The court emphasized that the petitioner had voluntarily deposited the tax and agreed to the conditions imposed by the respondents, thereby closing the proceedings under Section 74(5) of the CGST Act.