TMI Blog2019 (8) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioners were coerced to reverse the Cenvat Credit under the threat of arrest. Whether such action on the part of the Revenue is at all permissible? - HELD THAT:- The contentions of the Revenue is that the Petitioners are builders and could not be coerced in reversing the Cenvat Credit on the threats of arrests. This is no explanation for the unbecoming conduct of the officers of the State who are duty bound to treat all equally. The officers' perception about, whether the Petitioners would act upon the threat or not, cannot give a licence to the Respondents to act in such illegal and high handed manner. The Supreme Court as well as our High Court has repeatedly held that rule of law has to be followed and no officers of the respondent can take law in his own hands or take extralegal steps or manoeuvre so as to collect amounts which have not yet been held by judicial and/or quasi judicial order as payable by the petitioners to the respondent. Threats of arrest - HELD THAT:- This serious allegation was not responded to by any denial on the part of the Respondents at that time. The events as well as the material placed on record by the Petitioners, after considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much less adjudicated upon. 3. On the other hand, Mr. Kantharia, learned Counsel for the Respondents, states that on affidavit the officer of the Respondents stated that there was no threat of arrest ever issued to the Petitioners. Therefore, the statement of the Petitioners should not be accepted. He further submits that a show cause notice has already been issued. Therefore, no orders should be passed. We are, in the facts of the case and evidence placed before us, not impressed with the submissions made on behalf of the Respondents and were proceeding to pass an order finally. At that time, Mr. Kantharia, learned Counsel for the Respondents, sought time to take further instructions and prepare himself better, as this petition was shown under the caption of admission. 4. In the above view, we grant time at the request of the Revenue. However, we put to notice parties to the petition that it will be taken up for final hearing on 30 July 2019. 2. Today, when the matter was called out, Mr.Kantharia, learned Counsel appearing for the Respondents, filed an additional affidavit in reply of Mr.Abhijit Thorat, Assistant Commissioner of CGST Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se would be served by permitting the Petitioners to recredit the amount, which was reversed by the Petitioners at the instance of the Respondents, as if the show cause notice is adjudicated in favour of the Petitioners, the amount would be refunded to the Petitioners in any case. Thus, dismiss the petition. 5. We have considered the rival submissions. The issue raised in the petition, if correct, gives rise to a very serious issue of Rule of law. However, the above issue would only arise for our consideration on first determining whether in the facts, the grievance of the Petitioners that the recovery of the Cenvat Credit under the threat of arrest is true. The undisputed facts are that the Petitioners were under investigation for incorrectly availing of Cenvat Credit. During the time of investigation, i.e. even before any show cause notice was issued, the Petitioners reversed the Cenvat credit of ₹ 11.25 crores. This, the Petitioners claim, was under pressure from the officers of the Revenue, more particularly because of the threat of arrest. This we find is evident from the fact that the Petitioners had sought opinion of legal experts, whether on the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or State, cannot be permitted to play dirty games with the citizens of this country to coerce them in making payments which the citizens were not legally obliged to make. If any money is due to the Government, the Government should take steps but not take extralegal steps or manoeuvre. ....... Further this court in Vodafone Essar South Ltd. vs. Union of India (supra) has in similar circumstances passed strictures against the officers of D.R.I., who terrorized the petitioners therein and forced them to pay the money which was not permissible in law. The Court observed that the conduct of the officers was high handed and a gross abuse of the powers vested in them under the Customs Act. Similarly, in Cleartrip Pvt. Ltd. vs. Union of India (supra) 2016 (4) STR 948 , this Court observed as under : 16. We are clear in our minds and from the scheme of the Act and the Law as a whole that coercive measures, including effecting any arrest, would arise only when investigation has been completed and on launching the prosecution. If the prosecution is a criminal prosecution, then, there is no question of deviating or defeating from the Criminal Law. The Criminal Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th that the Petitioners were threatened with possible arrest if they do not reverse a Cenvat Credit of ₹ 11.25 crores. It is pertinent to note that there is no contemporaneous evidence inasmuch as there is no reply by the Respondents to the Petitioners' letter dated 7 May 2018 that clearly speaks about the threat of arrest . This serious allegation was not responded to by any denial on the part of the Respondents at that time. The events as well as the material placed on record by the Petitioners, after considering the affidavits filed by the Respondents, lead us to conclude that the Respondents have acted in a high handed manner and forced the Petitioners under the threat of arrest to reverse the Cenvat Credit of ₹ 11.25 crores before the show cause notice was issued or before any adjudication order thereon was passed. In these circumstances, we direct the Respondents to allow the Petitioners to re-credit the amount of ₹ 11.25 crores in their Cenvat Credit account. However, the Petitioners are prohibited from utilising the same till the adjudication of the show cause notice dated 28 September 2018 by the Commissioner, GST CX. 8. Mr.Kanthar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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