TaxTMI 
TaxTMI 
2019 (5) TMI 895
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....tion initiated by the respondents in the premises of the petitioner, commencing from 15.10.2018 and continuing on various dates thereafter. Seizures of voluminous documents and records have been effected. The petitioner has also been called upon to furnish various records and has done so, under letters dated 17.11.2018 and 22.11.2018. 3. The list of documents submitted on 17.11.2018 is set out below:- 'JAYACHANDRAN ALLOYS PVT LTD Following Original / Documents submitted to GST HPU Officers dt: 17/11/2018 S.No. Name of the Register Reports Date From To 1 Despatch Inspection Report 3/14/2018 4/21/2018 2 Lead Counting Note 9/25/2018 11/1/2018 3 Daily stock book 9/6/2018 11/17/2018 4 Vehicle Follow up chart 7/5/2018 9/20/2018 5 Daily stock book 5/30/2018 9/5/2018 6 Daily stock book 11/1/2017 2/18/2018 7 Despatch Inspection Report 5/31/2018 6/26/2018 8 Despatch Inspection Report 2/6/2018 3/13/2018 9 Battery Dimandle scrap Inward 2/11/2018 11/16/2018 10 Lead Outward Note 7/11/2018 11/17/2018 11 Lead Outward Note (....
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.... authorities, to grant opportunity to the petitioner and to pass an order of assessment in accordance with law. 7. A Miscellaneous Petition has been filed seeking the grant of an interim injunction restraining the respondents from proceeding cocercively against the petitioner and their staff including arresting them by invoking the provisions of Section 69 of the Act, pending disposal of the writ petition. 8. A counter affidavit has been filed by the respondents attempting to answer the main as well as the interim prayer. 9. The following issues arise, in my view, for resolution:- 1. Whether the petitioner is entitled to a mandamus as prayed for in regard to supply of the documents and statements sought for by it in the light of the provisions of the Act? 2. Whether the interim protection sought for to prevent the respondents from invoking the powers under Section 69 of the Act read with Section 132 thereof in respect of the petitioner is liable to be granted? 3. Whether the petitioner's request for a direction to the respondents to complete adjudication and make an assessment after following the due process of law is liable to be accepted? ....
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....ner has also made various submissions with regard to the merits of the additions that have been proposed in the course of the proceedings. I consciously refrain from adverting to the same in detail since this Court is not concerned with the merits of the proposed assessment but only the procedure that is adopted by the respondents to frame such assessment. As regards the procedure itself, the petitioner claims that there has been no proper compliance with the requirements of the statute. The Managing Director of the petitioner was threatened that he would be arrested in the light of the provisions of Section 69 of the CGST Act and he was coerced into signing statements, including one dated 21.02.2019, admitting various liabilities and providing for a schedule of payments to the Department. 16. The anticipated demand as per the statement recorded is of a sum of Rs. 18,99,50,468/-, and the petitioner has undertaken to remit Rs. 5,00,00,000/- on or before 28.02.2019 and the balance of Rs. 13,99,50,468/- before the end of March 2019. The said statement has been retracted the very next day vide letter dated 22.02.2019 sent by registered post and e-mail. The petitioner relies on vario....
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....lishing sales and purchase transactions and in the present case, there is no evidence to establish the movement of goods. Thus, the Department is categorical that the petitioner is a defaulter. Various details have been found in the premises in the course of investigation in support of the aforesaid factual position. The Department accepts that the investigation is on and no assessment has been framed. However substantial reliance is placed on statement dated 21.02.2019 wherein various lapses on the part of the petitioner have been tabulated and the petitioner has signed the same conceding to the lapses and agreeing to pay the tax arising therefrom amounting to a sum of Rs. 18,99,50,468/-. The Department also refers to the conduct of the Assessee in avoiding summons and in not co-operating with the proceedings. 21. As regards the allegation that the Managing Director had been coerced into signing statement dated 21.02.2019 under threat of arrest, the counter states that 'they had only pointed out the statutory provision (section 132 of the Act) as it exists'. The respondents reiterate that the petitioner has indulged in Bill Trading activity which is an offence under Section ....
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....S.Raman, learned senior counsel, for Mr.Rajkumar, learned counsel for the petitioner and Ms.Aparna Nandakumar, learned Senior Standing counsel, assisted by the officials of the Department, for the respondents. 27. The Act provides for an assessment to be made after notice to be issued to the assessee. In the present case, the petitioner/assessee has been filing monthly returns regularly. This is not disputed. However, the Department apprehended that the petitioner was engaging in bill trading activities and launched an investigation in the premises to verify the business activities of the petitioner and its compliance with the provisions of the Act. This investigation is in terms of section 67 of the Act, extracted below:- '67. Power of inspection, search and seizure.- (1) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that-- (a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules mad....
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....le is denied. (5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation. (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months. (8) The Government may, having regard to the perishable or hazardous natur....
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.... issued, the tabulation of the summons issued and attendance details of the petitioner indicate otherwise. Such details, as per the counter filed by the Department, are extracted below: 'S. NO NAME OF THE PERSON SUMMONED S/SHRI DESIGNATION SUMMON DATE STATUS 1 V.SARAVANAN BILLING INCHARGE 06.12.2018 APPEARED 2 V.VINOTH KUMAR BILLING INCHARGE 06.12.2018 APPEARED 3 S.SIVAGURUSAMY GENERAL MANAGER 06.12.2018 APPEARED 4 T.RETTINAMOORTHI STORES SUPERVISOR 07.12.2018 APPEARED ON CALL 5 D.JEGADEESH FINANCE MANAGER 07.12.2018 APPEARED 6 C.PRADEEP MANAGING DIRECTOR 07.12.2018 NOT APPEARED 7 VIVEGANANDAN S PRODUCTION MANAGER 17.12.2018 APPEARED 8 MAHENTHIRAN M DESPATCH SUPERVISOR 18.12.2018 APPEARED 9 S.SIVAGURUSAMY GENERAL MANAGER 19.12.2018 APPEARED 10 D. JAGADESH FINANCE MANAGER 20.12.2018 APPEARED 11 C.PRADEEP MANAGING DIRECTOR 21.12.2018 APPEARED AND C PRADEEP, REQUESTED TO POSTPONE ON 27.12.18 12 D.JEGADEESH FINANCE MANAGER 26.12.2018 APPEARED 13 C.PRADEEP MANAGING DIRECTOR 27.12.201....
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.... thus, liable to be accepted. Copies of the documents sought will be furnished within a period of two (2) weeks from the date of receipt of a copy of this order upon remittance of copying charges. As far as statements are concerned, there being no condition imposed/ restriction placed in statute, copies of the same will be furnished upon remittance of copying charges within two(2) weeks from date of receipt of a copy of this order. Issue (i) is answered in favour of the petitioner. 31. The provisions of Section 132 of the CGST Act are relevant to determine question (ii) framed above and are extracted hereunder:- '132. Punishment for certain offences (1) Whoever commits any of the following offences, namely: - (a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or rules made thereunder, with the intention to evade tax; (b) issues any any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax; (c) avails input tax....
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....mount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. (2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine. (3) The imprisonment referred to in clauses (i), (ii) and (iii) of subsection (1) and sub-section (2) shall, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the Court, be for a term not less than six months. (4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under this Act, except the offences referred to in sub-section (5) shal....
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....no movement of Goods. It is seen that without movement of Finished Goods from M/s. EGMI, Mangalore to M/s. JCA Perundurai pertaining to 132 Invoices raised by M/s. EGMI and M/s JCA has been availed by you Rs. 6,82,52,389/- 2 M/s. JCA has produced and supplied the finished goods without invoice and without payment of GST, difference between the production of finished goods and as per the Sales register works to Rs. 20,85,75,840/- @ Rs. 160/- Rs. 3,75,43,651/- 3 M/s. JCA had taken Input Tax Credit to the tune of Rs. 2,59,28,504/- under Reverse Charge Method (RCM) without payment of GST under RCM as it is seen from GSTR 3B, April-2018 return. To that extent they are liable to pay the GST of Rs. 2,59,28,504/-. Further, it is found that they have utilized the wrongly taken ITC of Rs. 2,59,28,504/- for their regular payment of GST. Rs. 5,18,57,008/- 4 There is a difference between the agreed quantity of raw material to be supplied by M/s. EGMI, Mangalore, and the quantity of raw material used at M/s.JCA as confirmed by the Managing Director of M/s. JCA in his statement works out to Rs. 17,94,30,110/- Rs. 3,22,97,420/- Total liability Rs. 18,9....
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....t providing for the levy of Service Tax and State Value Added Tax Acts. Thus the interpretation given to the provisions of the aforesaid statutes would equally govern the working of the present statute (GST) as well. No doubt, the interests of the revenue are paramount and have to be protected, but the actions of the Revenue Department draw power only from a wholistic interpretation of the statutory provisions. Any excess in this regard would vitiate the legitimacy of the exercise. 34. The Delhi High Court, in the case of Make My Trip (India) (supra) has considered the powers of the Directorate General of Central Excise Intelligence (DGCEI) for arrest, investigation and assessment in the light of service tax levy under the Finance Act, 1994. The Bench, after consideration of the judgment of the Supreme Court in Radheshyam Kejriwal (supra) relied upon by the revenue before me summarises its conclusions as follows: '116. To summarise the conclusions in this judgment: (i) The scheme of the provisions of the Finance Act 1994 (FA), do not permit the DGCEI or for that matter the Service Tax Department (ST Department) to by-pass the procedure as set out in Section 73A....
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....ed etc. That history can be gleaned only from past records of the ST Department. In such instances, it might be possible to justify resorting to the coercive provisions straightaway, but then the notes on file must offer a convincing justification for resorting to that extreme measure. (v) The decision to arrest a person must not be taken on whimsical grounds; it must be based on 'credible material'. The constitutional safeguards laid out in D K. Basu's case (supra) in the context of the powers of police officers under the Cr PC and of officers of central excise, customs and enforcement directorates, are applicable to the exercise of powers under the FA in equal measure. An officer whether of the Central Excise department or another agency like the DGCEI, authorised to exercise powers under the CE Act and/or the FA will have to be conscious of the constitutional limitations on the exercise of such power. (vi) In the case of MMT, without even an SCN being issued and without there being any determination of the amount of service tax arrears, the resort to the extreme coercive measure of arrest followed by the detention of Mr. Pallai was impermissible in law.....
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....IBO to institute appropriate proceedings in accordance with law against the officers of the DGCEI in which the supplementary affidavits filed in these proceedings and the replies thereto can be relied on. This holds good for the officials of the DGCEI as well when called upon to defend those proceedings in accordance with law. (xii) The Court cannot decline to exercise its jurisdiction and clarify the legal position as regards the interpretation of the scope and ambit of the powers under Sections 89, 90 and 91 of the FA. This is clearly within the powers of this Court. That is why this Court has decided to proceed with these petitions notwithstanding that the criminal petitions may be pending in the criminal jurisdiction of this Court. (xiii) The Court is satisfied that in the present case the action of the DGCEI in proceeding to arrest Mr. Pallai, Vice-President of MMT, was contrary to law and that Mr. Pallai's constitutional and fundamental rights under Article 21 of the Constitution have been violated. The Court is conscious that Mr. Pallai has instituted separate proceedings for quashing of the criminal case and, therefore, this Court doe....
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....d in Section 20 resulting in excess distribution of credit to one or more recipients, the excess credit so distributed shall be recovered from such recipients along with interest, and the provisions of Section 73 or Section 74, as the case may be, shall, mutatis mutandis, apply for determination of amount to be recovered. 38. Thus, 'determination' of the excess credit by way of the procedure set out in Section 73 or 74, as the case may be is a prerequisite for the recovery thereof. Sections 73 and 74 deal with assessments and as such it is clear and unambiguous that such recovery can only be initiated once the amount of excess credit has been quantified and determined in an assessment. When recovery is made subject to 'determination' in an assessment, the argument of the department that punishment for the offence alleged can be imposed even prior to such assessment, is clearly incorrect and amounts to putting the cart before the horse. 39. The exceptions to this rule of assessment are only those cases where the assessee is a habitual offender, that/who has been visited consistently and often with penalties and fines for contraventions of statutory provisions. It is only in su....
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....venue enactment, that in my view are necessary to appreciate the lis in proper perspective. The decision is thus distinguishable on facts and in law. 43. As far as the decision rendered by the Rajasthan High Court is concerned, it is distinguishable on facts, as at paragraph 20 thereof, the learned Judge records that the petitioner therein did not controvert the claim that the claim of Input Tax Credit is made based on fake invoices. Thus, no defence was put forth by the petitioner to the allegation of Bill Trading in that case, which is not so in the case before me. This decision is also distinguishable on facts. 44. The learned Single Judge of the Bombay High Court, in Anticipatory Bail Application, in the case of Meghraj Moolchand Burad v. Directorate General of GST (Intelligence), Pune and another, Anticipatory Bail Application No.2333 of 2018 has considered a similar case and has rejected the Anticipatory Bail taking into consideration the conduct of the applicant, gravity of offence and the serious allegations made. This order has travelled to the Supreme Court in Petition for Special Leave to Appeal Crl. Nos.244/2019, dated 09.01.2019 by the petitioner therein, wher....
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....n excess of Rs. 18 crores. The Managing Director of the Petitioner company, according to the department, conceded to the proposals for assessment and has undertaken to remit a sum of Rs. 5,00,00,000/- on or before 28.02.2019 and the balance of Rs. 13,99,50,468/- before the end of March 2019. Thus she submits that the petitioner be directed to remit a sum of Rupees five crores as a security for the demand as confirmed by the Managing Director. 49. The above request is unacceptable. A statement is no substitute for an assessment. No doubt, the value of the statement and the retraction thereof will be considered by the Assessing Authority while framing the order of assessment and nothing stated in this order shall be considered to be a fetter upon the powers of the assessing authority to do so. However, in the absence of a statutory provision that enables such imposition of a condition even prior to determination of the violations by an assessee and quantification of the consequent demands, this argument is rejected. 50. I however find that the statue contains inter alia Section 83 that vests the power of interim and provisional attachment of property to protect the interests of....