AI Drafter 
TaxTMI 
TaxTMI 
2020 (12) TMI 1120
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....edit ledger of a registered person. The second issue involved is with respect to the scope of exercise of power under Rule 86A of the Rules. In other words, the issue is whether the authority concerned is empowered to retain any amount deposited by a registered person during any inquiry or investigation in the absence of any confirmed liability against the assessee and, more particularly, without issuance of a show-cause notice and assessment/adjudication order imposing any tax liability on the assessee. 3. So far as the connected writ application, i. e., the Special Civil Application No.8163 of 2020 is concerned, the question arising therein is whether the authorities could have debited a sum of Rs. 7.65 Crore from the credit ledger thereby debiting the ITC availed by the writ applicant on various inputs and input services without there being any demand or any final assessment order. 4. We first take up the Special Civil Application No.8841 of 2020. 5. The facts giving rise to the Special Civil Application No.8841 of 2020 may be summarized as under:- 5.1 By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the fol....
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....s an Investigating Agency called the Directorate General of Goods & Service Tax Intelligence, and this agency is the Investigating Agency for the Jaipur Zone. It appears from the materials on record that the respondent No.4 has been conducting the investigation against the writ applicant through the respondent No.3. 5.3 It is not in dispute that the writ applicant is registered with the GST Department, and while paying the GST on the goods manufactured, it has been availing the ITC on the input transactions upon receiving the tax paid inputs and tax invoices. The dispute in the present litigation is pertaining to the A.Y.2017-18 and 2018-19 respectively. During this period of two assessment years, referred to above, the writ applicant received tax paid inputs from 36 registered dealers, the details of those has been furnished at Annexure-A to the writ application. It appears that the suppliers of inputs are located across the Country and registered with the GST Authorities, in charge of their respective divisions and commissionerates. 5.4 The writ applicant received the tax invoices from its suppliers and the transactions of inputs received and the ITC availed have been recor....
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....learned counsel appearing for the writ applicants submitted that the firm has been receiving the tax paid inputs from the 36 input suppliers, referred to above. It is pointed out that all the 36 input suppliers are registered with the GST Department. The same pattern and method of receiving the inputs and tax invoices including the paying price and tax by the RTGS has been followed in case of all the input suppliers who have submitted their returns before the jurisdictional GST Officers. It is argued that despite the same pattern and method being adopted, referred to above, the dispute has arisen only with respect to the supplies received from six out of the 36 registered dealers. This, according to Mr. Dave, is something which is not palatable or sufficient enough to block the ITC of a huge amount. 7. Mr. Dave would argue that his client has paid an amount of Rs. 13,36,23,413/- to the input suppliers through the RTGS and it is not the case of the Department that such payment made towards the price inclusive of the tax to this input suppliers through the normal banking channel was received back by the writ applicant in any manner. In other words, the argument of Mr. Dave is that....
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....wing decisions; (i) Century Metal Recycling Pvt. Ltd. vs. Union of India, (2009) 234 ELT 234 (P & H); (ii) Concepts Global Impex vs. Union of India, 2019 (365) ELT 32 (P & H); (iii) Abhishek Fashions Pvt. Ltd. vs. Union of India, 2006 (202) ELT 762 (Guj.) 11. The ratio of the three judgments, referred to above, is that unless there is assessment and demand, the amount deposited by the assessee under coercion/threat of arrest, cannot be appropriated. The Revenue cannot justify retaining the amount deposited by merely saying that the same was voluntarily deposited. The Revenue should bear in mind that they are creatures of statute and are bound by statutory law; the powers that they exercise are conferred upon them by the statute and there are no powers de hors the statute. In such circumstances, the Revenue is duty bound to act as provided by the provisions under which it can exercise such powers. The Revenue is not an organization which is entitled to retain money without any sanction of law. 12. Mr. Dave vociferously argued that the unilateral action of blocking the ITC thereby preventing the writ applicants from utilizing such credit is illegal an....
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....ficer ordering blocking of the ITC and secondly communication of such reasons to the affected person. It is argued that the bare minimal requirement of the principles of natural justice is recording of reasons and communicating such reasons to the affected party. 15. In the aforesaid context, Mr. Dave seeks to rely on the following judgments; (i) M/s. Ajantha Industries & Ors. vs. Central Board & Direct Taxes, New Delhi & Ors., (1976) 1 SCC 1001 (ii) CIT, West Bengal vs. Oriental Rubber Works, (1984) 1 SCC 700. 16. Mr. Dave vehemently argued that it is a settled principle of law that the credit of tax paid on inputs, in different services, and capital goods is an indefeasible right of the assessee. Since credit is a vested right of the assessee, the same cannot be extinguished or curtailed in any manner without the proper authority of law. Mr. Dave argued that with the introduction of Rule 86A of the CGST Rules, the aforesaid right to such credit is sought to be curtailed on flimsy grounds though temporarily. In the context of being an indefeasible right of the assessee, Mr. Dave, seeks to rely significantly on the decision of the Supreme Court in the case o....
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....r. Dave prays that the DRC-03 Form dated 21st December, 2019, Annexure-G in the Special Civil Application No.8841 of 2020 may be quashed and the order of the fourth respondent herein, blocking the ITC of Rs. 84,34,547/- may also be quashed and set aside. Mr. Dave prays that so far as the Special Civil Application No.8163 of 2020 is concerned, the two DRC-03 Forms both dated 9th April, 2019 (Annexure-F to the petition) may be quashed and the respondents may be directed to permit the writ applicants to avail the credit entry of Rs. 7.65 Crore in the credit ledger for utilizing such credit in accordance with law. Submissions on behalf of the respondents:- 22. Mr. Devang Vyas, the learned Asst. Solicitor General of India assisted by Mr. P.Y. Divyeshwar, the learned Addl. Standing Counsel for Union of India appearing for the respondents has vehemently opposed both the writ applications. Mr. Vyas would submit that both the litigations on hand are very serious as there are allegations of availing the ITC by the writ applicants on the strength of fake/bogus invoices. Mr. Vyas would submit that the investigation inboth the cases is in progress and there is more than a prima facie case....
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.... Kumar Jeet Ram, Addl. Director General, Directorate General of Goods & Services Tax intelligence, Jaipur Zonal Unit, Jaipur. Mr. Vyas seeks to rely on the following averments; "5 With reference to Para 1 to 5.1 of the petition, it is true that the dispute involved in the case in hand is about inputs, purportedly sold and supplied by various registered taxpayers including (i) M/s Anjani Metals and Steels, Chhattisgarh (GSTIN-22AWNPS2137D1ZP); (ii) M/s Kanchan Alloys and Steels, Jharkhand (GSTIN- 20BVTPP5808C1ZL); (iii) M/s Om Shiv Jharkhand (GSTIN- 20AALHM5998L1ZJ); (iv) Alloys and Steels, Chhattisgarh 22AALHM5998L1ZF); (v) M/s Shakambari Jharkhand (GSTIN-20AJMPP3256C1ZJ) and Vishkarma Industries, Jharkhand Metalicks, M/s Shiv (GSTIN- Metalicks, (vi) M/s (GSTIN- 20FJWPS4147A1Z5), as mentioned in this para, who have supplied invoices to the Petitioner, on the basis of which they have availed Input Tax Credit (ITC) during F.Y. 2017-18 and F.Y. 2018-19. Apart from above said six suppliers, M/s Sumeg Steels Pvt. Ltd., Rajasthan (08AAGCK3978G2Z4) have also supplied invoices to the Petitioner, without actual supply of goods on the basis of which Petitioner has availed Input Tax ....
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.... of IGST availed by the Petitioner during the F.Y.2017- 18 and 2018-19 1 M/s Anjani Metals and Steels, Chhattisgarh 31,43,990/- 2. M/s Kanchan Alloys and Steels, Jharkhand 3,88,874/- 3. M/s Om Shiv Metalicks, Jharkhand 83,84,996/- 4. M/s Shakambri Metalicks, Jharkhand 2,52,06,800/- 5. M/s Shiv Alloys and Steels, Chhattisgarh 86,16,958/- 6. M/s Vishkarma Industries, Jharkhand 5,25,068/- 7. M/s Sumeg Steels Pvt. Ltd., Rajasthan 33,02,362/- Total 4,95,69,048/- Investigation conducted so far have indicated that petitioner, M/s S.S. Industries, Bhavnagar, Gujarat is one such beneficiary, who have arranged such invoices and availed ITC amounting to Rs. 4,95,69,048/ -, merely on the strength of invoices issued by the aforementioned seven taxpayers, without actual receipt of goods. Such act of the petitioner is against the basic principles as set out in sub-sections (2) of section 16 of the CGST Act, 2017 and liable for penalty under section 74 read with section 122 of the CGST Act, 2017. Further, such action is also punishable under section 132 of the said Act, for their criminal liability. The bifurca....
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....-, wrongly, merely on the strength of invoices issued by aforementioned seven firms, without actual receipt of goods and hence such ITC is not admissible to the petitioner in light of the provisions of Section 16(1) and 16 (2)(a)(b) of CGST Act, 2017. With reference to para 7 of the petition, in addition to what has already been stated herein above it is respectfully submitted that this office (Respondent No. 4, which is headed by Additional Director General) is the premier investigating agency of the country for the matters related to evasion of tax matters of GST, Central Excise and Service Tax. The officers of the Directorate General of Goods 86 Services Tax Intelligence have been invested with all powers under the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax, 2017 and the rules made thereunder, throughout the territory of India, as are exercisable by the Central Tax Officers of the corresponding rank vide Notification No. 14/2017-Central Tax dated 01.07.2017. As stated above, investigation in this case is underway. It is worth mentioning that Show Cause Notice in the case is yet to be issued. This petition is premature as the same has been ....
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....strength of tax invoices or debit notes or any other document prescribed under rule 36- i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or ii. without receipt of goods or services or both; or Petitioner has paid only an amount of Rs. 25,00,000/- against their GST liability (Ineligible ITC) amounting to Rs. 4,95,69,048/-. Therefore, respondent No. 4 blocked the ITC of Rs. 84,34,547/- in terms of the Rule 86A(1)(a) of the CGST Rules, 2017. With reference to para 8.3, contentions of the petitioner are misleading. The amount paid by them is not reversal of ITC but payment against wrongly availed ITC by them on the strength of invoices supplied by the aforementioned seven firms. Since they have already utilised the ITC involved (though ineligible) and availed on the strength of such invoices, as per available alternate they had opted to pay it from their ITC ledger balance. If they wished to pay such amount from their current account ledger, they could have done so. Further, ITC amounting to Rs. 84,34,547/ -, which was available in their cred....
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....ent in FORM GST DRC-03 and the proper officer shall issue an order in FORM GST DRC- 05 concluding the proceedings in respect of the said notice. In this case, petitioner has deposited a partial amount of Rs. 25,00,000/ -, voluntarily, against the wrongly availed ITC totally amounting to Rs. 4,95,69,048/-." 24. Mr. Vyas, in support of his submissions, has placed reliance on the following judgments; (I) CCT, Orissa & Ors. vs. Indian Explosive Ltd., AIR 2008 SC 1631; (ii) UOI vs. Cisco Laboratories, 2007 (11) TMI 21 (SC); (iii) Bhubaneshwar Development Authority vs. Commissioner of Central Excise & Service Tax, 2015 (4) TMI 464 (Orissa High Court); (iv) Mega Corporation vs. Commissioner of Service Tax, 2015 (1) TMI 1095 (Delhi High Court); (v) Kirloskar Computer Service Ltd. vs. UOI 1997 (6) TMI 35 (Karnataka High Court); 25. In such circumstances, referred to above, Mr. Vyas, the learned Assistant Solicitor General of India prays that there being no merit in both the applications, those be rejected. 26. Mr. Vyas further pointed out that affidavit-in-reply has also been filed on behalf of the respondents in the connected w....
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....ineligible in as much as a) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36- i. issued by a registered person who has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or ii. without receipt of goods or services or both; or b) the credit of input tax has been availed on the strength of tax invoices or debit notes or any other document prescribed under rule 36 in respect of any supply, the tax charged in respect of which has not been paid to the Government; or c) the registered person availing the credit of input tax has been found non-existent or not to be conducting any business from any place for which registration has been obtained; or d) the registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36, may, for reasons to be recorded in writing, not allow debit of an amount equivalent to such credit in electronic credit ledger for discharge of any liability under section 49 or for clai....
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....ons of section 41 or section 43A, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along wit....
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....non-existent or not to be conducting any business from any place for which registration has been obtained. E. Availing of credit without documents: The registered person availing any credit of input tax is not in possession of a tax invoice or debit note or any other document prescribed under rule 36. 32. Rule 86A undoubtedly could be said to have conferred drastic powers upon the proper officers if they have reason to believe that the activities or invoices are suspicious. The Rule 86A is based on "reason to believe". "Reason to believe" must have a rational connection with or relevant bearing on the formation of the belief. It is a subjective term and can be interpreted differently by different individuals. Prima facie, it appears that the Rule 86A does not even contemplate for issue of any show-cause notice or intimation notice. In such circumstances, the person affected may be taken by surprise when he would go to the portal to pay taxes and finds that his ITC is not usable. 33. The Constitutional validity of Rule 86A of the Rules is not under challenge in the present case and we do not intend to test its validity in the absence of any specific challenge to the s....
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.... are finished subsequently. Thus, a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the rule cannot be applied to the goods manufactured prior to 16.3.1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods." 36. As significant reliance has been placed on Eicher Motors Ltd. (supra), we may also look into the decision of the Supreme Court in the case of C.C.E vs. Dai Ichi Karkaria Ltd., reported in 1999 (112) ELT 353 (SC). In the said case, the manufacturers purchased raw material and used the same in the manufacture of an intermediate product and, in turn, used the intermediate product in the manufacture of the final product. The raw material and the intermediate product were liable to excise duty and they were specified goods for the purposes of the Modvat....
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....R 515 (SC), in which, the Supreme Court considered the second proviso to Rule 57G of the Excise Rules. The history of this litigation is somewhat like this. In regard to the interpretation of the second proviso to Rule 57G, two different Benches of the Customs, Excise and Gold [Control] Appellate Tribunal took conflicting views consequent to which the issue came to be referred to a Larger Bench of the Tribunal which by its order dated 11.7.2000 made in Appeal No. E/273/99-NB and other connected matters took the view that after the introduction of the said proviso, a manufacturer cannot take the Modvat credit after six months from the date of the documents specified in the first proviso to Rule 57G of the Rules. Being aggrieved by the said order of the Tribunal, the appellants [Osram Surya (P) Limited] preferred appeals before the Supreme Court, questioning the correctness of that order. The appellants therein had not challenged the validity of the said proviso, accordingly the Supreme Court proceeded on the basis that the proviso in question is a valid one. In that context, the Supreme Court considered whether the proviso to the Rule in question is applicable to the cases of manufa....
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....udgment of this Court in CCE, Pune and Ors. v. Dai Ichi Karkaria Ltd. and Ors., 1999 (65) ECC 354 (SC) : 1997 (7) SCC 448. 8. It is vehemently argued on behalf of the appellants that in effect by introduction of this Rule, a manufacturer in whose account certain credit existed, would be denied the right to take such credit consequently, as in the case of Eicher (supra), a manufacturer's vested right is taken away, therefore, the Rule in question should be interpreted in such a manner that it did not apply to cases where credit in question had accrued prior to the date of introduction of this proviso. In our opinion, this argument is not available to the appellants because none has questioned the legality or the validity of the Rule in question, therefore, any argument which in effect questions the validity of the Rule, cannot be permitted to be raised. The argument of the appellants that there was no time whatsoever given to some of the manufacturers to avail the credit after the introduction of the Rule also is based on arbitrariness of the Rule, and the same also will have to be rejected on the ground that there is no challenge to the validity of the Rule. 9....
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....he Supreme Court considered the dictum laid down in Eicher's case (supra). The theory of "vested right" has been diluted by the Supreme Court. It is clear that even a vested right can be restricted or controlled by Notifications. It is a settled law that in the case of subordinate legislation, the authorities are conferred with the power to fill up the gaps when on functioning they are able to notice the loop holes or the areas left open. The very purpose of subordinate legislation is to only achieve this, since it may not be possible for the Parliament to make Laws frequently with precision. In the case of R.K. Garg vs. Union of India, AIR 1981 SC 2138, the Supreme Court has held that every legislation, particularly, the economic legislation is essentially empiric and it is based on experimentation or what one may call trial and error method. It cannot anticipate all possible abuses. There may be crudities and inequities in the complicated experimental economic Legislation, but on that account alone, it cannot be even struck down as invalid. It is also relevant to note that in the case of Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd. and Ors., 1999 (65) ECC 354 (....
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....y be. Such a course is impermissible in law. At the cost of repetition, the formation of the opinion, though subjective, must be based on some credible material disclosing that is necessary to provisionally attach the goods or the bank account for the purpose of protecting the interest of the government revenue. The statutory requirement of reasonable belief is to safeguard the citizen from vexatious proceedings. "Belief" is a mental operation of accepting a fact as true, so, without any fact, no belief can be formed. It is equally true that it is not necessary for the authority under the Act to state reasons for its belief. But if it is challenged that he had no reasons to believe, in that case, he must disclose the materials upon which his belief was formed, as it has been held by the Supreme Court in Sheonath Singh's case [AIR 1971 SC 2451], that the Court can examine the materials to find out whether an honest and reasonable person can base his reasonable belief upon such materials although the sufficiency of the reasons for the belief cannot be investigated by the Court. 45. In the case on hand, Mr. Vyas, the learned Assistant Solicitor General of India appearing for th....
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....se its discretion to achieve the object of speedy trial. The term "necessary" means what is indispensable, needful or essential." 47. In Barium Chemicals Ltd. vs. Company Law Board [AIR 1967 SC 295], the Supreme Court pointed out, on consideration of several English and Indian authorities that the expressions "is satisfied", "is of the opinion" and "has reason to believe" are indicative of subjective satisfaction, though it is true that the nature of the power has to be determined on a totality of consideration of all the relevant provisions. The Supreme Court while construing Section 237 of the Companies Act, 1956 held : "64. The object of S. 237 is to safeguard the interests of those dealing with a company by providing for an investigation where the management is so conducted as to jeopardize those interests or where a company is floated for a fraudulent or an unlawful object. Clause (a) does not create any difficulty as investigation is instituted either at the wishes of the company itself expressed through a special resolution or through an order of the court where a judicial process intervenes. Clause (b), on the other hand, leaves directing an investigati....
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....t the opinion and even the existence of circumstances from which it is to be formed to a subjective process. These analysis finds support in Gower's Modern Company Law (2nd Ed.) p. 547 where the learned author, while dealing with S. 165(b) of the English Act observes that "the Board of Trade will always exercise its discretionary power in the light of specified grounds for an appointment on their own motion" and that "they may be trusted not to appoint unless the circumstances warrant it but they will test the need on the basis of public and commercial morality." There must therefore exist circumstances which in the opinion of the Authority suggest what has been set out in sub clauses (i), (ii) or (iii). If it is shown that the circumstances do not exist or that they are such that it is impossible for any one to form an opinion therefrom suggestive of the aforesaid things, the opinion is challengeable on the ground of nonapplication of mind or perversity or on the ground that it was formed on collateral grounds and was beyond the scope of the statute." 48. The Supreme Court while expressly referring to the expressions such as "reason to believe", "in the opinion" of observed....
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....ssed and explained by Prof. Sir William Wade in Administrative Law (Ninth Edn.) in the chapter entitled 'abuse of discretion' and under the general heading the principle of reasonableness' which read as under : "The common theme of all the authorities so far mentioned is that the notion of absolute or unfettered discretion is rejected. Statutory power conferred for public purposes is conferred as it were upon trust, not absolutely that is to say, it can validly be used only in the right and proper way which Parliament when conferring it is presumed to have intended. Although the Crown's lawyers have argued in numerous cases that unrestricted permissive language confers unfettered discretion, the truth is that, in a system based on the rule of law, unfettered governmental discretion is a contradiction in terms. The real question is whether the discretion is wide or narrow, and where the legal line is to be drawn. For this purpose everything depends upon the true intent and meaning of the empowering Act. The powers of public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights....
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....e will be an error of fact when a public body is prompted by a mistaken belief in the existence of a nonexisting fact or circumstances. This is so clearly unreasonable that what is done under such a mistaken belief might almost be said to have been done in bad faith; and in actual experience and as things go, they may well be said to run into one another. The influence of extraneous matters will be undoubtedly there where the authority making the order has admitted their influence. An administrative order which is based on reasons of fact which do not exist must be held to be infected with an abuse of power." 52. We may also refer to and rely upon a decision of the Supreme Court in the case of ITO Calcutta vs. Lakhmani Mewal Das, reported in [(1976) 103 ITR 437 (SC)] wherein it had been held as under: "The reasons for the formation of the belief contemplated by Section 147(a) of the Income-tax Act, 1961, for the reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the I.T.O. and the formation....
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.... confers discretion based on the rule of "reason to believe" on the executive must furnish criteria or guidelines for exercise of that discretion. Without such criteria or guidelines, if the discretion in effect confers arbitrary power, the statute will be hit by Article 14 of the Constitution of India. (iii) The criteria or guidelines may be furnished by express provisions in the statute concerned or by the aims and objects of the statute and the policy and scheme of the statute as disclosed by the various provisions thereof. The preamble to the statute may indicate the purpose and policy of the statute. (iv) Where the subject-matter dealt with by a statute relates to wide-spread activity of a complex nature, giving rise to various cases of different types, posing various problems, the Legislature may leave discretion to responsible officers of the executive to select persons or objects for the application of particular provisions of the statute. This will not render the statute invalid, if the statute provides either expressly or impliedly sufficient guidance for exercise of the discretion. (v) Discretionary power conferred by a statute, though....
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....Finance Act, 1994 respectively. The same are reproduced hereunder:- "SECTION 11DDA. Provisional attachment to protect revenue in certain cases. - (1) Where, during the pendency of any proceedings under section 11A or section 11D, the Central Excise Officer is of the opinion that for the purpose of protecting the interest of revenue, it is necessary so to do, he may, with the previous approval of the [Principal Commissioner of Central Excise or Commissioner of Central Excise], by order in writing, attach provisionally any property belonging to the person on whom notice is served under [* * *] section 11A or sub-section (2) of section 11D, as the case may be, in accordance with the rules made in this behalf under section 142 of the Customs Act, 1962 (52 of 1962). SECTION 73C. Provisional attachment to protect revenue in certain cases. - (1) Where, during the pendency of any proceeding under section 73 or section 73A, the Central Excise Officer is of the opinion that for the purpose of protecting the interests of revenue, it is necessary so to do, he may, with the previous approval of the Principal Commissioner of Central Excise or Commissioner of Central Excise, by ....
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....tion, search and seizure. Sections 73 and 74 provides for the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized. 60.5 The Government has prescribed the procedure for the subject attachment vide Rule 159 of the CGST Rules "159. Provisional attachment of property. - (1) Where the Commissioner decides to attach any property, including bank account in accordance with the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of property which is attached. (2) The Commissioner shall send a copy of the order of attachment to the concerned Revenue Authority or Transport Authority or any such Authority to place encumbrance on the said movable or immovable property, which shall be removed only on the written instructions from the Commissioner to that effect. (3) Where the property attached is of perishable or hazardous nature, and if the taxable person pays an amount equivalent to the market price of such property or the amount that is or may become payable by the taxable person, whichever is lower, then such property shall be released f....
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....ted to the writ applicants in this regard, yet in the facts of the present case, it cannot be said that exercise of power under Rule 86A for the purpose of blocking the ITC is mala fide or without any application of mind. 64. In the overall view of the matter, we are convinced that we should not interfere at this stage. more particularly, when the investigation is in progress. The respondents have made themselves clear in the reply affidavit filed in both the matters that at the end of the investigation if they decide to issue a show-cause notice under Section 74 of the Act, then all the materials relied upon by the Department shall be disclosed to the writ applicants. It would be too much for this Court at this stage to stall a legitimate investigation into the allegations of fraudulent transactions and permit the writ applicants to avail the ITC of a huge amount in exercise of its writ jurisdiction. 65. Our final conclusions may be summarized as under:- (I) The invocation of Rule 86A of the Rules for the purpose of blocking the input tax credit may be justified if the concerned authority or any other authority, empowered in law, is of the prima facie opinion based ....
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.... ITC of Rs. 7.65 Crore for paying GST/IGST on the goods manufactured and supplied by the petitioner; (C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to direct Respondent No.2 herein to allow the Petitioner to take ITC of Rs. 7,65,00,000/- in the Petitioner's Electronic Credit Ledger and utilize such ITC for paying GST on supplies of final products on the terms and conditions that may be deemed fit by this Hon'ble Court; (D) An ex-parte ad-interim relief in terms of para 17(C) above may kindly be granted. (E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted." 67. Mr. Dave, the learned counsel appearing for the writ applicant submitted that the officers of the Jaipur Zonal Unit of the DGGI visited the office premises of his client at Bhavnagar and seized various documents, files etc. by drawing a Panchnama. He further pointed out that a statement of one of the Directors of the Company was also recorded, and in the said statement, his client made himself very clear that the transactions with the six registered dealers in question were....
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.... a similar view. In such circumstances, Mr. Dave prays that the DRC-03 Forms be set aside and thereby order cancellation of the debit entries of Rs. 7.02,10,842/- and Rs. 62,89,158/- respectively in the electronic credit ledger of the writ applicant maintained under the CGST Act. 69. By and large, the dispute compared to the facts of the connected writ application is the same. In the Special Civil Application No.8841 of 2020, the ITC has been blocked in exercise of power under Rule 86A of the Rules, whereas in the Special Civil Application No.8163 of 2020, it appears that the ITC in the electronic credit ledger has been debited, which according to the writ applicant, was done under pressure of the officers, whereas the case of the department is that the same was voluntary. 70. In the aforesaid context, we may now look into the averments made in the reply affidavit filed by the Department. We quote the relevant averments; "5. With reference to Para 1 to 5.1 of the petition, it is true that the dispute involved in the case in hand is about inputs, purportedly sold and supplied by various registered taxpayers including (i) M/s Anjani Metals and Steels, Chhattisgarh (....
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....no physical movement of goods has taken place under such invoices. He further revealed that he used to withdraw the amount received through RTGS from the recipients of GST invoices in cash and the same is returned back to the recipients of GST invoices after deduction of certain amount as his commission for providing such GST invoice only without supply of goods. Indulging in such an act is against the basic tenets of the GST law. 5.2 Investigation conducted so far have indicated that petitioner M/s Rudra Global Infra Products Ltd. Bhavnagar, Gujarat is one such beneficiary, who have arranged such invoices and availed ITC amounting to Rs. 15,25,12,636/-, merely on the strength of invoices issued by the aforementioned six taxpayers, without actual receipt of goods. Such act of the petitioner is against the basic principles as set out in subsections (2) of section 16 of the CGST Act, 2017 and liable for penalty under section 74 read with section 122 of the CGST Act, 2017. Further, such action is also punishable under section 132 of the said Act, for their criminal liability. The bifurcation of ITC availed by the Petitioner herein is as under: Sr. No. Name of the suppli....
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....eir ITC ledger balance. If they wished to pay such amount from their current account ledger they could have done so. 5.10 With reference to Para 8.4 of the petition, submissions made by the petitioner are not acceptable as the same are far from truth. The amount was paid by the petitioner voluntarily and the same was paid by them on GSTN by using their Login Id & Password subsequent to perusal and being convinced with the available evidences. Apart from statement dated 09.04.2019, two more statements of Shri Nikhil AshokKumar Gupta have been recorded on 01.05.2019 and 27.05.2019. However, he did not raise any such issue. Also the letter dated 17.04.2019, as referred by the petitioner, has never been received by this office. Copy of the referred letter, annexed as Annexure- "G" does not contain any mark of acknowledgement by this office. 5.11 With reference to Para 8.5 of petition, in addition to what has already been stated herein before it is humbly submitted that though the amount has been deposited voluntarily, there is no requirement for issuance of acknowledgement in DRC-04 and/or DRC-05 forms by any proper officer. DRC-04 and DRC-05 are issued under Rule 142....
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.... concerned it may have been done by the jurisdictional state/central GST authorities at the request of the Taxpayer. However, investigation in respect of GST evasion can be initiated against any taxpayer for the last five years as per GST law, even if registration of such Taxpayer has been cancelled. In addition to what has already been stated under foregoing paras it is humbly submitted that Section 74 of the CGST Act, 2017 deals with 'Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful misstatement or suppression of facts.' As per subsection (10) of Section 74 "The proper officer shall issue the order under subsection (9) within a period o f five years from the due date o f furnishing o f annual return for the financial uear to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from the date o f erroneous refund. Thus, petitioner's contention about issuance of show cause notice is not correct as the same would be issued in terms of above referred provisions. However, before issue of SCN, proper investigatio....
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....estigation cannot continue for an indefinite period of time. Almost more than a year has elapsed and, in such circumstances, the authorities concerned should arrive at some conclusion or the other. Even Rule 86A of the Rules prescribes one year time limit. In such circumstances, we direct the respondents to complete the investigation within a period of four weeks from the date of the receipt of this order and take an appropriate decision whether any case has been made out for issue of show-cause notice under Section 74 of the Act or not. At the fag end of the investigation, we do not deem fit and reasonable to pass an order in exercise of our writ jurisdiction directing the respondents to give back the credit of the ITC to the writ applicant and permit them to avail the same. Therefore, we are saying that let the investigation be completed within six weeks and appropriate decision shall be taken and communicated to the writ applicant. 73. Interference with the proceedings initiated by the Statutory Authority in exercise of the extraordinary writ jurisdiction would be justified only in exceptional circumstances. Three situations in which Courts have interfered even when the statu....