TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 180
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....O. Debit Entry Date CGST 70,00,000 DC2903230298599 24.03.2023 CGST 70,00,000 DC2903230298599 24.03.2023 CGST 60,00,000 DC2903230298599 24.03.2023 CGST 1,20,00,000 DC2903230298668 24.03.2023 CGST 1,40,00,000 DC2903230298668 24.03.2023 CGST 1,40,00,000 DC2903230298668 24.03.2023 CGST 60,00,000 DC2903230298712 24.03.2023 CGST 70,00,000 DC2903230298712 24.03.2023 CGST 70,00,000 DC2903230298712 24.03.2023 CGST 60,00,000 DC2903230298768 24.03.2023 CGST 70,00,000 DC2903230298768 24.03.2023 CGST 70,00,000 DC2903230298768 24.03.2023 b) Issue a writ, order or direction in the nature of mandamus or any other appropriate writ directing the Respondents herein to refund a sum of Rs. 10,00,00,000/- obtained from the petitioner on 24.03.2023 on the pretext of voluntary contribution towards various heads of Goods and Service Tax (Annexure-A, A1, A2 &A3) c) Grant such other relief that this Hon'ble Court may deem fit in the facts and circumstances of the present matter." 2. Briefly stated the facts giving rise to the present petit....
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....tax and as such, the said payment was legal and proper and the petition was liable to be dismissed. 5. The petitioner filed rejoinder to the statement of objections on 13.07.2023 to the statement of objections filed by the 4th respondent, who thereafter filed additional statement of objections on 11.09.2024. The petitioner has filed additional rejoinder to the additional statement of objections filed by the 4th respondent. 6. Heard learned counsel for the petitioner and learned counsel for the respondents-Revenue and perused the material on record. 7. In addition to reiterating the various contentions urged in the memorandum of petition and referring to the material on record, learned counsel for the petitioner submits that the petitioner did not voluntarily make payment by way of self ascertainment but the same was obtained / received / collected by the respondents under coercion and threat which is impermissible in law, which is contrary to Instruction No.1 / 2022-23 dated 25.05.2022 issued by the respondents and in the light of various judgments of the Apex Court, this Court and other High Courts, the respondents are to be directed to refund the entire sum of Rs. 10 cro....
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....ich 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. Therefore, we direct that the right of renewal of the petitioner of licence must be judged and attended to in accordance with law and the occasion not utilised to coerce the petitioners to a course of action not warranted by law and procedure. Secondly, in a situation of this nature, we are of the opinion that the government should consider feasibility of setting up of a machinery under a Council to be formed under Article 263 of the Constitution to adjudicate and adjust the dues of the respective governments. In these peculiar facts, it appears that the dispute is under two different Central legislations and under one the State authorities will realise and impose the taxes on finding on certain bases and under the other the....
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.... to the person through the common portal electronically]. 12. In its recent judgment in Radhika Agarwal v. Union of India -(2025) 6 SCC 545, the Apex Court held as under:- "63. The Central Board of Indirect Taxes and Customs (GST-Investigation Wing), has accepted the said position vide Circular dated 17-8-2022, the relevant portion of which reads as under: "F. No. GST/INV/Instructions/2021-22 GST-Investigation Unit 17-8-2022 Instruction No. 02/2022-23 [GST - Investigation] Subject: Guidelines for arrest and bail in relation to offence punishable under the CGST Act, 2017 - reg. Hon'ble Supreme Court of India in its judgment dated 16-8-2021 in Siddharth v. State of U.P. [Siddharth v. State of U.P., (2022) 1 SCC 676 : (2022) 1 SCC (Cri) 423], has observed as follows: (SCC p. 682, para 10) '10. We may note that personal liberty is an important aspect of our constitutional mandate. The occasion to arrest an accused during investigation arises when custodial investigation becomes necessary or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond. ....
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....cted, is likely to tamper the course of further investigation or is likely to tamper with evidence or intimidate or influence witnesses? 3.2.4. Whether person is mastermind or key operator effecting proxy/benami transaction in the name of dummy GSTIN or non-existent persons, etc. for passing fraudulent input tax credit, etc.? 3.2.5. As unless such person is arrested, his presence before investigating officer cannot be ensured. 3.3. Approval to arrest should be granted only where the intent to evade tax or commit acts leading to availment or utilisation of wrongful Input Tax Credit or fraudulent refund of tax or failure to pay amount collected as tax as specified in sub-section (1) of Section 132 of the CGST Act, 2017, is evident and element of mens rea/guilty mind is palpable. 3.4. Thus, the relevant factors before deciding to arrest a person, apart from fulfilment of the legal requirements, must be that the need to ensure proper investigation and prevent the possibility of tampering with evidence or intimidating or influencing witnesses exists. 3.5. Arrest should, however, not be resorted to in cases of technical nature i.e. where the d....
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....be given to the person arrested under proper acknowledgment. 64.4. The circular also makes other directions concerning medical examination, the duty to take reasonable care of the health and safety of the arrested person, and the procedure of arresting a woman, etc. It also lays down the post-arrest formalities which have to be complied with. It further states that efforts should be made to file a prosecution complaint under Section 132 of the CGST Act at the earliest and preferably within 60 days of arrest, where no bail is granted. Even otherwise, the complaint should be filed within a definite time-frame. A report of arrests made must be maintained and submitted as provided in Para 6.1 of the Instruction. 64.5. The aforesaid directions in the circular/instruction should be read along with the specific directions outlined in the earlier judgments of this Court and the present judgment. 65. One of the assertions and allegations made on behalf of the petitioners is that the parties are compelled and coerced to admit and make payment of tax in view of the threat of arrest. This is in spite of the fact that there is no assessment or adjudication as to the a....
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.... made to Section 79 of the CGST Act to state that recovery can be made only after following the due process of issuance of notice and subsequent confirmation of demand by issuance of an adjudicating order. On the last aspect, reference is made to Sections 73(5) and 74(5) of the CGST Act, which help the taxpayers in discharging their admitted liability, self-ascertained or as ascertained by the tax officer, without having to bear the burden of interest under Section 50 of the CGST Act. The statement in the circular that an assessee may voluntarily deposit tax as noticed was a cause of discussion before us. In this regard, our attention was drawn to Section 74(5) of the CGST Act, which states that a 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 15% 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. Sub-section (5) to Section 74 relates to voluntary payment, and does not postulate payment under force, coercion or threat of arrest. The aforesa....
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....March 2024 Period Formation No. of cases Detection Recovery No. of arrest (In Rs Cr) (In Rs Cr) 2017-18 w.e.f. July 2017 CGST Zones 5 13 12 2 DGGI 0 0 0 0 Total 5 13 12 2 2018-19 CGST Zones 1221 7993 676 97 DGGI 399 3258 510 57 Total 1620 11,251 1186 154 2019-20 CGST Zones 3231 12,003 1086 100 DGGI 1027 7929 1331 95 Total 4258 19,932 2417 195 2020-21 CGST Zones 5292 13,502 743 202 DGGI 1976 17,731 1489 227 Total 7268 31,233 2232 429 2021-22 CGST Zones 4636 14,895 825 178 DGGI 1330 13,127 1202 114 Total 5966 28,022 2027 292 2022-23 CGST Zones 5291 10,965 887 85 DGGI 1940 13,175 1597 68 Total 7231 24,140 2484 153 2023-24 (up to March 2024) CGST Zones 6993 15,374 836 69 DGGI 2197 21,000 2577 113 Total 9190 36,374 3413 182 "69. Analysing the aforesaid data indicates that the number of people arrested is normally i....
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.... 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." 14. In pursuance of the directions issued by the Gujarat High Court, the respondents issued Instruction No.01/2022-23 (GST - Investigation) dated 25.05.2022 as hereunder:- " F.No.GST/INV/Instruction /2022-23 Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Investigation Wing. 10TH Floor, Tower-2 Jeevan Bharathi Building Connaught Circus, New Delhi - 100 001. Dated: 25th May 2022. Instruction No. 01/2022-23 [GST - Investigation] Subject: Deposit of tax during the course of search, inspection or investigation - reg. During the course of search, inspection or investigation, sometimes the taxpayers opt for deposit of their partia....
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....spect 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. However, there is also no bar on the taxpayers for voluntarily making the payments on the basis of ascertainment of their liability 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 any of their officers 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. Sd/- (Vijay Mohan Jain) Commissioner (GST-Inv.),CBIC" 15. The issue as to whether p....
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....e 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. ** ** ** 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 a....
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....n 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." Thus section 74(5) of the Act gives an option to a person to make payment of tax, along with interest and 15% of penalty on its own ascertainment of the tax ascertained by proper officer and inform him in writing about such payment. 18. It is pertinent to note that a division bench of Gujarat High Court in Bhumi Associate v. Union of India [2021] 124 taxmann.com 429/84 GST 634 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....
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....nspection dt: 28/29 November 2019 by DGGSTI Officials at BTPL's offices situated at Bangalore, Gurugram and Hyderabad. Dear Sir, ** ** ** As an extension of our goodwill conduct and bonafide, we have deposited INR 15,00,00,000/- (Rupees Fifteen Crores Only) with the Exchequer of Government during the pendency of inspection proceedings. 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. 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: 2-12-2019 8. Reasons, if any: The above payment is made as an extension of ou....
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.... 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 [1998 (98) E.L.T 32 AP]; (ix) M/s FCI OEN Connectors Ltd. V Union of India & Ors [ WP 5901 of 2021 T- RES, Karnataka High Court ]; (x)....
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....rder 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 Indirect Taxes and Customs GST Investigation Wing. 10TH Floor, Tower-2 Jeevan Bharathi Building Connaug....
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....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 liability 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 any of their officers for getting the amount deposited during s....
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....d 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 the payment under protest and that the payment w....
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....ion 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 on GST portal. Such volu....
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....d 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 Form DRC-03, th....
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....on 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 interest will ....
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....rovision 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 the....
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....t the offer is made 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 adjud....
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....scertained by proper officer 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 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 ....
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....The 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: 8. Reasons, if any: The above payment is made as an extension of our goodwill and bonafide. It 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. 21. Thus it is evident that payments have not been made admitting the liability. On the other hand, the company reserved its right to seek refund and made it expressly clear that payment of the amount should not be treated as admission of its liability. Besides the aforesaid, there is no material on record to establish that guidelines issued by division bench of High Court of Gujarat were followed. Thus for the aforementioned reasons, the first issue is answered in the negative and it is held that the amount was not paid voluntarily und....
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....sessee 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 investigation proceeding without any adjudication is liable to be refunded. In CENTURY KNITTERS (INDIA) LTD. VS. UNION OF INDIA', 2013 (293) ELT 504 (P & H) it was held that any amount illegally collected cannot be retained without issuance of show cause notice and adjudication of liability and such amount is liable to be refunded. Similar view was taken in CONCEPTS GLOBAL IMPEX VS. UNION OF INDIA, 2019 (365) ELT 32 (P & H). 24. In the instant case, an investigation was initiated by DGGI officers and they entered the premises of the Company on 28.11.2019 at 10.30 a.m. in exercise of powers u/s 67(1) of CGST Act. On 30.11.2019 at about 4.00 a.m., a sum of Rs.15 Crores was deposited by the Company under the GST cash ledger. Thereafter summons were issued to officers of company under section 70 of the Act. The officers of the company made a further deposit of Rs.12,51,44,157/- at about 1.00 a.m. The aforesaid amounts were not deposited under section 74(5) of the Act.....
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....e 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 of Karnataka High Court in Commissioner of Central Excise v. KVR Construction, 2012 (50) VST 469, where in construing Section 11b, Court said that it refer to claim for refund of duty of excise only and does not refers to any other amount collected without authority of law. That was a case of ' Service Tax' and Court said as under: "Though under Finance Act, 1994 such service tax was payable by virtue of notification, they were not liable to pay, as there was exemption to pay such tax because of the nature of the institution for which they have made construction and rendered services. In other words, if the respondent had not paid those amounts, the authority could not have demanded the petitioner to make such payment. In other words, authority lacked authority to levy and collect such service tax. In case, the department were to demand such payments, petitioner could have challenged it as unconstitutional and without authority of law. If....
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....:- 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 protest. It is also said that interest was also deposited by petitioner on his own since it was his legal obligation. Against Commissioner's order dated: 29.08.2012, department reviewed matter and filed appeal before Tribunal which is pending. Since petitioner never filed any application for refund in accordance with Section 11B(3) of Act, 1944, hence respondents cannot entertain any claim of refund, and, no refund claim of petitioner, in law is pending with respondents. No refund is due, automatically. Moreover, order of Commissioner (Appeals) dated: 29.08.2012, is not final since appeal is pending before Tribunal. Board's Circular dated: 08.12.2014 deals with amount deposited under Section 35F while in the present case it is Section 11B which will be applicable. Since petitioner never filed application as prescribed under Section 11B, hence no mandamus for refund is permissible."" 18. The Co-ordinate Bench of this Court in the case of....
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....element of voluntariness is absent and accordingly, the sine qua non of self-ascertainment is not fulfilled. Though the declaration in Form DRC-03 contains a declaration that the filing is voluntary, the facts as noticed above are sufficient to construe that such declaration was in fact not voluntary. 25. It is also to be noted that, if the Authority was of the view that petitioner had made payments as a part of the process of self- ascertainment under Section 74(5) of the CGST Act, the scheme of Section 74 contemplates that proceedings would terminate either on acceptance of self-ascertainment or if the Authorities were of the view that the self-ascertainment and the amount paid under Section 74(5) would fall short of the amount actually payable, the Authority could in terms of Section 74(7) proceed to issue a notice as provided for under Section 74(1) in respect of such amount which falls short of the amount actually payable. In the present case, the show cause notice issued dated 30.11.2022 would clearly indicate that the notice sought to be issued under Section 74(1) would indicate a fresh and complete adjudication and is not a notice as regards short fall of actual ta....
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....after, also served summons for appearance of the proprietor at Bengaluru on 02.08.2024. It is the case of the respondent that, he was forced to sign the statement at 12:30 a.m. when the Officers were still in office and similarly the statement of 03.08.2021 was recorded at Bengaluru, to which place the proprietor of the respondent was summoned. The facts demonstrate the interference that the recording of statement was under the threat, that he shall be arrested. It is also a fact that, one deposit was made in the afternoon of 31.07.2021 and the same was after he was issued summons for appearance in Bengaluru on 02.08.2021 (appeared on 03.08.2021). So in that sense, there was likelihood that he may be arrested at Bengaluru if he does not deposit the money is writ large. Similarly, second payment was made on 03.08.2021 while the proprietor of the respondent was in Bengaluru. So it suggests, the statements were recorded and deposits were made under threat and coercion. The statements and the payments made cannot be separated nor it can be concluded that there is no allegation of threat and coercion for the purpose of payment/deposit of the amounts. 30. Section 74(1) of the CG....
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....h was closed, be provided. The respondents have averred in their counter-affidavit that the "petitioner also requested not to break open or seal 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 a.m." According to the respondents, the survey and inspection at the principal place of business began after 12:30 a.m. and was concluded at 02 : 30 a.m. on October 8, 2022. 23. Admittedly, the petitioner had deposited a sum of Rs. 18,72,000 at 2 : 06 a.m. 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 account. The statement recorded on the said date-which is also relied upon by the respondents- clearly indicates th....
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....04 as required under the CGST Rules. In Vallabh Textiles v. Senior Intelligence Officer [(2023) 120 GSTR 213 (Delhi); 2022 SCC OnLine Del 4508.], a Co-ordinate Bench had held that failure to follow the prescribed procedure would also lead to the conclusion that the deposit made by the taxpayer was not voluntary. xx xx xx xx xx xx 35. However, it appears that the said directions have not been implemented. In Vallabh Textiles v. Senior Intelligence Officer [(2023) 120 GSTR 213 (Delhi); 2022 SCC OnLine Del 4508.], a Co-ordinate Bench of this Court had respectfully concurred with the aforesaid directions. 36. The Central Board of Indirect Taxes and Customs (CBIC) has also issued instructions emphasizing that the tax must be collected only after following the due process of law. The relevant extract of the said instructions dated May 25, 2022 are set out below: "3. It is further observed that recovery of taxes not paid or short paid, can be made under the provisions of section 79 of the CGST Act, 2017 only after following due legal process of issuance of notice and subsequent confirmation of demand by issuance of adjudication order. No recovery can be made ....
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.... learned counsel for the parties, it is quite evident, that the issue at hand can only be determined, having regard to the circumstances in which the aforementioned amount was deposited. 24.1 In this context, one would have to bear in mind, the safeguards, that the law has put in place. 25. The 2017 Act and the 2017 Rules made therein, do make provisions for enabling a person chargeable with tax to pay tax, along with interest, before being served with a notice for payment of tax, which either has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized for any reason. 25.1 Thus, if the person chargeable with tax takes recourse to such a route, the proper officer is restrained from serving any notice qua tax or penalty under the provisions of the 2017 Act or the 2017 Rules framed thereunder, unless the amount which is self-ascertained by the person chargeable with tax falls short of the amount payable as per law. 25.2 This leeway is also available, where the person chargeable with tax is served with a show cause notice and pays the tax, along with interest, under Section 50 of the 2017 Act....
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....ules which are, perhaps, relevant are sub-rule (1A) and (2) of Rule 142, as they relate to the steps required to be taken before service of notice on the person chargeable with tax, interest and penalty under sub-section (1) of Section 73, or under sub-section (1) of Section 74 of the 2017 Act. 31. Under sub-rule (1A) of Rule 142 of the 2017 Rules, where a proper officer, before service of notice under section 73(1) or Section 74(1) of the 2017 Rules seeks to communicate details of tax, interest or penalty, he is required to do so in the prescribed form i.e., via Part A of Form GST DRC-01A. 31.1 Where, however, before service of notice or statement, the person chargeable with tax, based on self-ascertainment, seeks to make payment of tax and interest, in consonance with the leeway given under sub-section (5) of Section 73 [which relates to cases not involving fraud, wilful misstatement or suppression of facts to evade tax] or as the case may be, the payment of tax, interest and penalty under sub-section (5) of Section 74 [which relates to cases involving fraud, wilful misstatement or suppression of facts to evade tax], he is required to inform the proper officer o....
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....d form i.e., GST DRC-04, as prescribed under sub-section (2) of Rule 142 of the 2017 Rules. 36.1 The official respondents/revenue, in our opinion, have not been able to discharge this burden. 37. The malaise of officials seeking to recover tax dues (in contrast to voluntary payments being made by assesses towards tax dues) during search, inspection or investigation was sought to be addressed by the GST- Investigation, CBIC via Instruction No. 01/2022-2023 dated 25-5-2022. For the sake 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 m....
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....ily making the payments on the basis of ascertainment of their liability 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 any of their officers 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 16-2- 2021, passed by the Gujarat High Court in the matter of Bhumi Associate v. Union of India [2021] 124 taxmann.com 429/46 GSTL 36/84 GST 634, whereby the following wholesome directions were issued- "The Central Board of Indirect Taxe....
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....les and by the Court, to ensure that unnecessary harassment is not caused to the assessee, required adherence by the official respondents/revenue, as otherwise, the collection of such amounts towards tax, interest and penalty would give it a colour of coercion, which is not backed by the authority of law. 40. In this case, the argument of Mr Kumar, that the objection concerning the amounts deposited was raised only after the summon dated 13-4-2022 was issued, in our opinion, would not help the cause of the official respondents/revenue. 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 s....
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.... began after 12:30 am and was concluded at 02:30 am on 8-10-2022. 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 1- 4-2022 to 7-10-2022; Cash Book for the period 1-10-2022 to 7-10- 2022; Stock group summary as on 7-10-2022; copies of the last purchase and sale bills; profit and loss account for the period 1-4-2021 to 31-3-2022; and parties ledger. 25. It is important to note that the said statement does not indicate that there was any admission that....
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....ly 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 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 indicat....
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....r 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 been implemented. In Vallabh Textiles (supra), a Coordinate Bench of this Court had respectfully concurred with the aforesaid directions. 36. The Central Board of Indirect Taxes and Customs (CBIC) has also issued instructions emphasizing that the tax must be collected only after following t....
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....17-18 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 decision of this Court in M/s RCI Industries and Technologies and Technologies Ltd. Through its Director Rajeev Gupta (supra) is also misplaced. In that case, the assessee's claim that he was coerced to make the statement was doubted on the ground that the petitioner had not retracted the same. The said decision has no relevance in the facts of this case. 42. The decision of the Gujarat Hig....
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.... (supra). A Co- ordinate bench of this court held as under: "51. The 2017 Act and the 2017 Rules made therein, do make provisions for enabling a person chargeable with tax to pay tax, along with interest, before being served with a notice for payment of tax, which either has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized for any reason. 52. Thus, if the person chargeable with tax takes recourse to such a route, the proper officer is restrained from serving any notice qua tax or penalty under the provisions of the 2017 Act or the 2017 Rules framed thereunder, unless the amount which is self ascertained by the person chargeable with tax falls short of the amount payable as per law. 53. This leeway is also available, where the person chargeable with tax is served with a show cause notice and pays the tax, along with interest, under Section 50 of the 2017 Act within thirty [30] days of the issue of the show-cause notice. In such eventuality, a penalty is not leviable, and all proceedings in respect of such notice are deemed to be concluded. 54. This regime is set out in Section 73 of....
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.... subsection (1) of Section 74 of the 2017 Act. 64. Under sub-rule (1A) of Rule 142 of the 2017 Rules, where a proper officer, before service of notice under Section 73(1) or Section 74(1) of the 2017 Rules seeks to communicate details of tax, interest or penalty, he is required to do so in the prescribed form i.e., via Part A of Form GST DRC-01A. 65. Where, however, before service of notice or statement, the person chargeable with tax, based on self-ascertainment, seeks to make payment of tax and interest, in consonance with the leeway given under sub-section (5) of Section 73 [which relates to cases not involving fraud, wilful misstatement or suppression of facts to evade tax] or as the case may be, the payment of tax, interest and penalty under sub-section (5) of Section 74 [which relates to cases involving fraud, wilful misstatement or suppression of facts to evade tax], he is required to inform the proper officer of such payment made in the prescribed form i.e., GST DRC-03. 66. The proper officer thereafter, is required to issue an acknowledgement, accepting the payment made by the person, also in the prescribed form i.e., GST DRC-04. 67. Thi....
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....rther observed that recovery of taxes not paid or short paid, can be made under the provisions of Section 79 of CGST Act, 2017 only after following due legal process of issuance of notice and subsequent confirmation of demand by issuance of adjudication order. No recovery can be made unless the amount becomes 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. However, there is also no bar on the taxpayers for voluntarily making t....
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...., the aforementioned direction, issued by the Gujarat High Court as far back as on 16.02.2021, is binding on the official respondents/revenue, which was not followed in the instant case. 81. The violation of the safeguards put in place by the Act, Rules and by the Court, to ensure that unnecessary harassment is not caused to the assessee, required adherence by the official respondents/revenue, as otherwise, the collection of such amounts towards tax, interest and penalty would give it a colour of coercion, which is not backed by the authority of law. ***** 83. 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." 10. In the instant case, the deposit made by the Petitioner before the search ended and the officers left, shows that the deposit was not voluntary and contrary to the CBIC Instruction No. 01/2022- 2023 dated 25.05.2022. 11. We are unable to the accept the contention of learned counsel for the respondent that the deposit was voluntary for the reason that there is no material placed on record by respondent to show as to why petitioner w....
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.... of law that section 74(5) of the Act cannot be considered as a statutory sanction for advance tax payment, pending final determination in the assessment because that would certainly be contrary to scheme of assessment as set out under section 74. Sub-section 6 of this section further provides that no show cause notice shall be served upon the assessee on deposit by way of such ascertainment. These provisions clearly provide an opportunity for the assessee and/or to the revenue to ascertain the proper amount of tax, interest and penalty and even in cases where there might have been a shadow of wrong declaration, wrong availment or utilisation of ITC, or short payment of tax, there can be a closure of the proceedings at that stage itself on the basis of either a 'self ascertainment' by an assessee and acceptance of the same by the revenue or vice-a-versa. 12. Further, it is also the well established that no collection of tax from an assessee can be insisted upon prior to final determination of liability being made. According to the revenue, with the inception of section 74(5), the collection of amounts in advance has attained statutory sanction, provided the same ar....
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.... Services Tax Act, 2017, no recovery in any mode by cheque, cash, e-payments or adjustment of ITC should be made. 13. Further, no crystalised liability was shown to be existing against the petitioner and no show cause notice had been issued to it either at that time or even till now and the amount of Rs.50.70 lacs was recovered from it during investigation and has been retained by it. In similar circumstances in Century Knitters (India) Ltd.'s case (supra), a Bench of this Court had observed that unless and until demand was finalised and existing, no crystalised liability was existing against the petitioner and the revenue could not retain any amount in absence of specific statutory provisions and the refund of the amount so recovered was ordered. Similarly, in Concepts Global Impex's case (supra), a Co-ordinate Bench of this Court was dealing with a case wherein, at the time of import of goods, the duty leviable thereon, was paid but the Directorate of Revenue Intelligence has pressurized the petitioner to pay another sum of Rs.42 lacs while detaining the goods in transit. The petitioner submitted that the same had been paid without there being any show cause noti....
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....e made in the form of GST DRC-03. In view of the discussion as made above, we are of the opinion that the petitioner deserves the relief as claimed by it and accordingly, mandamus as sought by the petitioner, is granted and it is ordered that the sum of Rs.50.70 lacs, which was collected from the petitioner-M/S Parsvnath Traders during the course of search, shall be refunded to it within a period of 6 weeks from today. The petitioner shall also be entitled to interest @ 6% per annum from the date of deposit till the refund amount is released in its favour." 24. In Samyak Metals Pvt. Ltd's case supra, the Division Bench of the Punjab and Haryana High Court held as under: "6. Reference can now be made to a judgment passed by this Court in Modern Insecticides Ltd. v. Commissioner, Central Goods and Service Tax CWP No.8035 of 2021, wherein a similar issue was examined by this Court. In that case also, officials of the department had conducted a search in the factory premises of the petitioner (therein) and resumed the entire record lying there. On 07.03.2020, they got deposited a sum of Rs.39,15,583/-. Another search was conducted on 15.01.2021 and at that time, t....
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....luntarily making the payments on the basis of ascertainment of their liability on non-payment/short payment of taxes before or at any stage of such proceedings. It is the duty of the officer to inform the taxpayers regarding the provisions of voluntary tax payment through DRC-03. However, in the present case, as per these instructions, the petitioner has deposited the amount of Rs.35,73,147/-, but the officer has not issued DRC-03 till date. Neither the department has followed the provisions of Rule 142 (2) of the CGST Rules nor has issued any notice under section 74 (1) of the CGST Act." 25. In the instant case, the material on record discloses that on 23.03.2023, the 3rd respondent undertook a raid at the residence of the petitioner and seized a laptop; thereafter, on 24.03.2023, the respondents 3 and 4 along with other officials undertook search and inspection proceedings in the principal place of business of the petitioner, during the course of which, a sum of Rs.10 crores was obtained / received / collected by them from the petitioner on 24.03.2023 itself. In my considered opinion, the material on record clearly indicates that the aforesaid payment of Rs.10 crores by the pe....
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....sions contained in Section 74 would apply only if the respondents were to prove the aforesaid allegations contemplated in the said provision made against the assessee; in such proceedings to be initiated under Section 74, it is highly inconceivable that a tax payer / assessee in respect of whom, search, seizure and inspection proceedings are being conducted by the respondents would voluntarily make payment thereby exposing himself to the risk of admitting that he is guilty of the allegations contemplated in Section 74 of the CGST Act; in other words, in the light of Form GST DRC- 03 said to have been submitted by the petitioner along with the payment by invoking Section 74 (5) of the CGST Act, it is highly / inherently improbable that the said payment was made voluntarily by the petitioner that too during the course of search, seizure and inspection proceedings and even before he became aware or came to know whether proceedings under Sections 73 to 74 would be initiated against him and as such, the payment made by the petitioner cannot be said to be voluntary by way of self- ascertainment on this ground also. (vi) A perusal of the material on record will clearly indicate t....
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....iated or passed by the respondents prior to the payment made by the petitioner and no ascertainment had been made / done by the respondents till that time; the undisputed fact that the respondents themselves ascertained the actual amount payable by the petitioner only during the pendency of the present petition by issuance of intimation in Form GST DRC-01A dated 17.02.2025, is sufficient to come to the conclusion that prior thereto and at the time of search, seizure and inspection proceedings during the course of which, payment was made, there was no ascertainment of the actual tax, interest and penalty payable by the petitioner which also establishes that the payment made by the petitioner was involuntary and not on his own account but at the instance of the respondents, whose contentions are liable to be rejected on this ground also. (ix) A perusal of the provisions contained in Section 74(5) of the CGST Act will indicate that voluntary payment by the petitioner would have to be made as per the procedure prescribed in the said provision, viz., firstly, ascertain the actual tax payable by him after verification / scrutiny of his accounts, secondly, calculate the interest ....
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....ciated in the aforesaid judgments, I am of the view that the obtainment / collection / receipt of a sum of Rs.10 crores by the respondents from the petitioner at the time of search, inspection and seizure operations is not voluntary or by way of self- ascertainment and the same is wholly illegal, arbitrary and contrary to law and the provisions of the CGST Act and also without jurisdiction or authority of law and the said amount deserves to be refunded back to the petitioner together with interest at the rate of 6% p.a. within a stipulated timeframe. 27. In the result, I pass the following:- ORDER (i) Petition is hereby allowed. (ii) The petitioner is declared to be entitled to refund of Rs. 10 crores together with interest @ 6% p.a. from 24.03.2023 till the date of payment. (iii) The respondents are directed to refund the aforesaid amount of Rs.10 crores together with interest @ 6% p.a. from 24.03.2023 till the date of payment to the petitioner within a period of two months from the date of receipt of a copy of this order. (iv) All rival contentions between the parties pursuant to the show cause notice and adjudication proceedings of....