TMI Blog2019 (5) TMI 895X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner and its compliance with the provisions of the Act. The main prayer of the petitioner is for furnishing of copies of documents and records seized from its premises on 15.10.2018, 16.10.2018 17.10.2018. Thus, if the Department was of the view that this prayer was not liable to be granted for reasons that the documents were sensitive or such production would prejudice its interests, it ought to have said so in counter. In the absence of any such averment I must only conclude that there is no such apprehension in the mind of the Department and the prayer of the petitioner is thus, liable to be accepted. Copies of the documents sought will be furnished within a period of two (2) weeks from the date of receipt of a copy of this order upon remittance of copying charges. - the issue decided in favor of petitioner. Whether the interim protection sought for to prevent the respondents from invoking the powers under Section 69 of the Act read with Section 132 thereof in respect of the petitioner is liable to be granted? - HELD THAT:- In the present case, the Department does not dispute that action was intended or envisaged in the light of Section 132 of the CGST Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation initiated by the respondents in the premises of the petitioner, commencing from 15.10.2018 and continuing on various dates thereafter. Seizures of voluminous documents and records have been effected. The petitioner has also been called upon to furnish various records and has done so, under letters dated 17.11.2018 and 22.11.2018. 3. The list of documents submitted on 17.11.2018 is set out below:- 'JAYACHANDRAN ALLOYS PVT LTD Following Original / Documents submitted to GST HPU Officers dt: 17/11/2018 S.No. Name of the Register Reports Date From To 1 Despatch Inspection Report 3/14/2018 4/21/2018 2 Lead Counting Note 9/25/2018 11/1/2018 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 Lead Loading Log sheet 10/10/2017 12/26/2017 19 Lead Loading Log sheet 7/13/2018 9/5/2018 20 Export Inspection Report 3/23/2017 10/31/2017 21 Export Inspection Report 6/28/2018 11/11/2018 22 Vehicle Follow up chart 7/18/2017 5/2/2018 23 1 Box File 4. In letter dated 22.11.2018 addressed by the petitioner to the first respondent, acknowledged by the first respondent on the same date, the details of other documents and records supplied by the petitioner are mentioned, as follows: ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the respondents to provide copies of the documents and records seized during the inspection as well as copies of statements recorded by the inspecting authorities, to grant opportunity to the petitioner and to pass an order of assessment in accordance with law. 7. A Miscellaneous Petition has been filed seeking the grant of an interim injunction restraining the respondents from proceeding cocercively against the petitioner and their staff including arresting them by invoking the provisions of Section 69 of the Act, pending disposal of the writ petition. 8. A counter affidavit has been filed by the respondents attempting to answer the main as well as the interim prayer. 9. The following issues arise, in my view, for resolution:- 1. Whether the petitioner is entitled to a mandamus as prayed for in regard to supply of the documents and statements sought for by it in the light of the provisions of the Act? 2. Whether the interim protection sought for to prevent the respondents from invoking the powers under Section 69 of the Act read with Section 132 thereof in respect of the petitioner is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als of the Department have intimidated the petitioner, its Managing Director and staff. Statements recorded as well as the materials seized have not been furnished to the petitioner despite repeated requests, thus constraining the petitioner to approach this Court for the same. 15. The petitioner has also made various submissions with regard to the merits of the additions that have been proposed in the course of the proceedings. I consciously refrain from adverting to the same in detail since this Court is not concerned with the merits of the proposed assessment but only the procedure that is adopted by the respondents to frame such assessment. As regards the procedure itself, the petitioner claims that there has been no proper compliance with the requirements of the statute. The Managing Director of the petitioner was threatened that he would be arrested in the light of the provisions of Section 69 of the CGST Act and he was coerced into signing statements, including one dated 21.02.2019, admitting various liabilities and providing for a schedule of payments to the Department. 16. The anticipated demand as per the statement recorded is of a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to analyse the statements and averments. The Department states that the provisions of Section 16 (1) that stipulate the eligibility and conditions for availing ITC have not been complied with in the present case since movement and delivery and remittance of tax in regard to the goods / services has not been established. 20. The GST regime requires the Assessee to establish movement of goods in addition to documentation establishing sales and purchase transactions and in the present case, there is no evidence to establish the movement of goods. Thus, the Department is categorical that the petitioner is a defaulter. Various details have been found in the premises in the course of investigation in support of the aforesaid factual position. The Department accepts that the investigation is on and no assessment has been framed. However substantial reliance is placed on statement dated 21.02.2019 wherein various lapses on the part of the petitioner have been tabulated and the petitioner has signed the same conceding to the lapses and agreeing to pay the tax arising therefrom amounting to a sum of ₹ 18,99,50,468/-. The Department also refers to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, extracted earlier. According to them, a person from whose custody documents have been seized shall be entitled to receive copies thereof or take extracts only in cases where, in the opinion of the proper officer such supply of copies will not prejudicially affect the on-going investigation. 25. Ms.Aparna states that such prejudice as above will be caused in the present case. It is however relevant to state that this argument is advanced only orally and does not figure in the counter. 26. Heard the detailed submissions of Mr.P.S.Raman, learned senior counsel, for Mr.Rajkumar, learned counsel for the petitioner and Ms.Aparna Nandakumar, learned Senior Standing counsel, assisted by the officials of the Department, for the respondents. 27. The Act provides for an assessment to be made after notice to be issued to the assessee. In the present case, the petitioner/assessee has been filing monthly returns regularly. This is not disputed. However, the Department apprehended that the petitioner was engaging in bill trading activities and launched an investigation in the premises to verify the business activities of the petitioner and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er documents, books or things produced by a taxable person or any other person, which have not been relied upon for the issue of notice under this Act or the rules made thereunder, shall be returned to such person within a period not exceeding thirty days of the issue of the said notice. (4) The officer authorised under sub-section (2) shall have the power to seal or break open the door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of the person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) The person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in the presence of an authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in the opinion of the proper officer, prejudicially affect the investigation. (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods after cancelling any tax invoice or bill of supply issued earlier.' 28. In the course of the investigation, the respondents state that there was substantial evidence to establish their suspicions regarding the bill trading activities carried on by the petitioner. Various documents were seized. The petitioner also furnished documents as called for by the department. Though the department alleges that the petitioner did not co-operate with the investigation and did not attend hearings in response to summons issued, the tabulation of the summons issued and attendance details of the petitioner indicate otherwise. Such details, as per the counter filed by the Department, are extracted below: S. NO NAME OF THE PERSON SUMMONED S/SHRI DESIGNATION SUMMON DATE STATUS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... APPEARED AND C PRADEEP, REQUESTED TO POSTPONE ON 27.12.18 12 D.JEGADEESH FINANCE MANAGER 26.12.2018 APPEARED 13 C.PRADEEP MANAGING DIRECTOR 27.12.2018 APPEARED 14 C.PRADEEP MANAGING DIRECTOR 28.12.2018 C PRADEEP, MD REQUESTED TO POSTPONE ON 03.01.19 15 C.PRADEEP MANAGING DIRECTOR 03 04.01.2019 APPEARED AND C PRADEEP, MD REQUESTED TO POSTPONE ON 09.01.2019 16 C.PRADEEP MANAGING DIRECTOR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to the documents sought for by the petitioner. The main prayer of the petitioner is for furnishing of copies of documents and records seized from its premises on 15.10.2018, 16.10.2018 17.10.2018. Thus, if the Department was of the view that this prayer was not liable to be granted for reasons that the documents were sensitive or such production would prejudice its interests, it ought to have said so in counter. In the absence of any such averment I must only conclude that there is no such apprehension in the mind of the Department and the prayer of the petitioner is thus, liable to be accepted. Copies of the documents sought will be furnished within a period of two (2) weeks from the date of receipt of a copy of this order upon remittance of copying charges. As far as statements are concerned, there being no condition imposed/ restriction placed in statute, copies of the same will be furnished upon remittance of copying charges within two(2) weeks from date of receipt of a copy of this order. Issue (i) is answered in favour of the petitioner. 31. The provisions of Section 132 of the CGST Act are relevant to determine question (ii) frame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommission of any of the offences mentioned in clauses (a) to (k) of this section, shall be punishable (i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; (ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine; (iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the GST Officer at the above Office address on being summoned by them and I am giving this statement before him in the form of Questions Answers. As I have given my basic details I don t repeat the same now in previous statements. I am ready to offer my statement in the form of Questions Answers as did earlier. The GST Officers have explained to me the provisions of Section 70 of CGST Act 2017 which I have understood fully. The officers also showed to me the Section 193 and 228 of the IPC as per which I understood that I have to give true and correct statement otherwise punishable under the law. Q1: From the previous statements given by you the following are points and GST liability on those points are summarised below: Sl. No. Issue Involved GST Liability 1 As per Section 16 (2) of CGST Act, 2017, no input tax credit can be availed when there is no movement of Goods. It is seen that without movement of Finished Goods from M/s. EGMI, Mangalore to M/s. JCA Perundurai pertaining to 132 Invoices ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sd/-... 21/2/2019 C.PRADEEP C.PRADEEP MANAGING DIRECTOR MANAGING DIRECTOR M/S. JAYACHANDRAN ALLOYS M/S.JAYACHANDRAN ALLOYS //BEFORE ME// Sd/-.. 21/2/19 (S.THULIPBASIS) SUPDT (HPU) 33. The GST enactment subsumes various enactments including the Central Excise Act, the Finance Act providing for the levy of Service Tax and State Value Added Tax Acts. Thus the interpretation given to the provisions of the aforesaid statutes would equally govern the working of the present statute (GST) as well. No doubt, the interests of the revenue are paramount and have to be protected, but the actions of the Revenue Department draw power only from a wholistic interpretation of the statutory provisions. Any excess in this regard would vitiate the legitimacy of the exercise. 34. The Delhi High Court, in the case of Make My Trip (India) (supra) has con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence. Specific to Section 89 (1) (d) of the FA, it has to be determined with some degree of certainty that a person has collected service tax but has failed to pay the amount so collected to the Central Government beyond the period of six months from the date on which such payment is due and further that the amount exceeds ₹ 50 lakhs (now enhanced to ₹ 1 crore). (iv) A possible exception could be where a person is shown to be a habitual evader of service tax. Such person would have to be one who has not filed a service tax return for a continuous length of time, who has a history of repeated defaults for which there have been fines, penalties imposed and prosecutions launched etc. That history can be gleaned only from past records of the ST Department. In such instances, it might be possible to justify resorting to the coercive provisions straightaway, but then the notes on file must offer a convincing justification for resorting to that extreme measure. (v) The decision to arrest a person must not be taken on whimsical grounds; it must be based on credible material'. The constitutional safeguar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untary. Consequently, the amount that was paid by the Petitioners as a result of the search of their premises by the DGCEI, without an adjudication much less an SCN, is required to be returned to them forthwith. (x) It was imperative for the DGCEI to first check whether the entity whose employees are sought to be arrested has regularly been filing service tax returns or is a habitual offender in that regard. It is only after checking the entire records and seeking clarification where necessary, that the investigating agency can possibly come to a conclusion that Section 89 (1) (d) is attracted. None of the above safeguards were observed in the present case. The DGCEI acted with undue haste and in a reckless manner. (xi) Liberty is granted to the officials of MMT and IBIBO to institute appropriate proceedings in accordance with law against the officers of the DGCEI in which the supplementary affidavits filed in these proceedings and the replies thereto can be relied on. This holds good for the officials of the DGCEI as well when called upon to defend those proceedings in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be passed after the process of adjudication is complete and taking into account the submissions of the Assessee and careful weighing of evidence found and explanations offered by the Assessee in regard to the same. 37. The use of words commits make it more than amply clear that the act of committal of the offence is to be fixed first before punishment is imposed. The allegation of the revenue in the present case is that the petitioner has contravened the provisions of Section 16(2) of the Act and availed of excess ITC in so far as there has been no movement of the goods in the present case as against the supplier and the Petitioner and the transactions are bogus and fictitious, created only on paper, solely to avail ITC. The manner of recovery of credit in cases of excess distribution of the same is set out in Section 21 of the Act. This section provides that where the Input Service Distributor distributes credit in contravention of the provisions contained in Section 20 resulting in excess distribution of credit to one or more recipients, the excess credit so distributed shall be recovered from such recipients along with interest, and the provisions of Section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to necessarily follow the process of an assessment. 41. I draw support in this regard from the decision of the Division Bench of the Delhi High Court in the case of Make My Trip (India) (supra), as confirmed by the Supreme Court reiterating that such action, as in the present case, would amount to a violation of Constitutional rights of the petitioner that cannot be countenanced. 42. The decision of this Court in Criminal Original petition No.30467 of 2018 (batch case), dated 12.02.2019 is relied upon by the respondents. The learned single judge states that in the light of the grave position put forth by the prosecution and also the fact that the investigation was at very early stages , the request for Anticipatory Bail should be rejected and proceeds to do so. This decision does not take into consideration the decision of the Delhi High Court in the case of Make My Trip (India) Pvt. Ltd, (supra), confirmed by the Supreme Court and also does not take into account the relevant statutory provisions of the Revenue enactment, that in my view are necessary to appreciate the lis in proper perspective. The decision is thus distinguishable on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons in person, and pass a reasoned and speaking order, in accordance with law. 47. It is clarified that all observations made in the course of this order are only in the context of the issues that arose for resolution in this writ petition and nothing said herein shall prejudice the stands of either party in the process of adjudication or passing of final order of assessment. 48. To a pointed query as to the measures available for protection of the interests of the revenue pending adjudication/assessment, Ms.Nandakumar urges that the power under Article 226 of the Constitution of India are wide enough for the Court to call upon the petitioner to deposit an amount, fixed at the discretion of the court for such protection. Ms.Nandakumar suggests, as the basis for the exercise of such discretion, the amounts set out in the statement recorded from the Managing Director of the petitioner company, extracted elsewhere in this order. She points out that the statement itself makes it more than amply clear that the suppression engaged in by the petitioner is in the region of crores of rupees, leading to the demand computed in the statement, of an amount in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is extracted below for the sake of completion and to demonstrate that the provisions of Section 83 have been framed along identical lines as Section 281B. Provisional attachment to protect revenue in certain cases 281B. (1) Where, during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment, the [Assessing] Officer is of the opinion that for the purpose of protecting the interests of the revenue it is necessary so to do, he may, with the previous approval of the [Principal Chief Commissioner or] Chief Commissioner, [Principal Commissioner or] Commissioner, [Principal Director General or] Director General or [Principal Director or] Director], by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule. [Explanation.-For the purposes of this sub-section, proceedings under sub-section (5) of section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment.] (2) Every such prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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