9911796707
TMI Blog2023 (4) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rishi Nagar, Ludhiana. They detained Mr. Avtar Singh (78 years old), Director and Mr. Sahil Sharma, Chartered Accountant of the petitioner till 1.00 A.M. They were released on the condition of deposit of Rs. 2.15 crores, which were deposited through reversal of Input Tax Credit (for short ITC) from electronic credit ledger and surrender of refund already applied. The respondents did not supply copy of Panchnama, copy of resumed record and electronic gadgets, which are necessary to file returns and comply with the requirement of banks. In this backdrop, the present petition has been filed. The petitioners have taken a plea that as per Section 16 of the CGST Act, 2017 read with Rule 36 of CGST Rules, 2017, a registered person may avail Input Tax Credit (ITC) of inputs which are used in the furtherance of business. The ITC under CGST is principally same with Cenvat Credit Scheme under Central Excise Act, 1944 read with Cenvat Credit Rules, 2004. The Cenvat Credit Rules recognized only two stage dealers i.e. first stage dealer and second stage dealer. There could be any number of manufactures, but Cenvat Credit could be availed on the basis of invoice of a manufacturer or first st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased goods were accompanied with E-way bill apart from invoice. As and when goods moved in a truck, Goods Receipt (for short 'G.R.') is issued by the transporter. As per petitioner, in every case, it has received copy of G.R. On 05.03.2020, when officers of the respondents searched factory premises of the petitioner, they seized all the documents lying there. A Panchnama dated 05.03.2020 was prepared, however copy thereof, was not supplied to the petitioner. The respondents, without counting stock lying in underground tanks, work in progress created artificial shortage of goods involving GST at Rs. 34,04,855/. Under the pressure of respondents, the petitioner vide challan dated 07.03.2020, deposited Rs. 34,04,855/- towards GST from Electronic Credit Ledger and Rs. 5,10,728/- towards penalty from Cash Credit Ledger. Vide letter dated 12.03.2020 (Annexure P-2), the petitioner had made a request to the respondents to supply copy of different documents, which were resumed during the course of search. Vide letter dated 16.06.2020 (Annexure P-3), the respondents directed the petitioner to submit voluminous documents, which included import and export documents of the last five years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... typed statement of the Director of petitioner-company to the effect that he would not claim pending refund of Rs.1 crore. On the basis of said statement, notice in the form of RFD-08 (Annexure P-17) was electronically issued on 16.01.2021 (Saturday) and reply, which was required to be filed within 15 days, was filed on 16.01.2021. The refund was rejected in RFD-06 (Annexure P-18) on 17.01.2021 (Sunday), however, no attachment of order rejecting the refund was uploaded on the portal. Finally, vide letter dated 22.03.2021 (Annexure P-19), the petitioner was informed that no separate order regarding rejection of refund had been passed and refund had been rejected on the basis of RFD-08 and RFD-09 filed on the portal. Thereafter, the petitioner, vide letter dated 23.03.2021 (Annexure P-20), again asked the respondents to supply copy of documents resumed on 05.03.2020 and 15.01.2021. The petitioner vide letters dated 23.03.2021/25.03.2021 and 23.03.2021 (Annexures P-21 and P-22), requested the respondents to refund a sum of Rs.1.15 crore and Rs.2.15 crores respectively. In this backdrop, the present petition has been filed seeking direction to the respondents to return the amount of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax prior to the issuance of show cause notice under Section 74 of the CGST Act. The Director of the petitioner-company had also undertaken to withdraw the refund application in lieu of liability to be quantified by officers of Anti-Evasions branch. On the basis of statement of the petitioner, RFD-08 was issued, in response to which, the petitioner filed its reply vide FORM-GST-RFD-09 dated 16.01.2021 stating that they want their refund amount because they want to deposit under GST search vide DRC-03. Accordingly, refund was rejected vide order dated 17.01.2021. The petitioner has alternative remedy of filing an appeal against the rejection order dated 17.01.2021. Finally, it has been clarified that the petitioner had deposited Rs.1.54 crores (Rs.0.39 crore through DRC-03 dated 07.03.2020 and Rs.1.15 crore through DRC-03 dated 16.01.2021). Since the amount has been voluntarily deposited by the petitioner, no case to return the same is made out, as the investigation is under process and necessary order under sub-section (9) and (10) of Section 74 would be issued after completing the same. When this case was taken up on 23.02.2023, learned counsel for the respondents had informed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimation of conclusion of proceedings. Since, the proceedings have not been completed and investigation was still going on, DRC-04 has not been issued to the petitioner. He has further states that the department is likely to conclude the enquiry proceedings and issue a show cause notice under Section 74 (1) of the CGST Act. The short question for consideration in this petition is, whether the amount paid by the petitioner on 16.01.2021, could be retained by the department without issuing the show cause notice under Section 74 (1) of the CGST Act that too after expiry of two years. A perusal of Section 74 (5) of the CGST Act shows that if, any person chargeable with tax wants to pay the amount of tax along with interest, before service of notice under Section 74 (1) of the Act, on his own ascertainment of such tax, or the tax as ascertained by the proper office, then he can deposit tax along with interest and inform the proper officer in writing of such payment. As per sub-section (6) of Section 74, proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search has ended and the concerned officers have left the premises of the assessee. The above instructions and observations have been made so that no unnecessary harassment is caused to the assessee. The Delhi High Court, while allowing Vallabh Textiles's case (supra), had observed that deposit of tax made by the assessee during search was not voluntary and it was without following the provisions of Section 74 of the CGST Act. The respondents were directed to return the amount along with simple interest at the rate of 6% per annum from the date of deposit till the date of payment. The ratio of the judgment passed by Vallabh Textiles' case (supra) is directly applicable to the facts of the present case. In the present case as well, from the date when the search was conducted and amount was deposited, no summons under Section 74 (1) of the CGST Act have been issued till date. Though the respondents can initiate proceedings under Section 74 (1) of the Act by issuing notice within the period of limitation, they cannot retain the amount of Rs.1.54 crore deposited by the petitioner, which as per respondent-department was voluntary. The amount was deposited during search and as as per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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