TaxTMI 
TaxTMI 
2025 (2) TMI 175
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....e respondent on 31.07.2021 and on 03.08.2021 as being illegal. 2. Suffice to state, in paragraph No.2 of the impugned order, the learned Single Judge has noted that, the respondent has confined the writ petition for the relief of refund of the amount of Rs. 2,50,00,000/- keeping open the other contentions in the light of pending adjudication, initiated by issuance of show-cause notice. 3. The appellants had initiated proceedings during investigation of M/s Raj Chemicals, wherein the statement of one Vijay Kumar Gupta (one of the partners of M/s Raj Chemicals) was recorded under Section 70 of the CGST Act. The statement of Vijay Kumar Gupta had referred to supplies made by M/s Raj Chemicals to entities including the respondent herein, whereby invoices were raised without actual supply of any goods from M/s Raj Chemicals. 4. The case of the appellants is that, on an analysis of the e-way bills, it is revealed that the vehicles have not moved as evidenced by the RFID/fastag data. 5. A show-cause notice came to be issued on 30.11.2022 to the respondent. The case of the respondent before the learned Single Judge was, during the course of investigation and prior to issuance o....
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....which he was threatened with arrested (sic). Finally after detention and ill treatment in his own office for close to 2 days, Petitioner agreed under pressure to arrange ad hoc 1,00,00,000/- to pay as soon as the bank opens and agreed to come to Bengaluru for which summons would be issued. 8 31.07.2021 12:30 a.m. Late in the night, Statement was coercively signed and Panchnama signed wherein witnesses were not 2 people of good standing from the locality but the drivers of the Respondents. The Panchnama wrongly mentions the time as 11 30 pm 30-07-21. A-11-Part of SCN 9 31.07.2021 12:30 a.m. Summons issued to attend Bengaluru on 2nd August 21. The Petitioner requested that last 3 days have taken a toll on his health and he is exhausted, and he requested that he be allowed to attend after a few days. Which initially the officers agreed but constantly called the Petitioner on 2nd August 21 and directed him to come on 3rd August 21. B-Page 65 10 31.07.2021 12:30 p.m. As soon as possible, despite going through 2 days of mental and physical trauma, under the constant calls from the officer under....
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.... recorded at 12:30 a.m. on 31.07.2021 and also during the summons proceedings at Bengaluru on 03.08.2021 were retracted by filing an affidavit dated 10.08.2021. The case was also that, the appellants do not have the power to recover amounts during the pendency of investigation that had commenced even prior to issuance of show-cause notice at the stage of Sections 67 and 70 of CGST Act and hence, had sought for the refund of the amount(s). In fact, the respondent's case was also that, the supplies from M/s Raj Chemicals have been long standing transactions and such supply is evidenced by e-way bills; issue of invoices and proof of transport. It is also stated that, the show-cause notice issued does not exclude payments of Rs. 2,50,00,000/- which also strengthens the case of the respondent that the amount paid was not towards self-ascertainment. 8. The case of the appellants before the learned Single Judge was that, an information of evasion of tax was gathered by the Officers of DGGI while conducting investigation in respect of M/s Raj Chemicals. The statement of Vijay Kumar Gupta was recorded which would indicate the role of the respondent in tax evasion constituting receipt of ....
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....arred from serving any notice under sub-section 74 (1), though in terms of Section 74 (7), whether Proper Officer is of the opinion that the amount paid under Section 74 (5) falls short of the amount payable, he shall proceed to issue notice under Section 74 (1). 22. Section 74 (7) of the CGST Act states that, "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 willful misstatement or suppression of facts.- (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (emphasis supplied) 23. In terms of Section 74 (8), once the person chargeable with tax pays tax, interest and penalty "... all proceedings in respect of the said notice shall be deemed to be concluded." 24. It must be noted that the payments made by the petitioner of Rs.1.00 crore on 31.07.2021 and further amount of Rs.1.50 crores on 03.08.2021 and even i....
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....on in the present factual matrix being one which could be construed to be a recovery contrary to law and accordingly, contrary to Article 265 of the Constitution of India, the amount of Rs.2.50 crores is required to be refunded with interest as would be applicable in case of refund." Submissions: 14. Sri. Aravind Kamath, learned ASGI appearing for the appellants would contest the impugned order passed by the learned Single Judge by stating that, an information was gathered by the Officers of the DDGI, BZU, Bengaluru in respect of M/s Raj Chemicals that they are issuing fake GST invoices without supply of goods in violation of the provisions of CGST Act and accordingly, a search was conducted at the premises of M/s Raj Chemicals. During the search operation, the statement of Vijay Kumar Gupta was recorded wherein he has confirmed that they have not received any goods from the entities, but only GST invoices without actual receipt of goods. He also received commission of 0.5% of the taxable value for issuing invoices without supply of goods. The e-way bills were issued on the basis of vehicle details provided by the brokers and since the goods have not actually been supplied, t....
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....udge on the affidavit which was prepared 7 days after the payment on 03.08.2021 by enclosing the same along with the writ petition, could not have been relied upon by the learned Single Judge. 19. Sri. Kamath would also state that, the writ petition was filed with averments to mislead the Court. Moreover the disputed questions of fact could not have been gone-into and interfered with by the learned Single Judge. 20. He also stated that, the learned Single Judge had also failed to appreciate that Rule 142 (1) (a) of the CGST Rules which regulate the procedure in the case of voluntary payment under Section 74 (5) of the CGST Act, a notice was issued to the respondent as the respondent had made payment in part (voluntarily) and in response to the same, the respondent gave a reply dated 24.11.2022 denying the entire liabiliby including the voluntary payment made by him and hence, a show-cause notice was issued for the entire liability by proposing to appropriate the amount which was already paid voluntarily by the respondent. 21. Sri. Kamath has drawn our attention to the affidavit filed along with the writ petition by the respondent to state that, the plea of coercion of the ....
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....given by the learned Single Judge, the purpose of filing the present appeal by the appellants is only to frustrate/delay the legitimate claim of refund granted to the respondent by the learned Single Judge. The impugned order is based on a clear exposition of law. The legal position with regard to coercive recovery during investigation and summons is well settled, wherein it is clearly said that any coercive recovery is subject to judicial review. She also stated, the case of the appellants that statement of Vijay Kumar Gupta of M/s Raj Chemicals was recorded, cannot be accepted by the respondent as no such statement was provided to the respondent at the time of investigation. Whether such a statement is relevant or not need to be determined at the stage of investigation. In any case, the respondent had the occasion to obtain confirmation letter dated 14.12.2021 from M/s Raj Chemicals which prove that the entire transactions of sale and purchase are genuine. 24. She highlights the fact that the appellants visited the respondent on 29.07.2021 in the morning. Subsequently, the investigation continued for 48 hours wherein the respondent was detained illegally in the Office by the I....
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....is done by the taxpayer. The above section read with Rule 142 is the entire process of self-ascertainment. Sections 73 (5)/74 (5) itself state that if the taxpayer wishes to make payment on a self-ascertainment basis, they would make the payment in DRC 03 and inform the proper Officer in writing of such a payment. No such intimation was ever been given by the respondent. Further, Rule 142 (2) clearly states that, upon intimation of ascertainment of liability being paid by the taxpayer, the Officer would make available an acknowledgement in DRC 04 on online portal. Neither the respondent had intimated the payment to the Officer nor the Officer/appellants provided any DRC 04 which aspect had been noted by the learned Single Judge. In support of her submission that specific instructions given by the GST Investigation Wing clearly lays down how the investigation is to be conducted and no deposit of tax can be made voluntarily, she has relied upon the judgment of the Delhi High Court in the case of Lovelesh Singhal -Vs.- Commissioner, Delhi Goods and Services Tax and others [(2024) 121 GSTR 422 (Delhi)]. She states, in the given facts, the present appeal filed by the appellants is liabl....
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.... the assessee has an opportunity under Section 74 (5) to make his own ascertainment of tax and deposit the same. The appellants' case is that the respondent has deposited the amount upon self-ascertainment of tax, which stand is contested by the respondent by stating that the deposit was under threat and coercion, otherwise no amount is payable. So, the issue is whether any tax is payable at all? So, pending decision on the issue, can the amount remain deposited with the appellants? The answer has to be "NO", more so when it is concluded by the learned Single Judge that the same was not voluntary, with which we agree. 31. Having said that, insofar as the affidavit dated 10.08.2021 is concerned, the plea of Sri. Kamath is, such an affidavit was not given to the Authorities and it is for the first time filed along with the writ petition with an intention to resile out of the statements made to the appellants cannot be relied upon, is unsustainable. This we say so because, the only stand of the appellants in the appeal/affidavit is, the same is belated. If that be so it is noted, the affidavit is dated 10.08.2024 i.e., one week after the statement dated 03.08.2024 was made. One wee....
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....veral documents to the concerned officers including the trading account for the period April 1, 2022 to October 7, 2022; cash book for the period October 1, 2022 to October 7, 2022; stock group summary as on October 7, 2022; copies of the last purchase and sale bills; profit and loss account for the period April 1, 2021 to March 31, 2022; and parties ledger. xx xx xx xx xx xx 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 per cent. of tax payable as the case may be; in cases where the said tax is collected under coercion, the same is required to be returned. 29. It is not necessary to examine in detail any controversy whether such payments were made voluntarily. Clearly, where a taxpayer turns around and states that the payments had not been made involuntarily and the circumstances prima facie indicate so, the taxpayer must be granted the benefit of withdrawing such payments. Obviously, in such cases, the taxpayer would forfe....
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....comes payable in pursuance of an order passed by the adjudicating authority or otherwise becomes payable under the provisions of CGST Act and rules made 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 circumstance necessitating 'recovery' of tax dues during the course of search or inspection or investigation proceedings...". " 31. The judgment was sought to be distinguished by Sri. Kamath by stating the statements which were recorded in the relied upon case were in the midnight and it is on that basis, the Court has come to the conclusion that the deposits made were under coercion and duress. The said submission is not appealing. The Court need to look into the facts in totality to come to a c....