Back
2023 Supreme(P&H) 1201
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Ritu Bahri, Kuldeep Tiwari, JJ.
M/s Samyak Metals Pvt. Ltd. - Petitioner - Appellant
Versus
Union of India and others - Respondents - Respondent
CWP No.26529 of 2022
Decided On : 24-05-2023
Mr. Sandeep Goyal, Advocate, for the petitioner.
Mr. Tajender Joshi, Senior Standing Counsel, for the respondents.
Failure to follow procedural requirements and Govt. instructions led to the court's decision to direct the refund of the illegally recovered amount.
Headnote:
Mandamus - Refund of illegally recovered amount - Central GST Act, 2017, Haryana GST Act, 2017 - Section 74(5) of CGST Act, 2017 - Rule 142(2) of CGST Rules - Govt. instruction No.01/2022-23 dated 25.05.2022
Fact of the Case:
Petitioner seeks refund of amount recovered without issuance of show cause notice or passing order under Section 74 of the central GST Act and Haryana GST Act, 2017. Petitioner's business premises were searched, and an amount was recovered without following due procedure.
Finding of the Court:
Respondents failed to issue notice under Section 74(1) of the CGST Act and did not follow the provisions of Rule 142(2) of the CGST Rules and Govt. instruction No.01/2022-23 dated 25.05.2022. Court directed the respondents to return the amount to the petitioner with interest.
Issues: Illegal recovery of amount without due procedure under Sections 73/74 of the Act, non-issuance of notice under Section 74(1) of the CGST Act, and failure to follow Govt. instructions.
Ratio Decidendi: Failure to adhere to procedural requirements and Govt. instructions led to the court's decision to direct the refund of the illegally recovered amount.
Final Decision: Petition allowed. Respondents directed to return the amount to the petitioner with interest.
RITU BAHRI, J.
1. Petitioner is seeking a writ in the nature of mandamus directing respondent No.3 to refund the amount, which was recovered illegally from the petitioner vide Form GST DRC-03 dated 26.02.2021 (Annexure P-3) without issuing any show cause notice or passing any order under Section 74 of the central GST Act and Haryana GST Act, 2017.
2. The petitioner is engaged in the business of manufacturing of aluminium ingots. For the purpose of Goods and Service Tax, the petitioner is registered under the provisions of Central GST Act/Haryana GST Act, 2017 vide GSTIN 06AAHCS8928H1ZY (Annexure P-1). The business premises of the petitioner were searched on 25.02.2021 by the officers of Central GST Commissionerate, Faridabad, including respondent No.3. During the course of search, respondent No.3 examined the purchase ledger and asked about the purchases made by the petitioner from one M/s D.G. Enterprises, Faridabad. No document was resumed during the course of the search. The Panchnama drawn at the time of search is annexed as Annexure P-2. It is stated that after analyzing the ledger of M/s D.G. Enterprises, petitioner was forced to deposit tax in lieu of the Input Tax Credit claimed by it on the purchases made from M/s D.G. Enterprises to the tune of Rs.35,73,147/- each under the Central GST Act/State GST Act, including interest amounting to Rs.1,82,255/- and penalty amounting to Rs.4,42,291/- vide Form GST DRC-03 dated 26.02.2021 (Annexure P-3).
3. Grievance of the petitioner is that even after depositing the above said amount, no GST DRC-04 has been issued by respondent No.3. Amount of Rs.71,46,294/- has been recovered by the respondents without passing any adjudicating order or following any procedure under Sections 73/74 of the Act.
4. Upon notice, reply dated 01.02.2023 has been filed on behalf of respondent Nos.1 to 3, submitting therein that after conducting the search, Panchnama dated 25.02.2021 was drawn and statement of Sh.Ankur Jain, Director of M/s Samyak Metals Pvt. Ltd. was recorded under Section 70 of CGST Act, 2017 before Superintendent CGST Anti-Evasion (Annexure R-1). Sh. Ankur Jain, Director of the firm had admitted that they had accepted only bills from M/s DG Enterprises without goods, for which, he was ready to pay/reverse the duty amount along with interest and penalty as applicable. Hence, he had voluntarily paid total amount of Rs.35,73,147/- (Tax of Rs.29,48,601/-, interest of Rs.1,82,255/- and penalty of Rs.4,42,291/-) under Section 74(5) of CGST Act, 2017.
5. Heard, learned counsel for the parties.
6. Reference can now be made to a judgment passed by this Court in Modern Insecticides Ltd. and another vs. Commissioner, Central Goods and Service Tax and another, 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, the officials of the department took away Director and Chartered Accountant of the petitioner-company to their office at Rishi Nagar, Ludhiana. No notice under Section 74 (1) of the CGST Act was served even after expiry of two years. The Govt. instructions dated 25.05.2022 issued by the CBIC with respect to the GST investigation were also examined, which had been issued keeping in view the observations made by the Gujarat High Court in Bhumi Associate vs. Union of India, SCA No.3196 of 2021 (decided on 16.02.2021). As per the said instructions, no recovery of tax should be made during search, inspection or investigation unless, it is voluntary. In order to avoid harassment to the person, whose premises has been conducted, the voluntary payment in prescribed form i.e. GST DRC-03 can be made after the day of the search. The above instructions have been issued to avoid unnecessary harassment caus
