Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2021 Supreme(Mad) 321

IN THE HIGH COURT OF JUDICATURE AT MADRAS
ANITA SUMANTH, J.
M/s. Shri Nandhi Dhall Mills India Private Limited, Rep. by its Managing Director S.A. Kumar, Salem – Appellant
Versus
Senior Intelligence Officer, Director General of Goods and Service Tax, Trichy & Others – Respondent
W.P. No. 5192 of 2020 & WMP. No. 6135 of 2020
Decided On : 07-04-2021

Advocates Appeared:
For the Petitioner:Hari Radhakrishnan, Advocate.
For the Respondents: R1 to R3 & R5, V. Sundareshwaran, Senior Panel Counsel.

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.

Headnote:
Constitution of India, 1950 - Article 226 - Central Goods and Service Tax Act, 2017 - Service Tax - Recovery of Tax - Petitioner praying to Writ of Mandamus, direction restraining 1st and 2nd respondent from demanding any amount - Due Process of Law - Also Return documents seized - Writ petition was originally filed seeking a mandamus restraining first respondent from harassing petitioner baselessly without addressing its grievance petition and refund claim pending before respondents - Respondents are officials of Director General of Goods and Service tax writ petition having been given up qua R4 - Request of petitioner for amendment of prayer was allowed, recording no objection - Amended prayer is for a mandamus restraining R1 and R2 from demanding any amount from petitioner except by following due process of law and a further direction to refund a sum of Rs.2 crores along with statutory interest under provisions of Central Goods and Service Tax Act, 2017 and return documents seized at time of search - Post amendment, pleadings have been completed and detailed submissions of the parties have been heard –
Finding of the court: Central Board of Indirect Taxes and Customs as well as Chief Commissioner of Central/ State Tax of the State of Gujarat are hereby directed to issue following guidelines by way of suitable circular/instructions: No recovery in any mode by cheque, cash, epayment or adjustment of input tax credit should be made at time of search/inspection proceedings under Section 67 of Central/Gujarat Goods and Services Tax Act, 2017 under any circumstances - Even if the assessee comes forward to make voluntary payment by filing Form DRC03, assessee should be asked/ advised to file such Form DRC03 on the next day after the end of search proceedings and after officers of visiting team have left the premises of assessee - Facility of filing complaint/ grievance after the end of search proceedings should be made available to assessee if assessee was forced to make payment in any mode during the pendency of the search proceedings - If complaint/ grievance is filed by assessee and officer is found to have acted in defiance of aforestated directions, then strict disciplinary action should be initiated against the concerned officer - Mandamus as sought for by petitioner is granted - Amount of Rs.2.00 crores collected shall be refunded to the petitioner within a period of four (4) weeks from today
Result: Writ Petition is allowed

JUDGMENT :-

(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to Writ of Mandamus, direction restraining the 1st and 2nd respondent from demanding any amount from the petitioner except by following due process of law and further direct to refund of Rs.2 crores along with statutory interest under CGST Act 2017 and also return the documents seized at the time of search on 22.10.2019.)

1. This writ petition was originally filed seeking a mandamus restraining the first respondent from harassing the petitioner baselessly without addressing its grievance petition and refund claim pending before the respondents. The respondents are officials of the Director General of Goods and Service Tax (R1, R2, R3 and R5), the writ petition having been given up qua R4 on 04.06.2020. On 25.08.2020, the request of the petitioner for amendment of prayer was allowed, recording no objection to the same by Mr.V.Sundareswaran.

2. The amended prayer is for a mandamus restraining R1 and R2 from demanding any amount from the petitioner except by following the due process of law and a further direction to refund a sum of Rs.2 crores along with statutory interest under the provisions of the Central Goods and Service Tax Act, 2017 (in short ‘Act’) and return the documents seized at the time of search on 22.10.2019. Post amendment, pleadings have been completed and detailed submissions of the parties have been heard.

3. The petitioner is registered as a Small Scale Industry under the MSME Act and is an assessee under the provisions of the Goods and Service Tax Act, 2017 (Act). An investigation was conducted in the premises of the petitioner on 22.10.2019 and various documents and registers seized. In the course of that investigation, a statement was recorded from one S.A.Kumar, who has also deposed to the affidavit filed in support of this writ petition, to the effect that the petitioner has not discharged its GST liability correctly. In the statement, he accepts the mistakes in completion of GST and assures the respondents that the liability would be discharged at the earliest with applicable interest. A scheme of payment has also been set out for the tax remaining unpaid, as follows:

TIME LINE FOR PAYING GST LIABILITY ON TAXABLE OUTWARD SUPPLIES MADE DURING THE PERIOD FROM JULY, 2017 TO OCTOBER, 2019 (UP TO 21.10.2019)

22.10.2019 - Rs.1,00,00,000/- paid

23.10.2019 - Rs.1,00,00,000/-

30.10.2019 - Rs.1,00,00,000/-

07.11.2019 - Rs.1,00,00,000/-

13.11.2019 - Rs.1,00,00,000/-

20.11.2019 - Rs.1,00,00,000/-

27.11.2019 - Rs.1,00,00,000/-

04.12.2019 - Balance amount as quantified by the GST Department

4. This undertaking has been signed by the Managing Director on 22.10.2019. In line with the undertaking, the petitioner has, on the same day remitted a sum of Rs.1 crore in FORM GST DRC-03 corresponding to Rule 142(2) and (3) and Section 74(5) of the Act. The second installment of the tax was paid on 30.10.2019.

5. However, on 05.11.2019 the Managing Director of the petitioner has retracted his statement in the following terms:

The Office of Senior Intelligence

DGGI, Regional Unit,

No.5, Williams Road, Melapudur

Cantonment, Tiruchirappalli – 620 001

Tamil Nadu

Respected Sir,

Sub: Search conducted at our premises on 22-10-2019 Reg

Ref: Mahazar dated 22-10-2019

This has reference to the search proceedings conducted by your Ld. Authority at our premises at No.270, Narasimman Road, Shevapet, Salem, Tamil Nadu 636 002 on 22-10-2019, wherein we would like to retract the version/statement mentioned in the MAHAZAR dated 22-10-2019. We would further like to inform you that your Ld. Authority had failed to mention the actual facts in the Mahazar which were informed to your Ld. Authority during the search proceedings along with relevant supporting documents in support of our claim.

In this regard, we would like to present the actual facts before your Ld. Authority

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2021 Supreme(Mad) 321

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.

Cases Referred (1)