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2023 (3) TMI 845
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....cable interest; B. This Hon'ble Court may be pleased to declare that no Customs duty is payable in respect of the finished goods, raw materials, spares and consumables, plant and machinery, etc., destroyed during the fire which took place in the Petitioner's factory on 19.03.2014. C. This Hon'ble Court may be pleased to issue a writ of mandamus or a writ in nature of mandamus or any other appropriate writ or order directing the Respondent No.3 to forthwith grant refund of the amount of INR 1,50,00,000/- (INR 1.5 crores) along with applicable interest at the rate of 12& per annum; D. This Hon'ble Court may be pleased to declare the investigation/ proceedings to be deemed concluded and any subsequent notices to be issued will be barred by limitation and thereby , void ab initio; E. For costs of this Petition and orders thereon; and F. For such further and other reliefs as this Hon'ble Court considers appropriate in the facts and circumstances of the case." 2. The brief facts giving rise to the present petition as pleaded by the petitioner are as under:- The petitioner is a private limited company registered as a 100% Export Ori....
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....ically invoked Article 265 of the Constitution of India and stated that no tax can be collected by the respondents from the petitioner except by an authority of law and in the absence of the respondents having any authority of law, respondents illegally have retained the aforesaid INR 1.5 crores collected by them and the same deserves to be refunded back to the petitioner. 2.4 Petitioner further contends that subsequently, the various queries / questions put by the respondents for the purpose of refund was answered by them and additional information was also provided by the petitioner, despite which, the respondents did not take any steps to grant refund in favour of the petitioner, who is before this Court by way of the present petition. 3. The respondents - revenue have filed their statement of objections clearly disputing the various contentions and claim put forth by the petitioner. It is contended that the petitioner had deliberately chose to insure value of the imported goods and excluded the customs duty and consequently, the question of refunding the customs duty / tax to the petitioner do not arise. It is therefore contended that the petitioner had not paid the custo....
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....he petitioner without there being adjudication are in the nature of pre-deposit and the same not in the nature of tax / duty, the same deserves to be refunded back to the petitioner. In support of his contentions, learned Senior counsel for the petitioner has placed reliance upon the following decisions:- (i) LML Ltd., vs Collector of Central Excise, Kanpur - 2002 (142) ELT 273(SC); (ii) Concepts Global Impex V. UOI - 2018 (11) TMI 688 - P&H HC; (iii) Century Metal Recycling Pvt Ltd V. UOI - [2008 (10) TMI 96 - P&H H] (iv) M/S Bhumi Associate V. Union of India - R/SCA 3196 of 2021, Gujarat High Court; (v) M/S. Vallabh Textiles V. Senior Intelligence Officer & Ors. -[W.P. (C) 9834/2022, Delhi High Court; (vi) Makemytrip (India) Pvt. Ltd & Ibibo Group Pvt. Ltd Vs. Union of India & Ors., [(2016) 233 DLT 484 (DB)] (Upheld by the Hon'ble High COurt in Union of India Vs. Makemytrip (India) (P) Ltd., [(2019) 11 SCC 765]; (vii) Union of India and Ors. Vs. Bundl Technologies Private Limited and Ors [Judgment dated 03.03.2022 in W.P. No 4467 of 2021]; (viii) Sivashankar Granites Pvt Ltd V Asst Commr of C. Ex., Warangal [....
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.... made the basis to deny refund sought for by the petitioner. My attention is invited to paragraph-10 of the statement of objections in order to point out that the admission made by the respondents that INR 1.5 crores was actually paid by the petitioner under protest during investigation. It is therefore contended that in the light of the submission of the petitioner that the petitioner has paid the said amount under protest, the petitioner would be entitled to refund. It is contended that the proceedings pursuant to the show cause notice are independent proceedings, which are mutually exclusive, independent and distinct from the right of the petitioner to claim refund and consequently, the said proceedings cannot be relied upon by the respondents to deny the refund sought for by the petitioner. 8. I have given my anxious consideration to the rival submissions and perused the material on record. 9. Before adverting to the rival contentions, it is necessary to extract the two Circulars dated 25.05.2022 and 19.01.2022. The Circular dated 25.05.2022 reads as under:- F.No. GST/INV/Instruction /2022-23 Ministry of Finance Department of Revenue Central Board of Indire....
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....ade therein. Therefore, there may not arise any situation where "recovery" of the tax dues has to be made by the tax officer from the taxpayer during the course of search, inspection or investigation, on account of any issue detected during such proceedings. However, the law does not bar the taxpayer from voluntarily making payment of any tax liability ascertained by him or the tax officer in respect of such issues, either during the course of such proceedings or subsequently. 4. Therefore, it is clarified that there may not be any circumstances necessitating 'recovery' of tax dues during the course of search or inspection or investigation proceedings. However, there is also no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liablility on non-payment/short payment of taxes before or at any stage of such proceedings. The tax officer should however, inform the taxpayers regarding the provisions of voluntary tax payments through DRC-03. 5. Pr. Chief Commissioners/ Chief Commissioners, CGST Zones, and Pr. Director general, DGGI are advised that in case, any complaint is received from a taxpayer regarding use of force or coercion by ....
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.... provisions of the Customs Act also. The Circular dated 19.01.2022 clearly states that arrears are the over due payment of the amount of tax, interest, fine or penalty that is confirmed against a person who is liable to pay the same to the exchequer and it arises as result of Order-in-Original. The said Circular also clarifies the amount in the case under investigation, unconfirmed demands, Show Cause Notice etc., and the Order-in-Original that has been set aside or remanded for de-novo adjudication by Appellate authority do not fall under the category of arrears. 11. In the instant case, it is an undisputed fact that prior to recovery of a sum of INR 1.5 crores from the petitioner, there is no adjudication or any order made/passed by the respondents, which entitled them to recover the money paid by the petitioner. As rightly contended by the learned Senior counsel for the petitioner, the respondents have themselves admitted in their statement of objections that the petitioner did not voluntarily make the payment and that he made it under protest. Under these circumstances, in the light of the aforesaid material on record, which clearly establishes that the petitioner had made t....
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....e of convenience, the said instruction is extracted hereafter: "Date:25th May, 2022 Instruction No. 01/2022-23 [GST - Investigation] Subject: Deposit of tax during the course of search, inspection or investigation- reg. 1. During the course of search, inspection or investigation, sometimes the taxpayers opt for deposit of their partial or full GST liability arising out of the issue pointed out by the department during the course of such search, inspection or investigation by furnishing DRC-03. Instances have been noticed where some of the taxpayers after voluntarily depositing GST liability through DRC-03 have alleged use of force and coercion by the officers for making 'recovery' during the course of search or inspection or investigation. Some of the taxpayers have also approached Hon'ble High Courts in this regard. 2. The matter has been examined. Board has felt the necessity to clarify the legal position of voluntary payment of taxes for ensuring correct application of law and to protect the interest of the taxpayers. It is observed that under CGST Act, 2017 a taxpayer has an option to deposit the tax voluntarily by way of submitting DRC-03....
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.... for getting the amount deposited during search or inspection or investigation, the same may be enquired at the earliest and in case of any wrongdoing on the part of any tax officer, strict disciplinary action as per law may be taken against the defaulting officers. (Vijay Mohan Jain) Commissioner (GST-Inv.), CBIC" 38. It appears that this Instruction was issued by the GST-Investigation Wing, CBIC, in the backdrop of an order dated 16.02.2021, passed by the Gujarat High Court in the matter of Bhumi Associate v. Union of India MANU/GJ/0174/2021, whereby the following wholesome directions were issued- "The Central Board of Indirect Taxes and Customs as well as the Chief Commissioner of Central/State Tax of the State of Gujarat are hereby directed to issue the following guidelines by way of suitable circular/instructions: (1) No recovery in any mode by cheque, cash, e-payment or adjustment of input tax credit should be made at the time of search/inspection proceedings under Section 67 of the Central/Gujarat Goods and Services Tax Act, 2017 under any circumstances. (2) Even if the assessee comes forward to make voluntary payment by filing Fo....
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....enue. The reason is, that if a procedure is prescribed under a statute or by law, that is, via dicta contained in a judgment, it has to be followed to the tee. 40.1 Failure to follow the prescribed procedure will, as in this case, have us conclude that the deposit of tax, interest and penalty was not voluntary. 41. The reason that the officers of the official respondents/revenue have been asked, perhaps, to have the amounts deposited the day after the search is concluded, is, to also give space to the concerned person to seek legal advice, and only thereafter deposit tax, interest and penalty, wherever applicable, upon a proper self-ascertainment. 41.1 Undoubtedly, in this case, no such elbowroom was made available. Conclusion: 42. Therefore, as alluded to hereinabove, we are persuaded to hold, that the aforementioned amounts which were deposited on behalf of the petitioner-concern, lacked an element of voluntariness. 43. Given this position, we are inclined to direct the official respondents/revenue to return Rs.1,80,10,000/- to the petitioner-concern, along with interest at the rate of 6% (simple) per annum. 44. The i....
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....in the statute which authorizes such retention. Retention of any amount by the revenue in such a situation would be violative of Article 265 of the Constitution. The relevant observations are as under:- "11. After hearing learned counsel for the parties and perusing the record, we find that as on date no crystallized liability has been shown to be existing against the petitioners. Further, only a show cause notice has been issued whereunder a liability to the extent of Rs.50 lacs could be fastened. Insofar, as the matters which are under investigation, it has not been shown that any show cause notice in respect thereof has been issued by the respondent-department so far. 12. It is trite law that unless a demand, which is finalized and is existing which is liable to be discharged, the revenue cannot retain any amount unless there exists specific provision in the statute for the retention of the amount. 13. On a specific query put to the learned counsel for the revenue relating to any provision in the statute on the basis of which the revenue could provisionally retain the amount, learned counsel for the revenue candidly admitted that there is no s....
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....de only to avoid the further consequences of continued detention. Such a statement can hardly be said to be voluntary even though it may be made before a Court. Secondly, there appears a contradiction because the DGCEI did not decline to receive the offer of payment of alleged service tax arrears. 106. In a different context, while interpreting the provisions of the Delhi Value Added Tax Act, 2004 ('DVAT Act'), this Court in Capri Bathaid Pvt. Ltd. v. Commissioner of Trade & Taxes 2016 (155) DRJ 526 (DB) took exception to the officials of the Department of Trade and Taxes collecting arrears of sales tax from dealers at the time of survey and search. The Court pointed out that the said practice was illegal and there could be no collection without there being an assessment. The same principle would apply here as well. 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 detention was impermissible in law. Consequently, the amount that was paid by the Petitioners as a result of the search of their premises by the DGCEI, without an adjudication much less....
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....cer and inform him in writing about such payment. 18. It is pertinent to note that a division bench of Gujarat High Court in M/S BHUMI ASSOCIATE VS. UNION OF INDIA by an interim order directed the Central Board Of Indirect Taxes And Customs was directed to enforce the following guidelines by issuing suitable circular / instructions: (1) No recovery in any mode by cheque, cash e-payment or adjustment of input tax credit should be made at the time of search / inspection proceedings under Section 67 of the Central / Gujarat Goods and services Tax Act, 2017 under any circumstances. (2) Even if the assessee comes forward to make voluntary payment by filing Form DRC 03, the assesee should be asked / advised to file such Form DRC 03 on the next day after the end of search proceedings and after the officers of the visiting team have left the premises of the assessee. (3) Facility of filing complaint / grievance after the end of search proceedings should be made available to the assessee if the assessee was forced to make payment in any mode during the pendency of the search proceedings. (4) If complaint / grievance is filed by assessee and offic....
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.... challan of payment of the aforesaid deposit is enclosed herewith for your ready reference as Annexure E. We assure you of our full co-operation in this matter going forward. 20. The company has also reiterated its stand in GST DRC-03 generated on 2.12.2019, the relevant portion of which is reproduced below: FORM GST DRC - 03 [See Rule 142(2) & 142(3)] Intimation of payment made voluntarily or made against the show cause notice (SCN) or statement ARN:AD291219000080K Date: 02.12.2019 1. GSTIN 29aafcb7707d1zq 2. Name Bundl Technologies Private Limited 3. Cause of payment Others 4. Section under which voluntary payment is made Others 5. Details of show cause notice, if payment made within 30 days of its issue Reference No.NA Date of issue: NA 6. Financial year 2017-18 7. Details of payment made including interest and penalty if applicable (Amount in Rs.) Sr. No. Tax period Act Place of supply Tax / cess Interest Penalty if applicable Others Total Ledger utilized (Cash / Credit) Debit entry No. Date of debit entry 1. Jul 2017 - Mar 2018 ITST....
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....person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place. 70. Power to summon person to give evidence and produce documents. (1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908). (2) Every such inquiry referred to in sub-section (1) shall be deemed to be a "judicial proceedings" within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). 23. In VODAFONE ESSAR SOUTH LTD VS. UNION OF INDIA', 2009 (237) ELT 35 (BOM) it was held by Division Bench of Bombay High Court that without adjudication of liability, during the course of an investigation the assessee should not be forced to pay any amount. Similar view was taken by Delhi High Court in MAKEMYTRIP (INDIA) PVT. LTD. VS. UNION OF INDIA, 2016 (44) STR 481 DEL and it was held that amount collected during investigati....
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....hat in the instant case also, the subject amount of INR 1.5 crores collected from the petitioner - company by the respondents is in violation of Articles 265 and 300-A of the Constitution of India and the same deserves to be refunded back to the petitioner. 17. In view of the aforesaid judgments and the judgment of the Hon'ble Division Bench in Bundl Technologies case (supra), I am of the considered opinion that in the facts of the instant case, in the absence of any material to establish that there was any order or adjudication made by the respondents quantifying the amount of tax / duty payable by the petitioner as on the date of collecting / recovering the same during investigation, the respondents were clearly not entitled to recover the same, leading to the sole inference that the respondents are liable to refund the amount collected by them. 18. Learned Senior counsel for the petitioner is also correct in his submission that in the case of Central Excise vs. KVR Construction - 2012(50) VST 469, while construing Section 11B of the Central Excise Act, the Hon'ble Division Bench of this Court held as under:- 33. We may also refer hereon a Division Bench Judgment o....
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....untary payment made by the petitioner is in the nature of pre-deposit which was liable to be refunded back to the petitioner. As stated supra, in the facts of the instant case also that the respondents as regards the recovery of aforesaid sum of INR 1.5 crores from the petitioner on 15.10.2019 is under protest as stated by the respondents themselves, there was no order of adjudication nor any other proceedings or order which initiated by the respondents, which entitled them to recover the said amount from the petitioner in the absence of any order of adjudication or any other material in this regard, the respondents did not have recover the said amount from the petitioner. 20. Insofar as the contentions urged by the respondents that the petitioner ought to have made an application under Section 27 of the Customs Act is concerned, this very contention was also answered against the revenue and in EBIZ.COM's case supra, it is held as under:- 11. Respondents have filed a counter-affidavit stating that petitioner paid "Service tax" voluntarily. It is also said that Section 11B of Act, 1944 would not be applicable since 'Service Tax' was deposited voluntarily and not under pr....