TaxTMI 
TaxTMI 
2021 (4) TMI 366
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....swaran. 2.The amended prayer is for a mandamus restraining R1 and R2 from demanding any amount from the petitioner except by following the due process of law and a further direction to refund a sum of Rs. 2 crores along with statutory interest under the provisions of the Central Goods and Service Tax Act, 2017 (in short 'Act') and return the documents seized at the time of search on 22.10.2019. Post amendment, pleadings have been completed and detailed submissions of the parties have been heard. 3.The petitioner is registered as a Small Scale Industry under the MSME Act and is an assessee under the provisions of the Goods and Service Tax Act, 2017 (Act). An investigation was conducted in the premises of the petitioner on 22.10.2019 and various documents and registers seized. In the course of that investigation, a statement was recorded from one S.A.Kumar, who has also deposed to the affidavit filed in support of this writ petition, to the effect that the petitioner has not discharged its GST liability correctly. In the statement, he accepts the mistakes in completion of GST and assures the respondents that the liability would be discharged at the earliest with applicable i....
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....mmediately on the same day i.e.22-10-2019 under the influence of coercion, threat and in a state of panic without providing any workings of determination of tax liability; 14) It has been 15 days from the date of search and yet your office has not provided us with the workings of actual determination of tax liability despite receiving frequent follow up calls from your office on enquiry of discharge of tax liability for which we are not bound to make any payment as per the provisions of CGST Act, 2017; 15) Based on the above facts, we would like to bring to your notice that Shri.S.A.Kumar signed the MAHAZAR and paid an amount of Rs. 2,00,000/- under the influence of coercion, threat and in a state of panic without giving an opportunity to read the content of the Mahazar and without providing the workings of the actual determination of tax liability; ........ 6. Thus, the petitioner has stated that it has no liability to tax, that the MD and officials were forced to accept liability to tax and the admission was, by no means, voluntary. The petitioner has also made serious allegations about the high handedness of the authorities during the conduct of sea....
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.... full available material to facilitate the completion of assessment. In the absence of such co-operation the revenue will be justified in completing the assessment in accordance with law. 9.Mr.Sundareswaran confirms that the completion of proceedings for investigation leading to the issuance of show cause notice, will take, not less than six months. It is in these circumstances that the petitioner presses the mandamus seeking refund of the amount of Rs. 2 crores paid at the time of investigation. According to the respondents, the amounts have been paid in line with the schedule of payments voluntarily suggested by the petitioner and as such there is no justification whatsoever for seeking such refund. Though I am only concerned with the legal issue of whether the collection of any amount during the process of investigation is statutorily permitted, some facts would have to be adverted to in deciding this issue. 10.The petitioner is a dealer in pulses, dhals and flour and manufactures food products, grain mill products and dhal. The dispute revolves around the short compass of whether the products sold are branded or unbranded. If unbranded, then there is no liability to GS....
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.... period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilfulmisstatement or suppression of facts to evade tax, for periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-sect....
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....ument furnished under this Act or the rules made thereunder, or failure to furnish any information on being asked for, in writing, by the proper officer. 13. Section 74 provides for a determination of tax not paid or short paid or erroneously refunded or the wrongful availment or utilization of Input Tax Credit (ITC) by reason of fraud, willful misstatement or suppression of facts. Subsection (1) states that if the officer feels that the aforesaid circumstances arise in any case, he shall issue a show cause notice to the person concerned calling for an explanation in this regard and also proposing interest under Section 50 and penalty equivalent to the tax proposed to be levied. Sub-section (2) states that the notice shall be issued at least six months prior to the time limit specified in Section 74(10) for issuance of the order of assessment. 14.Sub-section (3) states that where a notice has been issued under subsection (1), it shall be supported by a statement containing the details of tax unpaid, short paid or erroneously refunded or ITC wrongly availed or utilized for such purpose other than those covered under sub-section (1) of Section 73. According to sub-section (4....
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....tion (10) provides for the time limit for issuance of such order. 18. Sub-section (11) states that any person served with an order-in-original under sub-section (9) has the option of remitting the tax and interest along with penalty amounting to 50% of such tax, within 30 days of communication of the order, in which case, all proceedings in respect of that notice shall stand concluded then and there. This consciously opens the door for a contest as the assessee, had it been inclined to settle matters amicably, would/should have chosen the avenues presented to it under sub-sections (5) and (8) and (11) of Section 74. Henceforth, an adversarial and contested position emerges. This, in my understanding, is the scheme of assessment under Section 74. 19.The remittance under Section 74(5) is in terms of Rule 142 of the Central Goods and Services Tax Rules, 2017 (in short 'Rules') and has to be made in Form GST DRC-03. Both the Rule and the Form (the latter as executed by the petitioner) are extracted below: 142. Notice and order for demand of amounts payable under the Act.-(1) The proper officer shall serve, along with the (a) notice issued under section 52 or sec....
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....n sub-section (9) of section 73 or sub-section (9) of section 74 or sub-section (3) of section 76 or the reply to any notice issued under any section whose summary has been uploaded electronically in FORM GST DRC- 01 under sub-rule (1) shall be furnished in FORM GST DRC-06. (5) A summary of the order issued under section 52 or section 62 or section 63 or section 64 or section 73 or section 74 or section 75 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130 shall be uploaded electronically in FORM GST DRC-07, specifying therein the amount of tax, interest and penalty payable by the person chargeable with tax. (6) The order referred to in sub-rule (5) shall be treated as the notice for recovery. (7) Where a rectification of the order has been passed in accordance with the provisions of section 161 or where an order uploaded on the system has been withdrawn, a summary of the rectification order or of the withdrawal order shall be uploaded electronically by the proper officer in FORM GST DRC-08. FORM GST DRC- 03 [See rule 142(2) & 142 (3)] Intimation of payment made voluntarily or ma....
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....ittances have been made in line with Section 74(5) and are hence permitted statutorily. Prior to the inception of the GST Act, instances were rife when officials of DRI and Customs Department were infamous for collecting advance payments of tax from assesses, many a time under coercion, and in the course of investigation itself. There are several decisions of Courts wherein such acts have been frowned upon, with Courts consistently holding that no amounts may be collected prior to an actual determination of an amount payable by an assessee. With the inception of Section 74(5), it is the case of the revenue that the collection of amounts in advance has attained statutory sanction, provided the same are voluntary in Form GST-DR03. 23. Thus, according to the revenue, the remittances made by the petitioner during investigation in terms of Section 74(5) amount to 'self- ascertainment'. Having remitted two instalments of the tax as per its own ascertainment, it cannot now pray for a mandamus seeking refund of the amount. After all, revenue argues, the petitioner is well aware of the fact that its transactions are liable to tax and any remittances effected would be adjusted against ....
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....tes that with ascertainment of demand in Section 74(5), no proceedings for show cause under Section 74(1) shall be issued. In this case, enquiry and investigation are on-going, personal hearings have been afforded and both the parties are fully geared towards issuing/receiving a show cause notice and taking matters forward. Thus, the understanding and application of Section 74(5) in this case, is, in my view, wholly misconceived. 27. In this context I may usefully extract from a decision in the case of Clear trip Private Ltd. and Ors. (supra), wherein a Bench of the Bombay High Court at paragraph 16 holds as follows: 16. We are clear in our minds and from the scheme of the Act and the Law as a whole that coercive measures, including effecting any arrest, would arise only when investigation has been completed and on launching the prosecution. If the prosecution is a criminal prosecution, then, there is no question of deviating or defeating from the Criminal Law. The Criminal Law contains several provisions including protective measures, which would enable the Petitioners to resist any arrest, as apprehended. In the scheme of the Criminal Law and particularly the Finan....