The deposit made during the search proceedings was deemed coerced, lacking legal safeguards mandated under the CGST Act, making it non-voluntary.

JUDGMENT

[Physical Court hearing/ Hybrid hearing (as per request)]

TABLE OF CONTENTS

Rajiv Shakdher, J.

Preface:

1. The sole question which arises for our consideration is: whether the cumulative sum of Rs.1,80,10,000/- deposited on behalf of the petitioner- concern, during search proceedings carried out between 16.02.2022 and 17.02.2022, was a voluntary act or not.

2. The petitioner claims, that the aforementioned amount was deposited in four (4) tranches, between 01:28 A.M. and 07:03 A.M. on 17.02.2022.

3. It is the petitioner's case, that the search commenced at about 03:30 PM on 16.02.2022 and ended at 09:30 AM on 17.02.2022.

4. Respondents no. 1 and 2 ["official respondents"]/revenue, however, contend to the contrary.

4.1. It is the official respondents/revenue's broad stand, that the aforementioned amount was deposited against challan(s) submitted in the prescribed form i.e., Form GST DRC-03, each of which is dated 17.02.2022.

5. The official respondents/revenue, thus, take the position, that the allegation of coercion is an afterthought, which was raised only on 25.05.2022 after summons had already been served on the petitioner- concern.

6. The principal controversy in the matter was noticed, when the matter was listed before the Court for the first time on 05.07.2022. On that date, notice was issued in the petition. The official respondents/revenue were represented by Mr Satish Kumar, senior standing counsel who appeared on behalf of respondents no. 1 and 2, and Ms Anushree Narain, who appeared on behalf of respondent no.3.

7. It is pertinent to note, at this juncture, that on the returnable date i.e., 26.08.2022, Mr Vivek Sarin, who appears on behalf of the petitioner- concern confined the relief sought in the writ petition to prayer clause (a), which concerns, in effect, the relief for return of Rs.1,80,10,000/- along with statutory interest, deposited on behalf of petitioner-concern.

7.1. Consequently, it was indicated to us, that other reliefs will not be pressed in the instant writ action.

Background:

8. Before we proceed further, it would be relevant to etch out the broad backdrop in which the present writ petition has been preferred.

9. The petitioner-concern, which is in the business of trading in Ready- Made Garments (RMG) is also engaged in selling these very goods on behalf of third parties, albeit in the domestic market, on a commission basis.

10. It is alleged by the official respondents/revenue, that the petitioner- concern, inter alia sold goods, in cash, on behalf of two entities i.e., Empire Apparels Pvt. Ltd. ("EAPL") and M/s Navrang Enterprises ("NE"), during the period spanning between July 2017 and February 2022.

11. The official respondents/revenue claim that the RMGs sold, in cash, on behalf of the aforementioned entities by the petitioner-concern were worth Rs.149.90 crores against which it received by way of a commission [at the rate of 5%] Rs.7.50 crores. It is alleged that the commission was also received in cash.

11.1. Thus, according to the official respondents/revenue, the petitioner- concern failed to disclose the said cash transactions, and pay the requisite tax on the commission earned by it.

12. It was because of this intelligence which was received by the official respondents/revenue, that a search at the petitioner-concern's premises was conducted between 16.02.2022 and 17.02.2022.

12.1. The said premises, as per the stand of the official respondents/revenue, was unregistered.

13. It is also the official respondents/revenue's case, that at the time of the search, one Mr Sumit Jain i.e., the manager and authorized representative of the petitioner-concern was found at its premises.

14. The official respondents/revenue claim, that amongst other things, it was discovered that the petitioner-concern maintained a ledger concerning cash sales, albeit in soft form, in a laptop,