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2020 (8) TMI 418
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....On the intervention of their Advocate at mid-night, they were released, allege the appellants. The appellants, in the writ petition prayed for (i) setting aside Exhibit P2 notice, requiring them to provide information issued by the Senior Intelligence Officer (SIO), (ii) invalidation of search and seizure proceedings initiated under Section 67 of the CGST Act evidenced by Exhibit P4, (iii) refund of Rupees One Crore collected by the 4th and 5th respondents, (iv) a declaration that the petitioners are not liable to pay GST on the revenue share retained by the Local Cable Operator ['LCO' for brevity] as also (v) compensation for the damage to the reputation of the petitioners and the mental agony suffered. 2. The learned Single Judge found that the writ petition is premature and there was no evidence produced by the petitioners to substantiate the contention of harassment perpetrated on them. The learned Single Judge held that it is inappropriate to form an opinion regarding the allegations raised, at this stage, especially for reason of there being no supporting material to establish the allegations. The learned Single Judge refused exercise of discretion under Article 226 ....
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....re A6. It is hence contended that Section 67 proceedings initiated is invalid on the face of it and, hence, the attachment of the Bank accounts, as evidenced from Annexures A7 and A8 series of documents, are also to be set aside. There could also be no parallel proceedings of audit and investigation. The audit initiated has to be concluded before an investigation is initiated, asserts learned Senior Counsel. 5. It is argued that the cheque of Rupees One Crore was forcefully taken and the same is in violation of the prescription in the CGST Rules, 2017 as to the payments to be made to the Department. Rule 87 is pointed out, specifically to contend that an Electronic Cash Ledger has to be maintained in the prescribed form for each person liable to pay any amounts under the Act, in the common portal. Any deposit made, can only be with the prescribed form under sub-rule (2) of Rule 87 and not otherwise. No such prescribed form was generated, which establishes the duress under which the cheque was issued. The contention of the Department that the appellants had sought to get the benefits under Section 74(5) of the Act is, hence, prima facie incorrect. It is also pointed out that Exhibi....
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....ith issuance of a DIN, all of which documents are produced before this Court in a sealed cover, as per the directions issued by this Court. Exhibit P4 is a seizure order, for which no DIN is required since the instructions issued by the Central Board does not take in such orders issued at the time of inspection in the presence of the assessees or the persons investigated. There is no question of pre-dating or post-dating, which evil is sought to be avoided by compulsory generation of DIN in the communications addressed to any person, as distinguished from an order issued in the presence of such persons under investigation. Section 74(1) notice, it is argued, does not require a determination of tax, since it is a mere initiation of proceedings for the purpose of determining tax not paid, short paid, etc. Section 74(5) speaks of a benefit conferred on the person who is proposed to be investigated to pay up tax on his own assessment, upon which there could be no issuance of notice under Section 74(1). Only if there is apprehension of further short fall, could there be a notice under Section 74(1), which is provided for under sub-section (7). The benefit under Section 74(5) is insofar....
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.....P(C) No.3618/2010 dated 29.06.2020 [Watermelon Management Services Private Limited v. The Commissioner, Central Tax, GST Delhi] is placed on record to assail the simultaneous proceedings of audit and investigation. The decision of the Division Bench of the High Court of Bombay, reported in Kaish Impex Private Limited v. Union of India [2020 SCC OnLine Bom 125] is pointed out to resist the attachment of Bank accounts. 9. The matter was heard on three days and on 05.08.2020 we had, by an interim order, specifically directed the Department to produce the regularization of Exhibit P4, Annexures 2 & 3 Summons by generation of DIN, if the same is applicable. The learned Standing Counsel has produced the authorization of the SIO to carry out the search and seizure, under Section 67(2) with CBIC-DIN-202006DSS500009LAF2F as also the subsequent generation of DIN with respect to Annexures 2 and 3 CBIC-DIN-202006DSS500001F47A3 and CBIC-DIN-202006DSS500007V5BAA, respectively. At the commencement of hearing on 11.08.2020 itself, the DIN were supplied to the learned Senior Counsel who appeared through Video Conferencing as also the learned instructing counsel who was before us, in person. By th....
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....to the appellants in their presence would not be included, as there could be no suspicion raised of its issuance, on the date and time it bears and its author. The objective is also for the assessee to ensure the genuineness of the document as having been issued on the date and by the officer who has issued it. This prevents any abuse by the Departmental officers of pre-dating communications and ratifying actions by authorizations subsequently made out in the files. We do not think, Exhibit P4 issued to the appellants, which is also an order of seizure of documents, made in the presence of the appellants, to effectuate seizure requires a DIN or even subsequent generation of the same. The invalidity argued on that ground does not survive. As far as summons at Annexures A2 and A3, there is proper generation of DIN, which has been verified by the learned Senior Counsel and the Instructing Counsel and communicated to us by the time the hearing concluded. The argument addressed on the basis of Annexure A6 does not, hence, stand for further consideration. 11. The allegations raised of harassment and high-handedness cannot be considered in a petition under Article 226 of the Constitution....
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....ried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: xxx xxx xxx". 13. Section 67 (1) empowers an officer not below the rank of Joint Commissioner with the authority to inspect, search and seize as also empowers such officer to authorize in writing any other officer to inspect any place of business or other premises of a taxable person. Likewise, sub-section (2) enables any officer below the rank of Joint Commissioner to carry out by himself, or authorize in writing, any other officer to search and seize such goods, documents, books or things. The reason to believe, which has to be entered into by an officer not below the rank of Joint Commissioner as per sub-section (2) of Section 67, to carry out by himself a search and seizure operation or to authorize another officer, is with respect to the fact that goods liable to confi....
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....tition, to be entered into by the officer not below the rank of Joint Commissioner, is that goods liable to confiscation or material relevant to any proceedings under the Act is secreted in a place. Such reason to believe is available in the authorization and the further reason to believe, as is seen from Exhibit P4, is of the authorized officer as to the prima facie relevance attached to the documents, books and things seized. The authorization is also to search and seize any goods or documents or other things relevant to the proceedings under the Act as found by the authorized officer. We do not think that the reason to believe as found in Exhibit P4 entered into by the authorized officer, is one spoken of under sub-section (2) of Section 67; but is a mandatory requirement flowing from the authorization itself. The SIO, according to us, has been properly authorized under section 67(2) to carry out the search and seizure operations in the premises of the appellants. The reason to believe as seen from Exhibit P4 issued by the SIO, is a requirement as per the authorization and does not at all vitiate or invalidate the order. 16. The next contention raised by the learned Senior Coun....
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....whether it should be on the gross amounts collected by the LCO. Looking at the various proceedings it cannot be, for a moment, believed that the appellants were taken off guard by the abrupt proceedings taken under Section 67 as they would allege. We do not find any infirmity in the audit and investigation proceeding being continued simultaneously. But the learned Standing Counsel informs us that in the wake of the investigation commenced, the audit would not be proceeded with. 18. The learned Senior Counsel has seriously challenged the receipt of the cheque not only as a coercive act under duress, but also as not sanctioned by the Statute or the Rules. Any deposit of money, according to the learned Senior Counsel, has to be after determination of tax under Sections 49 and 50 and by generating the forms as prescribed under the Rules. In such circumstance, when no tax is assessed and there exists no demand, there could not be any deposit taken or cheque accepted under Section 74(5), is the argument. Looking at the provisions, we are unable to accept the above contention. 19. Sections 49 and 50 are seen at Chapter X of the CGST Act, which has the nominal heading 'Payment of Tax....
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....), the assessee is enabled under sub-section (5) of Section 74 to pay the amount of tax along with interest under Section 50 and a penalty equivalent to 15% on the basis of a self assessment or as ascertained by the proper officer. On such amounts being paid, the proper officer under sub-section (6) shall desist from serving any notice under sub-section (1). Then proceedings can be resumed under sub-section (1) only if the proper officer is of the opinion that the amount paid falls short of that actually payable. Again, after issuance of notice under Section 74(1), the assessee is enabled to pay the amounts with interest and penalty equivalent to 25% under sub-section (8). However, when an order is issued under sub-section (9) by the proper officer pursuant to a notice issued under sub-section (1); under sub-section (11) in addition to the tax and interest penalty equivalent to 50% of the tax payable is mandatory. The scheme, hence, is such that an assessee on being informed of the initiation of a proceeding being enabled to pay tax, even before a notice for determination is issued, with interest and penalty of 15%. The penalty after issuance of notice for determination is enhance....
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....d sub-rule (1)(b) of a statement, inter alia under subsection (3) of both Sections 73 and 74, which contains the details of tax payable for periods other than that covered under a notice issued under sub-section (1), which stages, we have not reached in the present case. Sub-rule (1A) speaks of communication of the details of tax, interest and penalty as ascertained by an officer, in Part A of Form GST DRC-01A, prior to a notice under sub-section (1) of Section 73 or Section 74, as the case may be. The Form DRC-01A has the heading "Intimation of Tax ascertained as being Payable under Section 73(5)/74(5)'. Hence, when the proper officer contemplates issuance of a notice under Section 73(1) or Section 74(1), prior to that he has to issue Form DRC-01A showing the details of tax, interest and penalty as ascertained by the said officer. This does not, however, deviate from the fact that even before that, the assessee could voluntarily make a deposit under sub-section (5) of Section 73 or Section 74. Sub-rule (1A) was brought in by notification No.49.2019-Central Tax, dated 9.10.2019, with effect from 09.10.2019. In tune with the said provision, sub-rule (2) was amended with addition....
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....n made. We have also found that the issuance of the cheque is voluntary and its receipt by the SIO, is sanctioned by the statute and the rules prescribed there under. Hence, the Department could proceed for encashment of the cheque in accordance with the procedure prescribed. 25. The last contention raised by the learned Senior Counsel was the attachment made of bank accounts. We kept it for last since, if Section 67 proceedings are found to be illegal, then definitely attachment would also stand vacated. We are also of the opinion that it may not be proper for us to look at the attachment orders which have been issued subsequent to the writ petition having been dismissed. We are in appeal from the judgment of the learned Single Judge and it may not be proper for us to go beyond the issues urged and considered by the learned Single Judge in an appeal. The learned Senior Counsel however vehemently urged that the appeal is a continuation of the writ proceedings. Kaish Impex Private Limited, was also relied on. 26. Kaish Impex Private Limited, the decision of a Division Bench of the Bombay High Court, is not applicable to the facts of the instant case. Kaish Impex Private Limited wa....