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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
Sapphire Intrex Limited - Appellant
Versus
Union of India & Ors. - Respondents
W.P.(C) 14572 of 2022
Decided On : 14-12-2023
refund - GST - Section 67(2), Section 74(1), Section 20 - Rule 89, Rule 90, Rule 142 - The court discussed the petitioner's entitlement to a refund, the coercive recovery of the amount, the issuance of deficiency memos, and the procedural compliance under the CGST Rules. The court highlighted the involuntary nature of the deposit, the absence of an adjudication of liability, and the non-compliance with the prescribed procedure, leading to the allowance of the petitioner's claim for refund and the direction to process the same.
Fact of the Case:
The petitioner, a public company engaged in supply of services, was allegedly coerced to deposit an amount of Rs.2,30,00,000 during a search operation by the GST Anti-Evasion department. The petitioner claimed the deposit was made under protest and sought a refund. Respondent issued deficiency memos and recommended filing fresh refund claims after rectification.
Finding of the Court:
The court found that the deposit was involuntary, the prescribed procedure under Rule 142 of the CGST Rules was not complied with, and the petitioner's claim for refund was allowed. The court did not decide on the merits of the Show Cause Notice or the petitioner's liability to pay GST.
Issues: The issues included the coercive recovery of the amount, issuance of deficiency memos, compliance with procedural requirements, and the entitlement to a refund.
Ratio Decidendi: The court held that the deposit was involuntary, the prescribed procedure under Rule 142 of the CGST Rules was not complied with, and the petitioner's claim for refund was allowed. The court did not decide on the merits of the Show Cause Notice or the petitioner's liability to pay GST.
Final Decision: The writ petition was allowed, and the respondents were directed to process the petitioner's claim for refund. The court clarified that it had not decided on the merits of the Show Cause Notice or the petitioner's liability to pay GST.
JUDGMENT
Amit Mahajan, J.
1. The petitioner has filed the present petition, inter alia, praying as under:
"a) Issue a writ of mandamus or any other appropriate writ or order or direction in the nature thereof, directing the Respondents to refund an amount of Rs. 2,30,00,000/-, which was coercively recovered by them from the Petitioner, along with interest from the date of payment to the date of refund; and/or
b) Alternatively, issue a writ of certiorari or any other appropriate writ or order or direction in the nature thereof, quashing the impugned deficiency memo bearing C. No. GST EAST/MCIE/R-161/Refund/Sopphire Intrex Ltd/271/2022 dated 22.08.2022 (enclosed as ANNEXURE-1 to the writ petition) issued by the Respondent No. 2; and/or
c) Issue a writ of certiorari or any other appropriate writ or order or direction in the nature thereof, quashing the impugned deficiency memo bearing C. No. GST EAST/MCIE/R-161/Refund/Sopphire Intrex Ltd/272/2022 dated 22.08.2022 (enclosed as ANNEXURE-2 to the writ petition) issued by the Respondent No. 2; and/or
d) Issue a writ of certiorari or any other appropriate writ or order or direction in the nature thereof, quashing the impugned letter bearing C. No. II(3)GST East/MCIE/Range 161/Refund/Sapphire Intrex Ltd./271/2022 dated 17.10.2022 (enclosed as ANNEXURE-14 to the writ petition) issued by the Respondent No. 5; and/or
e) Issue a writ of mandamus or any other appropriate writ or order or direction in the nature thereof, directing the Respondent No. 2 to process refund claims bearing ARN AA070822010019L (for an amount of Rs. 36,35,360/-) and AA070822010080W (for an amount of Rs. 1,93,64,642/) both dated 04.08.2022 filed by the Petitioner and grant refund expeditiously in a time bound manner; and/or
f) Issue such further orders and other reliefs as the nature and circumstances of the case may require."
2. The petitioner is a public company engaged in supply of services such as trading in shares & securities, renting of immovable properties, commission, and brokerage, etc, in New Delhi. The petitioner is registered under the Central Goods and Services Tax Act, 2017 (hereafter `the Act') with registration no. 07AAECS4651G1ZD.
3. It is the petitioner's case that search operation was conducted at the premises of the petitioner on 20.10.2021, by the officers of GST Anti-Evasion department, under Section 67(2) of the Act. During search, the petitioner was allegedly made to deposit an amount of Rs.2,30,00,000/-, which was coercively paid by it, and the payment details were intimated vide FORM GST DRC-03 bearing ARN AD071021006167P.
4. The petitioner, thereafter, wrote a letter and an email dated 21.10.2021, to the Inspector, Office of Joint Commissioner (Antievasion), Central Tax, Delhi East claiming that the payment made by the petitioner is under protest and that it reserves the right to apply for refund of the amount so deposited.
5. Respondent no.3 issued a Show Cause Notice (hereafter `SCN') dated 23.06.2022, inter alia, demanding the recovery of GST amounting to Rs.36,35,359/-under Section 74(1) of the Act and Section 20 of the Integrated Goods and Services Tax Act, 2017, and further sought to appropriate the amount of Rs.2,30,00,000/-, deposited by the petitioner during investigation, towards the proposed demand.
6. The petitioner, in terms of Section 54 of the Act read with Rule 89 of the Central Goods and Services Tax Rules, 2017 (hereafter `CGST Rules') filed two separate refund claims in FORM GST RFD01 claiming refund of the amount of Rs.2,30,00,000/-. The same is tabulated as under:
| Period | Application Particulars | Dated | Amount (INR) |
| February 2019-2020 | ARN AA0707220334677 | 13.07.2022 | 35,35,360/- |
| March 2019-2020 | ARN AA0707220334768 | 13.07.2022 | 1,93,64,642/- |
| TOTAL | 2,30,00,002/- |
7. Respondent no.2 issued the following two deficiency memos dated 28.07.2022 (in FORM GST RFD-03) under Rule 90 (3) of the CGST Rules. The same is tabulated as under:
| Period | Application Particulars | Deficiency memo particulars (first deficiency memos | ||
Payments made under coercion during tax inspections cannot be construed as voluntary; proper procedures must be followed for valid refund claims.
Point Of Law: 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 wilfulmisstatement or suppression of facts.
The main legal point established in the judgment is the importance of voluntary tax payments and the consequences of non-compliance with the prescribed procedure, as well as the liability for interes....
The deposit of tax, interest, and penalty must be voluntary and backed by the authority of law, and the prescribed procedure for recovery of taxes must be followed to ensure the voluntariness of the ....
Point of Law : It is well settled that “construction which permits one to take advantage of one's own wrong or to impair one's own objections under a Statute should be disregarded. The interpretation....
The main legal point established in the judgment is that while the search authorization was deemed legal, the deposit made by the petitioner was found to be under duress and not voluntary, emphasizin....
The court held that a refund application filed within the statutory period cannot be rejected on grounds of limitation, and the applicant must be afforded an opportunity to be heard before any reject....
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