TMI Blog2022 (3) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... nt paid during the investigation by the company was voluntarily paid, under section 74(5) of CGST Act? - HELD THAT:- Section 74 of the Act deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts - The payment is made as an extension of goodwill and bonafide. It is without prejudice to and with full reservation of our rights and contentions to seek necessary refund at the appropriate time and therefore should not be regarded as an admission of liability. Thus it is evident that payments have not been made admitting the liability. On the other hand, the company reserved its right to seek refund and made it expressly clear that payment of the amount should not be treated as admission of its liability. Besides the aforesaid, there is no material on record to establish that guidelines issued by division bench of High Court of Gujarat were followed - the issue is answered in the negative and it is held that the amount was not paid voluntarily under Section 74(5) of the CGST Act. Whether the amount was recovered from the company during inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belated and stale claims is not a rule of law but a rule of practice based on sound and proper exercise of discretion. The question of delay has to be decided in the facts of each case. The principle on which relief to a party on the grounds of delay and laches is denied is that rights may have accrued to others by reason of delay in filing the Writ Petition should not be allowed to be disturbed unless there is a reasonable explanation for the delay. The lapse of time is not attributable to any laches or negligence. In the instant case, the only provision which permits deposit of an amount during pendency of an investigation is section 74(5) of CGST Act, which is not attracted in the fact situation of the case - it is evident that amount has been collected from Company in violation of Article 265 and 300-A of the Constitution. Therefore, the contention of the Department that amount under deposit be made subject to the outcome of the pending investigation can not be accepted. The Department, therefore, is liable to refund the amount to the Company. Appeal dismissed. - W.A. No.1274 OF 2021 (T-RES) IN W.P.No.4467 OF 2021 (T-RES) - - - Dated:- 3-3-2022 - HON BLE MR. JUSTICE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale consideration. Green Finch is a Company incorporated under the provisions of Companies Act on 08.02.2016 and its Annual General Meeting was held on 31.03.2021 as per the official website of Ministry of Corporate Affairs portal. For the period under the investigation i.e. 2017-20, Green Finch provided 10,31,464 Temp DEs to the Company which in turn provided 2,91,75,667 food deliveries through them. 4. For providing aforesaid services, Green Finch raised valid tax invoices on the Company and charged applicable GST which was paid to Green Finch which deposited the same with the Department by filing GSTR-3B return. The Company availed input tax credit in terms of Section 16 of Central Goods and Services Tax, 2017 (hereinafter referred to as 'the CGST' for short). 5. An investigation was initiated by the Department with regard to services provided to the Company by third party service providers namely Green Finch by Director General of Goods and Services Tax Intelligence, Hyderabad Zonal Unit (hereinafter referred to as 'the DGGI' for short) on the ground that Green Finch was a non-existent entity and accordingly, the input tax credit availed by the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Company thereupon filed the petition seeking a writ of mandamus directing the Department to forthwith refund the amount of ₹ 27,51,44,157/- along with interest at the rate of 12% from the date of deposit till its refund. The petitioner also assailed the validity of Section 16(2)(c) of the CGST Act as well as Karnataka Goods and Services Tax Act, 2017 as unconstitutional on the ground that it is violative of Article 14, 19(1)(g) and 300A of the Constitution. 8. The appellants filed a detailed statement of objections in which inter alia it was pleaded that investigation was initiated in exercise of powers conferred under the Act relating to wrongful availment of input tax credit during which it was noticed that Green Finch, so also its suppliers were non-existent entities and in the course of such investigation, summons were issued to the Directors and Officers of the Company. It is also asserted that during the course of the investigation, the deposit of the amount was voluntarily made by the Company. 9. The learned Single Judge, by an order dated 14.09.2021 inter alia held that payment of the amount made by the Company during the course of investigation was involunta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the company be made subject to outcome of the proceeding. In support of aforesaid submissions, reliance has been placed on the decision of High Courts of Kerala and Gujarat in 'SURESH KUMAR P.P. VS. DY.DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI), THIRUVANANTHAPURAM', 2020 (41) G.S.T.L. 17 (KER.), 'COMMISIONER OF CCC ST HYD. - 11 VS. PEERS TECHNOLOGIES PVT. LTD.', 2019 (27) G.S.T.L. TIOL (TRI. HYD), 'CEGAT, SOUTHERN REGIONAL BENCH, MADRAS - S.P.A.M. KRISHNA CHETTIAR VS. COLLECTOR OF CUSTOMS AND CENTRAL EXCISE MADURAI', 1985 (22) E.L.T. 63 (TRIBUNAL). 12. On the other hand, Learned Senior Counsel for the company submitted that Greenfinch is a company in existence which is evident from the official website of the ministry of corporate affairs portal and has obtained GST registration from the Department. It is also pointed out that the aforesaid company has periodically filed its returns until September 2019. It is also pointed out that on the basis of the stand taken by the department, the company had suspended the services availed by it from Greenfinch with effect from 09.12.2018 and had terminated the agreement. Thereupon Greenfinch initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF INDIA' (2016) 44 S.T.R.481 (Del.). 14. The CGST Act is a code in itself and provides for complete and detailed machinery for levy, collection and recovery of tax. Section 39 of the CGST Act deals with furnishing of returns. Section 54 provides for refund of tax, and mandates a claimant to make an application before the expiry of two years from the relevant date. 15. In the obtaining factual matrix following issues arise for our consideration:- (I) Whether the amount was voluntarily paid during the investigation by the company under section 74(5) of CGST Act? (II) Whether the amount was recovered from the company during investigation under the coercion and threat of arrest? (III) Whether the DGGI officers conducted in a High handled and arbitrary manner during the course of investigation? (IV) Whether writ petition filed by company suffers from delay or laches? 16. Now we may proceed to deal with issues ad seriatim. (I) WHETHER THE AMOUNT PAID DURING INVESTIGATION BY THE COMPANY WAS VOLUNTARILY PAID, UNDER SECTION 74(5) OF THE CGST ACT? 17. Section 74 of the Act deals with determination of tax not paid or short paid or erroneously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search proceedings should be made available to the assessee if the assessee was forced to make payment in any mode during the pendency of the search proceedings. (4) If complaint / grievance is filed by assessee and officer is found to have acted in defiance of the afore stated directions, then strict disciplinary action should be initiated against the concerned officer. The guidelines issued by the division bench are intended to regulate the powers of officers carrying out search and seizure as well as to safeguard the interest of the assessee. 19. The issue which arises for consideration is whether amount of ₹ 27,51,44,157/- has been paid by the company on its own ascertainment under section 74(5) of the Act. In the instant case, there is no material on record to indicate that the amount of ₹ 15 Crores and an amount of ₹ 12,51,44,157/- which were paid at about 4AM and 1PM on 30.11.2019 and 27.12.2019 respectively were paid on admission by the Company about its liability. There is no communication in writing from company to the proper officer about either self ascertainment or admission of liability by company to infer that such a payment was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence No.NA Date of issue: NA 6. Financial year 2017-18 7. Details of payment made including interest and penalty if applicable (Amount in Rs.) Sr. No Tax period Act Place of supply Tax / cess Interest Penalty if applicable Others Total Ledger utilized (Cash / Credit) Debit entry No. Date of debit entry 1. Jul 2017 - Mar 2018 ITST Karnataka 5,056,604.00 0.00 0.00 0.00 5,056,604.00 Cash DC2912190003301 02/12/2021 8. Reasons, if any: The above payment is made as an extension of our goodwill and bonafide. It is without prejudice to and with full reservation of our rights and contentions to seek necessary refund at the appropriate time and therefore should not be regarded as an admission of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908). (2) Every such inquiry referred to in sub-section (1) shall be deemed to be a judicial proceedings within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). 23. In VODAFONE ESSAR SOUTH LTD VS. UNION OF INDIA', 2009 (237) ELT 35 (BOM) it was held by Division Bench of Bombay High Court that without adjudication of liability, during the course of an investigation the assessee should not be forced to pay any amount. Similar view was taken by Delhi High Court in MAKEMYTRIP (INDIA) PVT. LTD. VS. UNION OF INDIA, 2016 (44) STR 481 DEL and it was held that amount collected during investigation proceeding without any adjudication is liable to be refunded. In CENTURY KNITTERS (INDIA) LTD. VS. UNION OF INDIA', 2013 (293) ELT 504 (P H) it was held that any amount illegally collected cannot be retained without issuance of show cause notice and adjudication of liability and such amount is liable to be refunded. Similar view was taken in CONCEPTS GLOBAL IMPEX VS. UNION OF INDIA, 2019 (365) ELT 32 (P H). 24. In the instant case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as impleaded them in the writ petition. Therefore, the same being a question of fact cannot be adjudicated in a summary proceeding under Article 226 of the constitution of India. 27. Before parting with the issue we would like to state that no one in a society governed by rule of law can take resort to a course of action not permissible in law. A Statutory power has to be exercised reasonably and in good faith, and for the purpose for which it is conferred. The power vested in any Authority by law has to be exercised in consonance with the spirit as well as letter of the Act. The broader the sweeper ambit of the power, the more caution and circumspection is required while invoking such power. A statutory power has to be exercised within a system of controls and has to be exercised by relevance and reason. It needs reiteration that a statutory power should not be exercised in a manner, so as to instill fear in the mind of a person. However, the facts and circumstances of the case the third issue is kept open to be agitated in an appropriate proceeding. IV Whether the Writ Petition filed by the Company, suffers from Delay or laches: 28. The rule which says that this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition. Therefore the fourth issue is answered by stating that there is no delay or laches in filing the writ petition. 31. The submission by the company that Green Finch is neither a non existent entity nor that the company has rightly availed input tax credit is concerned need not be adverted to in this proceeding, as the same is pending investigation. Article 265 of the Constitution mandates that collection of tax has to be by the authority of law. If tax is collected without any authority of law, the same would amount to depriving a person of his property without any authority of law and would infringe his right under Article 300A of the Constitution of India as well. In the instant case, the only provision which permits deposit of an amount during pendency of an investigation is section 74(5) of CGST Act, which is not attracted in the fact situation of the case. Therefore, it is evident that amount has been collected from Company in violation of Article 265 and 300-A of the Constitution. Therefore, the contention of the Department that amount under deposit be made subject to the outcome of the pending investigation can not be accepted. The Department, therefore, is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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