TaxTMI 
TaxTMI 
2021 (11) TMI 108
X X X X Extracts X X X X
X X X X Extracts X X X X
....leadings II Case as made out by way of oral submissions III Analysis: A) Refund and alternative remedy B) Self-ascertainment and Section 74(5) of CGST Act C) Amount paid under coercion D) Right of Bona fide Tax Payer to be treated with dignity E) Video recording of Investigation F) Other prayers The petitioner has filed the present writ petition seeking for; issuance of a writ of mandamus directing the respondents to refund an amount of Rs. 27,51,44,157/- illegally collected from the petitioner, issuance of an appropriate writ in the nature of direction to the respondents not to take any coercive action against the petitioner and its officials during the pendency of ongoing investigation, issuance of a writ directing the respondents to pay interest of 12% p.a. on the amount the refund of which is sought for, issuance of a writ directing the respondents to provide the petitioner the copies of statement of officials of the petitioner recorded during investigation, issuance of a writ to direct the respond....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the GST cash ledger. 5. It is further submitted that subsequently, i.e., on 26.12.2019 in response to the summons issued to the Directors of the petitioner to appear before the DGGI Office, the Directors were present at the DGGI Office at 11.00 a.m. at Hyderabad on 26.12.2019. It is averred that the Directors were present till late hours on the said date and at around 8.00 p.m., the Directors were locked in the DGGI Office and there were threats of arrest held out during investigation. It is further asserted, that as the Directors were not allowed to leave during the early hours of 27.12.2019 at around 1.00 a.m., the petitioner was forced to make further payment of tax of Rs. 12,51,44,157/-, which payment has been made in order to secure the release of the three Directors. Accordingly, it is asserted that in all a sum of Rs. 27,51,44,157/- has been illegally collected from the petitioner during the investigation proceedings under threat and coercion, which payment has been obtained by the Department without following the due process of law as provided under the CGST Act. Accordingly, while asserting that as no show cause notice was issued by the Department even aft....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd its Directors and the allegation of coercion has been specifically denied. II. CASE AS MADE OUT BY WAY OF ORAL SUBMISSIONS: 12. Sri Lakshmikumaran, learned counsel appearing for Sri Ravi Raghavan for the petitioner has made submissions, while Additional Solicitor General, Sri M.B.Naragund has made submissions on behalf of the respondents. 13. During the course of submissions, the learned counsel appearing on behalf of the petitioner, has specifically asserted that the aspect of payment under duress and coercion is borne out from the admitted facts as is reflected in the pleadings and could also be made out from the assertion of the respondents and accordingly, the contention that the matter involves disputed questions of fact which ought not be decided in the proceedings in exercise of writ jurisdiction requires to be rejected. 14. It is further pointed out that there is no dispute relating to the investigation between 28.11.2019 and 30.11.2019 as well as the investigation between 26.12.2019 and 27.12.2019. It is asserted that during the course of investigation between 28.11.2019 and 30.11.2019, the petitioner has made deposit in the Electronic Cash Ledger and paymen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and payment of substantial tax, and while noticing their record as a tax payer, the manner in which the investigation has been proceeded and the payments obtained reflected an unfair and arbitrary treatment of a bona fide tax payer. It is submitted that the dispute, if any, of wrongful availment of Input Tax Credit relating to certain transactions, is a matter for adjudication after investigation and that the petitioner is ready to comply with lawful demand and would co-operate with the adjudication process till the orders reach finality. 19. It is submitted that the payments made were to be construed as one made 'under protest' which could be gathered from the communication made by the petitioner to the Department after such payments were made. 20. It is also asserted that, as no show cause notice under Section 74 of CGST Act has been issued and payments of the petitioner has remained with the Department, that the investigation is still not concluded and in light of prolonged investigation, the petitioner has a legitimate right to seek for refund of tax, which would not in any way come in the way of their obligation to honour the demand made after adjudication....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cations (copies of their applications are annexed at Annexure-'Q'), the present Writ Petition is not maintainable and that the petitioner is to pursue its statutory remedies, is a matter that requires consideration. 27. It must be noticed that no doubt the application for refund has been filed by the petitioner invoking the statutory remedy, but insofar as such of the applications, the Department has responded by way of communication at Annexure-'A' dated 13.10.2020, wherein it is concluded at Paras-3 and 4 as follows: "3. Parallelly proceedings under Section 74 of CGST Act 2017 against M/s. Greenfinch have been initiated also and they are independent and mutually exclusive of proceedings initiated against M/s.BTPL. Both the proceedings will be brought to their logical/legal conclusion separately. Cooperation of M/s. Greenfinch is not a relevant issue in respect of Section 74 proceedings against M/s.BTPL. 4. Under these circumstances, it is too early and naive to presume that M/s.BTPL have not wrongfully availed/utilised ITC and have not committed an offence. Pending issuance of notice under Section 74 of CGST Act, 2017 claiming refund of the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oaches the High Court seeking the relief of obtaining only refund and those where refund is sought as a consequential relief after striking down the order of assessment, etc. While a petition praying for mere issue of a writ of mandamus to the State to refund the money alleged to have been illegally collected is not ordinarily maintainable, if the allegation is that the assessment was without a jurisdiction and the taxes collected was without authority of law and therefore the respondents had no authority to retain the money collected without any authority of law, the High Court has the power to direct refund in a writ petition. (Vide Salonah Tea Co. Ltd. v. Supdt. of Taxes [(1988) 1 SCC 401 : 1988 SCC (Tax) 99 (2)] .) (v) xxx vi) Where the lis has a public law character, or involves a question arising out of public law functions on the part of the State or its authorities, access to justice by way of a public law remedy under Article 226 of the Constitution will not be denied. (Vide Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd. [(2005) 8 SCC 242] ) We are therefore of the view that reliance upon Suganmal [AIR 1965 SC 1740] was misplaced, to hold that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eedings. The above deposit is without prejudice to and with full reservation of our rights and contentions to seek necessary refund at the appropriate time and therefore should not be regarded as an admission of liability. The Challan of payment of the aforesaid deposit is enclosed herewith for your ready reference as Annexure-'E'." 32. The other communication of 27th December, 2019 at 1.12 a.m., detailing the Input Tax Credit has a description "subject: submissions related to investigation" is also to be noted. 33. It requires to be noticed that Section 74 of the CGST Act provides for a procedure that is self-explanatory, the relevant extract is reproduced as follows:- "74. 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 wilful-misstatement or suppression of facts.- (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fifty per cent of such tax within thirty days of communication of the order, all proceedings in respect of the said notice shall be deemed to be concluded." 34. Clearly the procedure prescribed would make out that under Section 74(1) of the CGST Act, a show-cause notice may be issued calling upon the assessee to pay the amount specified in the notice along with interest under Section 50 and a penalty equivalent to the tax specified in the notice. Sub-sections (4) and (5) of Section 74 of CGST Act are of particular interest to the case on hand. Under sub-section (5) of Section 74, 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 of CGST Act 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. Upon such ascertainment as contemplated under sub-section (5) of Section 74 of CGST Act, further legal procedure is contemplated to complete such process of ascertainment as contained in the provision. Section 74 includes sub-sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proceeded with. 38. If it is that the petitioner has paid tax on self ascertainment, the question of respondents contending that the investigation is pending would also indicate that the contention of self-ascertainment as made out by the respondent is clearly an afterthought. The respondents have not taken the stand that self-ascertained tax falls short and if that were to be so, it could have proceeded to issue notice as contemplated under Section 74(7) and could have even rejected the self-ascertainment in its entirety while asserting that it would issue notice under Section 74(1) of CGST Act, if facts so warrant. The stand of the respondents is ambiguous as self-ascertainment is put forward only as defence to the assertion of the petitioner that the payment of amount has been made involuntarily. Accordingly, the contention of payment being made by way of self-ascertainment is liable to be rejected. C. Amount paid under coercion: 39. The Directors of the petitioner Company in response to the summons issued under Section 70 of the CGST Act appeared before the Authorities at 20.00 hours on 28.11.2019 and were there till 4.00 a.m. on 29.11.2019 (as per para-13 of the state....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claim at on a later date." 45. Insofar as the aspect as to whether amount is paid under coercion as asserted by the petitioner, suffice it to say that the amounts are paid contemporaneous to the very dates when investigation was being made and during times when the petitioner's Officers or Directors were at the place of investigation, which fact is not in dispute. If it is that the petitioners were otherwise regularly filing their returns and paying taxes as evidenced from the table extracted supra at Para 18, the dispute if any as regards to the wrongful availment of input tax credit as regards certain set of transactions is a matter that was pending investigation. But, instead of allowing investigation to proceed and be concluded, it appears that the Department has acted in undue haste insofar as to ensure that taxes were paid during the process of investigation. While considering the time at which the amount was deposited in the Cash Ledger and the date of deposit, it would indicate that amounts were paid during times when there was no legal obligation to make payment. 46. No doubt, at the hearing of the matter, the Additional Solicitor General asserts fairly that authoriz....
X X X X Extracts X X X X
X X X X Extracts X X X X
....indicate, the presence of a letter by the Director of the assessee firm admitting that they had not declared full value of services rendered. Further it is to be noticed that a notebook was recovered during search and a letter was given explaining that the figures in the note book reflect value of services which were not included in the 'ST-3' returns. It is in the light of such incriminating material contained in the note book that the Court appears to have disbelieved the contention of threat, coercion and duress. 48. In the present case, the facts are different and the mere delay will not have the effect of taking away the timing of payment as the circumstances in which the payment was made leads to the inevitable conclusion that payment was made involuntarily. 49. In the case of Acto, Anti-Evasion, Alwar v. Khandelwal Foods Products - 2018 (8) G.S.T.L. 112 (Raj.), in the reply to show cause notice, the Respondent assessee had accepted the excess stock and that he had no explanation to offer, the said admission was sought to be retracted before the appellate authority. However, in the present case there is no such statement admitting any lapse on their part and inf....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "Before we part with this case, two aspects have to be adverted to--one was regarding the allegation of the petitioner that in order to compel the petitioners to pay the duties which the petitioners contended that they were not liable to pay, the licence was not being renewed for a period and the petitioners were constantly kept under threat of closing down of their business in order to coerce them to make the payment. This is unfortunate. We would not like to hear from a litigant in this country that the Government is coercing citizens of this Country to make payment of duties which the litigant is contending not to be leviable. Government, of course, is entitled to enforce payment and for that purpose to take all legal steps but the Government, Central or State, cannot be permitted to play dirty games with the citizens of this country to coerce them in making payments which the citizens were not legally obliged to make. If any money is due to the Government, the Government should take steps but not take extra legal steps or manoeuvre...." 53. It must be noted that filing of return and payment of substantial taxes by the petitioner would clearly warrant for treating s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng of the investigation process, this court by a considered interim order in the present proceedings on 20.04.2021 has recorded a legal mandate of installing of CC TV in all offices where interrogation is being carried out. The order reads thus: "After the matter is heard for sometime, insofar as the request made on behalf of the petitioner that interrogation must be video recorded, note is taken of the directions of the Apex Court in the case of Paramvir Singh Saini v. Baljit Singh and Others reported in [(2021) 1 SCC 184], in particular, directions at Para 19 which reads: "19. The Union of India is also to file an affidavit in which it will update this Court on the constitution and workings of the Central Oversight Body, giving full particulars thereof. In addition, the Union of India is also directed to install CCTV cameras and recording equipment in the offices of: (i) Central Bureau of Investigation (CBI) (II) National Investigation Agency (NIA) (iii) Enforcement Directorate (ED) (iv) Narcotics Control Bureau (NCB) (v) Department of Revenue Intelligence (DRI) (vi) Serious Fraud Investigation Office ....