Petitioner fails to prove coercion in voluntary ITC reversal, writ petition disposed without relief

The Bombay HC disposed of a writ petition seeking refund of reversed Input Tax Credit (ITC) allegedly coerced during investigation into bogus firms. The petitioner voluntarily reversed ITC but claimed it was due to coercion by tax authorities. The court held that disputed questions regarding coercion cannot be determined in writ jurisdiction, as various reasons could exist for ITC reversal. The court noted that if coercion occurred, legal remedies are available, and if entitled to refund on other grounds, proper application procedures should be followed. The petition was disposed of without relief.

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Issues:
1. Quashing of investigation and summons under CGST Act.
2. Coerced payment of tax through reversal of Input Tax Credit and seeking refund.

Issue 1: Quashing of investigation and summons under CGST Act:
The Petitioner sought relief in a writ petition to quash the investigation conducted under section 67 of the Central Goods and Services Tax Act, 2017, and the summons issued under section 70. Allegations were made that the Petitioner availed Input Tax Credit (ITC) of Rs.7.61 crores for non-existent firms. The Respondents proceeded with arrests under section 69 of the CGST Act, treating the offenses as cognizable and non-bailable. The Directors of the Petitioner were arrested, produced before the Magistrate, and later granted bail. The Petitioner challenged the investigation and subsequent proceedings leading to the offense and bail in the civil writ petition.

The Division Bench referred to previous legal decisions to determine when a civil or criminal writ petition should be filed. It was highlighted that if a proceeding may result in a sentence of imprisonment, fine, or forfeiture of property, it should be treated as a criminal writ petition. The Bench provided directions for categorizing writ petitions as either civil or criminal based on the nature of relief sought. The Petitioner's prayer for quashing the investigation and summons was not properly filed, and the Petitioner's Counsel acknowledged not pressing this prayer.

Issue 2: Coerced payment of tax through reversal of Input Tax Credit and seeking refund:
The second relief sought by the Petitioner was a declaration that the payment of tax through the reversal of Input Tax Credit was coerced and should be refunded. The Petitioner alleged coercion during the criminal investigation process, leading to the reversal of ITC. The Respondents denied these allegations and refuted the claims of creating fraudulent ITC. The Petitioner argued that the aggressive stance of the authorities forced them to reverse the ITC. However, the Respondents contended that the Directors did not complain of ill-treatment when produced before the Magistrate, suggesting that coercion was an afterthought. The investigation into the matter was ongoing, with disputed questions surrounding the reversal of ITC. The Court noted that it could not determine coercion in a writ jurisdiction and advised the Petitioner to seek legal remedies if subjected to threats or coercion. If entitled to a refund on legal grounds, the Petitioner was advised to apply for reversal or refund through proper channels.

The writ petition was disposed of with these observations, emphasizing the need for legal remedies in case of coercion during the investigation and the availability of procedures for seeking refunds based on legal grounds.

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