TaxTMI 
TaxTMI 
2023 (12) TMI 238
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....he petitioner prays that the search of his business premises and seizure effected, be declared illegal. FACTUAL CONTEXT 2. The petitioner is an individual and is engaged in the business of trading of PVC Resin under the name of M/s Shivani Overseas. The petitioner is registered under the CGST Act and has been assigned the Goods and Services Tax Identification Number (GSTIN): 07AAYPS1178H1Z0. 3. On 07.10.2022 continuing till early hours of 08.10.2022, a search was conducted by respondent no. 3 at the petitioner's business premises being Property No. 66, 3rd floor, Pocket-13, Sector-24, Rohini, Delhi and 3411/249, 2nd floor, Hansa Puri, Tri Nagar, Delhi, under Section 67 of the CGST Act. This was on the basis of authorization dated 07.10.2022 (in form GST INS-01), issued by respondent no. 1 in terms of Rule 139(1) of the CGST Rules. 4. During the course of the search operation, documents pertaining to the period FY 2017-18 to 2021-22 were inspected. The petitioner alleges that during the course of the inspection, the visiting team of officers forced him to reverse the Input Tax Credit (ITC) amounting to Rs.18,72,000/- in respect of supplies purchased from one M/s Samridhi....
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....lied on the decision of the Tripura High Court in Dayamay Enterprise v. State of Tripura and 3 Ors.: WP(C) No. 89/2021, decided on 22.02.2021, whereby the Court had set aside a show cause notice on the ground that it was vague and imprecise. He also referred to the decision of the Madras High Court in M/s Shri Nandhi Dhall Mills India Private Limited v. Senior Intelligence Officer and Ors.: W.P. No. 5192/2020, decided on 07.04.2021, whereby in similar facts, the Madras High Court had directed the concerned authorities to refund an amount of Rs.2,00,00,000/-, which was allegedly paid under coercion. 11. The petitioner also referred to the decision of the Gujarat High Court in M/s Bhumi Associate v. Union of India: Manu/GJ/0174/2022, decided on 16.02.2021, whereby the Court had issued directions to be followed for collecting tax in proximity to the search and seizure operations. The learned counsel also relied on the decision of the Coordinate Bench of this Court in M/s Vallabh Textiles v. Senior Intelligence Officer and Ors.: 2022 SCC OnLine Del 4508, whereby this Court had respectfully concurred with the directions issued by the Gujarat High Court in M/s Bhumi Associate v. Union....
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....engaged in the business of transporting goods where he has reason to believe that; (a) the taxable person has suppressed any transaction relating to supply of goods or service or both; (b) suppressed the stock of goods in hand; (c) claimed ITC in excess of his entitlement; or (d) has indulged in contravention of any of the provisions of the CGST Act or the CGST Rules made thereunder, to evade tax. 16. In terms of Rule 139(1) of the CGST Rules authorization under Section 67(1) of the CGST Act is required to be issued in Form GST INS-01. The said Form is reproduced below: "FORM GST INS-1 AUTHORISATION FOR INSPECTION OR SEARCH [See rule 139(1)] To ............................................ ............................................ (Name and Designation of officer) Whereas information has been presented before me and I have reasons to believe that- A. M/s.___________________________________________ ___ • has suppressed transactions relating to supply of goods and/or services • has suppressed transactions relating to the stock of goods in hand, ....
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.... (ii)" 17. It is apparent from the above that Clause (A) of the said Form sets out various reasons on the basis of which conduct of search may be authorized. The proper officer is required to select the relevant reason for authorizing a search under Section 67(1) of the CGST Act. In the present case, the proper officer has issued the authorization in Form INS-01 setting out all the reasons as stated in Section 67(1)(a) of the CGST Act and all the reasons (except the taxpayer claiming refund in excess of his entitlement) as set out in Clause A for issuing such authorization. Thus, there may be some merit in the grievance of the taxpayer that the proper officer has not set out any specific reason but has merely reproduced all reasons on the basis of which an authorization under Section 67(1)(a) of the CGST Act could be issued. However, it is seen that the reasons as set out are connected. 18. The respondents have not referred to any specific reason for initiating the proceedings under Section 67 of the CGST Act, in their counter affidavit, except to state that the reasons to believe were duly recorded on the file prior to conducting the search and the inspection. It was a....
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....al the premises as it would bring bad name to its business and the Petitioner requested the Officers to wait at the additional place of business at Tri Nagar till the time keys got arranged by some family member at 12:30 AM." According to the respondents, the survey and inspection at the principal place of business began after 12:30 am and was concluded at 02:30 am on 08.10.2022. 23. Admittedly, the petitioner had deposited a sum of Rs.18,72,000/- at 2:06 am by debiting the ECL. Concededly, the search and inspection proceedings were continuing at the material time. 24. In the given facts, we are inclined to accept the petitioner's claim that the deposit was made under duress and in compelling circumstances. The petitioner had been subjected to the search/inspection operations way beyond the normal business hours. Admittedly, the petitioner was called upon to provide copies of various books of accounts. The statement recorded on the said date - which is also relied upon by the respondents - clearly indicates that the petitioner had provided several documents to the concerned officers including the Trading Account for the period 01.04.2022 to 07.10.2022; Cash Book for the perio....
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....eed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable" 27. It is clear from the above that the provisions of Sub-sections (5) and (6) of Section 73 of the CGST Act are for the benefit of a taxpayer who voluntarily pays tax on his own ascertainment prior to issuance of any show cause notice and thus, absolves himself of liability to pay penalty in respect of the tax paid. Sub-section (5) of Section 74 of the CGST Act is in somewhat similar terms except that the taxpayer is also required to pay penalty equivalent to 15% along with tax deposited on the basis of his own ascertainment. The provisions of Sub-sections 73(5) and 74(5) of the CGST Act are not provisions under which the Department can compel a taxpayer to deposit tax. 28. Given the scheme of permitting the taxpayers to voluntarily deposit tax prior to issuance of notices (either under Section 73 or Section 74 of the CGST Act) to avail of the benefit of absolving themselves from the liability to pay penalty either in entirety or in excess of 15% of tax payable as the case may be; in cases where the said tax is collected under coercion, the s....
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....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 assessee 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 officer is found to have acted in defiance of the afore-stated directions, then strict disciplinary action should be initiated against the concerned officer." 34. In terms of the aforesaid directions, the concerned officers were required to advise the taxpayer, who come forward to deposit tax during the course of search proceedings, that he should do so on the next day after the proceedings have been concluded. 35. However, it appears that the said directions have not ....
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....to claim that the payments made were not voluntary. There is no factual foundation for the said contention. A plain reading of the statement of the petitioner as recorded on 07.10.2022 does not indicate that he had acknowledged the liability to pay any tax or that he had availed ITC contrary to law. On the contrary, the petitioner had disputed that there was any mismatch in the returns filed for the period 2017-18 and 2022-23. The respondents rely on paragraph 14 of the said statement, which reads as under: "14. That the visiting team has informed that the following inward supply dealers have been cancelled suomoto from the date of registration: 1. M/s. Samridhi exports (07AFGPY9258P2Z7) ITC Rs.18,72,000/-" 40. The above statement cannot be read as acknowledgment of any liability to pay ITC. It merely records that the visiting team had informed the petitioner that the registration of the supplier, M/s Samridhi Exports had been cancelled. The same cannot be read as the petitioner acknowledging that he was liable to reverse the ITC in respect of purchases made from the said dealer. 41. In view of the above, the reliance placed by the respondents on the decisio....