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Section 151, Goods and Services Tax - GST
Greetings of the day!!!
One my clients received notice under Section 151(2) of CGST Act for the year 2017-18. Wherein RTP asked to produce the Tax Invoices, mode payments to the supplier, Bank Account Details, Party Ledgers with detailed narration and ITC ledger. Thereafter he served the Notice in DRC - 01 and subsequently received an order in DRC - 07. Thereafter attachment under DRC 13. I invite the attention of the Experts kindly throw some light on this issue. According to the enactment if any availment of ITC, which is to be proved ineligible, then the officer has to serve the Notice under Section 61 but, in the said scenario notice issued under section 151. Is it correct ? if so, whether we have to prefer an appeal or shoot the WP before court of Law ? Seems the notice and orders are beyond the jurisdiction.
kindly ignore the earlier one and focus on this. Regret for the inconvenience caused.
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Has your client filed reply to DRC-01 or not ?
Was an opportunity for personal hearing accorded before passing an Order under DRC-07 ?
If we penetrate into legal meaning of idiom, 'call upon', the scope of Section 151 is very wide. This idiom includes , 'to choose, request, obligate, order, or demand someone to do something.'
The basic purpose is to collect information.
It is an appealable order. First preference is to challenge the order through departmental channel. If no personal hearing has been granted, such order will be set aside at the very the first appellate stage.
Such order is in violation of principles of natural justice. You can challenge this order in High Court direct. This order is not without jurisdiction but no legs to stand. Hopefully your WP would be admitted in High Court. You can easily search case laws wherein order-in-original has been set aside on the ground of not affording an opportunity for P.H.
Prior to amendment effective from 01.01.2022, Section 151 reads as follows:
"Power to collect statistics.
151. (1) The Commissioner may, if he considers that it is necessary so to do, by notification, direct that statistics may be collected relating to any matter dealt with by or in connection with this Act.
(2) Upon such notification being issued, the Commissioner, or any person authorised by him in this behalf, may call upon the concerned persons to furnish such information or returns, in such form and manner as may be prescribed, relating to any matter in respect of which statistics is to be collected."
So, said section 151 was mainly dealing with power to collect 'statistics'. Hence, said section does not give powers to Commissioner (in my view) to order 'information' u/s 151 for purpose of carrying any investigation against any registered taxable person about wrong / irregular availment of ITC. Such powers are indeed available to Dept. / Commissioner but under other provisions (such as Section 67 to 72 of the CGST Act, 2017)
If I understood correctly from your query, you are not interested challenging such order u/s 151 as such. but, your main issue & concern is resultant order in Form DRC-07 and subsequent back attachment.
If ONLY basis for confirming demand in DRC-07 (i.e. for alleged wrong availment of ITC) is non-submission of asked information to Commissioner against order u/s 151 (1) and absolutely nothing more and then, you can approach High court by filing the writ petition in my view (by arguing that commissioner lacked powers to order sought 'information' u/s 151)
Approaching directly High court is also applicable if no personal hearing is granted before passing the subject.
Please remember that approaching HC - through writ petitions - can be costly affair with no certainty of closure of the issue - once for all. You may loose time-limit to file appeal with appellate authority - in between - which can create another sets of legal challenges if HC does not give you sought relief / closure.
In the context under discussion and considering the fact that we are not aware of actual contents of order u/s 151 (1), notice in DRC-01 & order in DRC-07, you need to also consider section 155 of the CGST Act, 2017 (i.e. Where any person claims that he is eligible for input tax credit under this Act, the burden of proving such claim shall lie on such person.) before choosing a particular course of action.
Another set of legal issue to be considered - beforehand - is amended Section 151 (effective from 01.01.2022) & potential effects of those amendment (if any) in your situation, if said order is issued by commissioner on or after 01.01.2022. (I have not given any thought on this aspect yet, in the context of your situation).
Hence, in summary, you need to take a comprehensive call whether you want to approach High court or file appeal with first appellate authority after taking various legal provisions, 'facts' as may be applicable in your situation, costs and risks involved in each of two options.
These are ex facie views of mine and the same should not be construed as professional advice / suggestion.
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Your observations about Sh.Amit Agrawal Sir are right to the core. He is very very humble, disciplined, knowledgeable and benevolent . His plus point is that he is open to any contrary view. In his replies, he never offends any person.Knowledge is power, if shared.
Thanks, Shri Veeresham Veerabomma Ji, for your kind words! I am happy to know that you find our inputs worth your time reading and understanding them.
Dear Shri Kasturi Sethi Ji,
I have my limitations, which I am aware. I just try to give my best if I take up any query to answer. I am deeply humbled by your post (though they are gross exaggeration of my qualities, if any, Sir).
Lot to learn from you, Sir, both on law and how to conduct oneself.
Sh.Amit Agrawal Ji,
We reinforce each other by exchanging views on this forum. After your entry in this forum, I always first wait for your reply.
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Thanks & regards,