TMI Blog2023 (8) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... proposition of law that Section 74(5) of the Act cannot be considered as a statutory sanction for advance tax payment, pending final determination in the assessment because that would certainly be contrary to scheme of assessment as set out under Section 74 - Further, it is also the well established that no collection of tax from an assessee can be insisted upon prior to final determination of liability being made. Whether the deposit of sum Rs. 50.70 lacs which was made by the petitioner during the course of investigation, is to be considered as voluntary deposit of amount which had allegedly been claimed by it by way of ITC on the basis of purchases made by it from M/S Royal which are alleged to be false purchases? - HELD THAT:- The self ascertainment which is contemplated under Section 74(5) of the Act, 2017 is in the nature of self assessment and amounts to a determination by it which is unconditional and not as in the present case when shortly after depositing the amount Rs. 50.70 lacs, the petitioner approached the revenue for refund of the same. Such recovery is not permissible - Further, no crystalised liability was shown to be existing against the petitioner and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the date of deposit till the refund amount is released in its favour. With regard to the petitioner- M/S Mahavira Dyes Chemicals, who had deposited an amount of Rs. 45.65 lacs, the similar directions are issued and it is ordered that the respondents shall refund this amount along with interest 6 % per annum from the date of deposit till its realisation. Petition allowed. - HON BLE MS. JUSTICE RITU BAHRI AND HON BLE MRS. JUSTICE MANISHA BATRA Present : For the petitioner(s) : Mr. Deepak Gupta, Advocate. For the Respondents : Mr. Anshuman Chopra, Senior Standing Counsel. MANISHA BATRA , J . This common order shall dispose of two above mentioned petitions which have been filed under Article 226 of the Constitution of India by the petitioners making prayer for issuing writs of certiorari for quashing the orders dated 18.05.2021 whereby, the request of the petitioners of both petitions for grant of refund had been declined by respondent No. 1. They have also made prayer for issuing writs of mandamus thereby, directing respondent No. 1 to refund the amounts as mentioned in both these petitions. As common question of facts and law have arisen i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Service Tax Act, 2017 (for short-the Act) which were mandatory in nature had not been complied and principles of natural justice were violated. Hence, prayer had been made by the petitioner for setting aside the order rejecting the request made by it for refund of the amount of Rs. 50.70 lacs and also for further directing the respondents No. 1 to refund the above said amount. 3. In response to the notice of the petition, the respondents filed a joint reply by way of affidavit submitting therein that on receipt of a report regarding evasion of tax and availing of ITC by certain tax payers on the basis of fake transactions, from the Directorate General of Analytics and Risk Management, New Delhi (DGARM) in the year 2018 and on going through the data shared by the DGARM of tax payers who were involved in issuance of availment of fake ITC, the respondents had verified data of M/S Royal on GST portal which revealed that this firm had passed ITC amounting to Rs. 5,15,12,408/- within a short span of 13-15 months after getting itself registered in GST. On making enquiries, it was found that the premises of the firm were locked and no business activities were going on. The premises of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice in accordance with Section 74(1) of the Act and even till the date of filing of this petition, had not served any such notice upon it, therefore, the petitioner was certainly entitled to refund of the amount so paid which was not at all a voluntary deposit. To fortify his argument, learned counsel for the petitioner has relied upon the judgments passed by the Co-ordinate Benches of this Court in Century Metal Recycling Pvt. Ltd. vs. Union of India, 2009 (234) E.L.T. 234 (P H), Concepts Global Impex vs. Union of India, 2019(365) E.L.T. 32 (P H), Century Knitters (India) Ltd. vs. Union of India, 2013 (293) E.L.T. 504 (P H) and the judgment passed by the High Court of Gujarat in M/s Bhumi Associate vs. Union of India through the Secretary, (2021) 46 GSTL 36. 7. Per contra, the contention as raised by learned counsel for the revenue was that the petitioner in connivance with M/S Royal was found engaged in tax evasion of huge amount of money. There was ample material on record to show that it had taken invoices showing false purchases on bogus transactions from M/S Royal to cause loss to the revenue and had wrongly availed ITC on that amount. He submitted that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th tax, before service of notice under sub-Section (1) of Section 74 of the Act, pay the amount of tax along with interest payable and penalty equivalent to 50% of the tax on the basis of such tax as ascertained by the proper officer. Sub-Section (6) of Section 74 of the Act further provides that the proper officer on receipt of information qua deposit of amount of such tax and penalty shall not serve any notice under sub-Section (1) of Section 74, of the Act in respect of tax so paid or any penalty. 11. The grievance of the petitioner is that the respondents without issuing any show cause notice as required under Section 74(1) of the Act, straightaway recovered an amount of Rs. 50.70 lacs from it thereby, without following the adopted procedure and this action amounted to recovery without authority of law. Whereas, according to the respondents, the deposit had been made voluntarily vide GST DRC-03 on two different dates during the course of investigation which amounted to self-ascertainment in terms of Section 74 and it was hence urged that the petitioner could not make any prayer for issuing a mandamus seeking refund of that amount. The legal issue raised before us is as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged to be false purchases? According to the petitioner, since there was no assessment and even demand by way of issuance of show cause notice, the amount deposited by it could not be appropriated especially when it was not voluntary deposit. Interestingly, this petition is pending since the year 2021, admittedly no show cause notice has been issued against the petitioner in accordance with Section 74(1) of the Act till date. As asserted by the revenue, the payments of Rs. 50.70 lacs (Rs. 20 lacs+Rs.30.70 lacs) as made by the petitioner on two different dates constituted self ascertainment and triggered the provisions of Section 74(5) of the Act and were voluntary deposits. However, we are unable to accept this contention for the reasons that if that would have been actually the position, then the respondents must have contained material on record to show that the petitioner had in fact, accepted the ascertainment made by it and the revenue had applied its mind and arrived at the conclusion that self ascertainment by the assessee was adequate/inadequate. The petitioner on the contrary is shown to have consistently contested its liability to make payment of the tax. The dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein, a Co-ordinate Bench of this Court had observed that unless there was an assessment and demand, the amount deposited by the petitioners could not be appropriated. It was observed as under:- 13. As far as the amount deposited by the petitioners is concerned, case of the petitioners is that the same was deposited under coercion. Case of the respondents was that the same was deposited voluntarily. Whatever be the position, unless there is assessment and demand, the amount deposited by the petitioners cannot be appropriated. No justification has been shown for retaining the amount deposited, except saying that it was voluntarily deposited. In view of this admitted position, the petitioners are entitled to be returned the amount paid. 15. It is also relevant to mention also that this Bench has dealt with similar question in CWP-733-2021 titled as William E Connor Associates Sourcing Pvt. Ltd. vs. Union of India Others, decided on 04.05.2023, in CWP-23788-2021 titled as Diwakar Enterprises Pvt. Ltd. vs. Commissioner of CGST and Others, 2023(98) GST 322, decided on 14.03.2023 and in CWP-8035-2021 titled as Modern Insecticides Ltd. and Others vs. Commissioner, Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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