TMI Blog2023 (12) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case, it is accepted that the deposit was made by the petitioner under duress and compelling circumstances. The search operations started at around 3:45 p.m. on 20.10.2021 and went way beyond the normal business hours, that is, up to 00:30 a.m. on 21.10.2021. It is not in doubt that a tax payer can voluntarily pay tax prior to issuance of the Show Cause Notice in terms of Section 73(5) of the Act. In terms of Section 73(6) of the Act, in case a person chargeable with tax before service of notice under Section 73(1) or before giving any statement under Section 73(3) of the Act, makes a voluntary payment of tax with interest, the proper Officer is not to serve any notice in respect of tax so paid or any penalty payable under the provisions of the Act or the CGST Rules made thereunder. The provision is clearly for the benefit of the tax payer who voluntarily pays tax prior to issuance of any Show Cause Notice and, thus, absolves himself of any liability to pay the penalty. These provisions do not empower the Department to compel the tax payer to pay any tax. It is also important to note that the requisite procedure under Rule 142 of the CGST Rules, has also been com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. II(3)GST East/MCIE/Range 161/Refund/Sapphire Intrex Ltd./271/2022 dated 17.10.2022 (enclosed as ANNEXURE-14 to the writ petition) issued by the Respondent No. 5; and/or e) Issue a writ of mandamus or any other appropriate writ or order or direction in the nature thereof, directing the Respondent No. 2 to process refund claims bearing ARN AA070822010019L (for an amount of Rs. 36,35,360/-) and AA070822010080W (for an amount of Rs. 1,93,64,642/) both dated 04.08.2022 filed by the Petitioner and grant refund expeditiously in a time bound manner; and/or f) Issue such further orders and other reliefs as the nature and circumstances of the case may require. 2. The petitioner is a public company engaged in supply of services such as trading in shares securities, renting of immovable properties, commission, and brokerage, etc, in New Delhi. The petitioner is registered under the Central Goods and Services Tax Act, 2017 (hereafter the Act ) with registration no. 07AAECS4651G1ZD. 3. It is the petitioner s case that search operation was conducted at the premises of the petitioner on 20.10.2021, by the officers of GST Anti-Evasion department, under Section 67(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount claimed does not exceed two lakh rupees, certification under Rule 89(2)(m) otherwise-not uploaded March 2019-2020 ARN AA0707220334768 Dated 13.07.2022 C.No.GST/EAST/MCIE/R-161/Refund/Sopphire Intrex Ltd/271/2022 28.07.2022 b. Documents in support of the claim are not sufficient. 8. The petitioner, in response to the first set of deficiency memos filed two separate rectified refund claims dated 04.08.2022 amounting to ₹36,35,360/-(period February 2019-2020) and ₹1,93,64,642/- (period March 2019-2020), enclosing along with DRC-03 dated 20.10.2021, under-protest payment letter dated 21.10.2021, SCN dated 23.06.2022, and the copy of certificates issued by a CA certifying that the amount paid the petitioner has not been claimed/adjusted against the regular liability of GST, and also not availed as input tax credit. 9. Respondent no. 2 thereafter issued second set of deficiency memos dated 22.08.2022 (in FORM GST RFD-03) under Rule 90(3) of the CGST Rules allegedly pointing out the same deficiencies as were pointed out in the first set of deficiency memos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel further contended that non-issuance of acknowledgement from the proper officer in FORM GST DRC-04 under Rule 142(2) of the CGST Rules vitiates the stand that the said payment was voluntary and the respondents are liable to refund the said amount, which was coercively recovered during the search proceedings along with interest. [ Ref: Vallabh Textiles v. Senior Intelligence Officer and Ors. :2022 SCC OnLine Del 4508] 16. Third, the learned counsel submitted that the impugned second deficiency memos both dated 22.08.2022 issued by the respondents are in contravention of the paragraph 11 of the Circular dated 18.11.2019 as the petitioner had rectified the deficiencies mentioned in the first deficiency memos both dated 28.07.2022 by attaching the relevant documents. The learned counsel submitted that the said circular issued by the CBIC stipulates that no second deficiency memo is to be issued in respect of refund application filed afresh, after rectification of deficiencies, unless the earlier deficiencies remain unrectified, or any other substantive deficiency is noted subsequently, and the same is binding on the respondents. [ Ref: Commissioner of Central Excise, Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel submitted that the refund claims filed by the petitioner are not arising out of any adjudication order and therefore, the time limit to file such refund claims cannot be calculated from the date of passing of an adjudication order. 20. Lastly, the learned counsel submitted that the letter dated 17.10.2022, which in effect rejects the refund claims filed by the petitioner, without giving the petitioner any show cause notice and/or any opportunity of being heard, is illegal. It is issued in violation of the principles of natural justice and contrary to the binding Circular dated 18.11.2019. He stated that the adjudication of the SCN dated 23.06.2022 is immaterial and not a pre-requisite for processing of the refund claims filed by the petitioner under the residuary category as the refund is not arising as a result of any order or proceedings. He submitted that GST laws do not mandate that in case a show cause notice is issued to an applicant, his refund claims cannot be processed unless the said notice is adjudicated. Furthermore, it was also submitted that petitioner is not required to furnish an order (to evidence adjudication of the show cause notice) in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r against the deficiency memos. Conclusion 27. The first and foremost question to be addressed is whether the petitioner is entitled to the refund of the amount that was made through its cash ledger. As noted above, according to the petitioner, it was coerced to make the deposit of tax through the cash ledger vide Debit Entry No. DC0710210203804 dated 20.10.2021 at 8:41pm while the search and inspection proceedings were continuing at the material time. 28. It is an admitted case that while the payment was made by the petitioner, it had not admitted the liability to pay the amount. It is also not in dispute that there is no adjudication of the liability and the Show Cause Notice demanding the recovery of GST and the appropriation of the amount of ₹2,30,00,000/- deposited by the petitioner was issued on 23.06.2022, that is, much after the said deposit. The amount was deposited during the course of investigation. The learned counsel appearing for the respondents does not deny that an assessee cannot be forced to pay any amount during the course of investigation. If any amount is collected without any authority of law, the same amounts to depriving the person of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and Ors.(supra) and held as under: 32. It is also important to note that the requisite procedure under Rule 142 of the CGST Rules has also not been complied with. Admittedly, the respondents have not issued any acknowledgement accepting the payment made by the petitioner in Form GST DRC-04 as required under the CGST Rules. In Vallabh Textiles v. Senior Intelligence Officer and Ors. (supra), a Coordinate Bench had held that failure to follow the prescribed procedure would also lead to the conclusion that the deposit made by the taxpayer was not voluntary. 33. This Court also relied upon the judgment passed by the Gujarat High Court in M/s Bhumi Associate v. Union of India: Manu/GJ/0174/2022, decided on 16.02.2021 and held that the directions issued by the Gujarat High Court had not been followed. The Central Board of Indirect Taxes and Customs ( CBIC ), has also issued directions emphasizing that tax must be collected only after following the due process of law. The relevant extract of the instructions dated 25.05.2022, are set out below: 3. It is further observed that recovery of taxes not paid or short paid, can be made under the provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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