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TMI Blog2025 (2) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... uffice to state, in paragraph No.2 of the impugned order, the learned Single Judge has noted that, the respondent has confined the writ petition for the relief of refund of the amount of Rs. 2,50,00,000/- keeping open the other contentions in the light of pending adjudication, initiated by issuance of show-cause notice. 3. The appellants had initiated proceedings during investigation of M/s Raj Chemicals, wherein the statement of one Vijay Kumar Gupta (one of the partners of M/s Raj Chemicals) was recorded under Section 70 of the CGST Act. The statement of Vijay Kumar Gupta had referred to supplies made by M/s Raj Chemicals to entities including the respondent herein, whereby invoices were raised without actual supply of any goods from M/s Raj Chemicals. 4. The case of the appellants is that, on an analysis of the e-way bills, it is revealed that the vehicles have not moved as evidenced by the RFID/fastag data. 5. A show-cause notice came to be issued on 30.11.2022 to the respondent. The case of the respondent before the learned Single Judge was, during the course of investigation and prior to issuance of show-cause notice, a forcible recovery was made which is being sought to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, Petitioner agreed under pressure to arrange ad hoc 1,00,00,000/- to pay as soon as the bank opens and agreed to come to Bengaluru for which summons would be issued. 8 31.07.2021 12:30 a.m. Late in the night, Statement was coercively signed and Panchnama signed wherein witnesses were not 2 people of good standing from the locality but the drivers of the Respondents. The Panchnama wrongly mentions the time as 11 30 pm 30-07-21. A-11-Part of SCN 9 31.07.2021 12:30 a.m. Summons issued to attend Bengaluru on 2nd August 21. The Petitioner requested that last 3 days have taken a toll on his health and he is exhausted, and he requested that he be allowed to attend after a few days. Which initially the officers agreed but constantly called the Petitioner on 2nd August 21 and directed him to come on 3rd August 21. B-Page 65 10 31.07.2021 12:30 p.m. As soon as possible, despite going through 2 days of mental and physical trauma, under the constant calls from the officer under their directions 1 crore paid through RTGS at the Bank. All through the Investigation the petitioner had no access to any legal consultation. Page 63 11 03.08.2021 Petitioner attends ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of investigation that had commenced even prior to issuance of show-cause notice at the stage of Sections 67 and 70 of CGST Act and hence, had sought for the refund of the amount(s). In fact, the respondent's case was also that, the supplies from M/s Raj Chemicals have been long standing transactions and such supply is evidenced by e-way bills; issue of invoices and proof of transport. It is also stated that, the show-cause notice issued does not exclude payments of Rs. 2,50,00,000/- which also strengthens the case of the respondent that the amount paid was not towards self-ascertainment. 8. The case of the appellants before the learned Single Judge was that, an information of evasion of tax was gathered by the Officers of DGGI while conducting investigation in respect of M/s Raj Chemicals. The statement of Vijay Kumar Gupta was recorded which would indicate the role of the respondent in tax evasion constituting receipt of invoices without actual supply of goods. It was specifically asserted that, the payments made by the respondent during investigation through Form GST DRC-03 dated 03.08.2021 as well as payment made under identical circumstances on 31.07.2021 were voluntary and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CGST Act states that, "74. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful misstatement or suppression of facts.- (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (emphasis supplied) 23. In terms of Section 74 (8), once the person chargeable with tax pays tax, interest and penalty "... all proceedings in respect of the said notice shall be deemed to be concluded." 24. It must be noted that the payments made by the petitioner of Rs.1.00 crore on 31.07.2021 and further amount of Rs.1.50 crores on 03.08.2021 and even if 'DRC-03 declaration' is taken note of, it cannot be stated that in the present case, there is self-ascertainment. For the purpose of self-ascertainment, it is clear that it amounts to a voluntary determination by the assessee himself as regards the liability of tax. In light of the stand taken in the Affidavit dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants would contest the impugned order passed by the learned Single Judge by stating that, an information was gathered by the Officers of the DDGI, BZU, Bengaluru in respect of M/s Raj Chemicals that they are issuing fake GST invoices without supply of goods in violation of the provisions of CGST Act and accordingly, a search was conducted at the premises of M/s Raj Chemicals. During the search operation, the statement of Vijay Kumar Gupta was recorded wherein he has confirmed that they have not received any goods from the entities, but only GST invoices without actual receipt of goods. He also received commission of 0.5% of the taxable value for issuing invoices without supply of goods. The e-way bills were issued on the basis of vehicle details provided by the brokers and since the goods have not actually been supplied, the vehicles would not have been moved. So, the supplies purported to have been made by M/s Raj Chemicals to the entities located outside Delhi and Haryana from April 2020 to June 2021 are bogus and invoices have been raised without actual supply of goods, which includes M/s Kesar Colour Chem Industries (the respondent) as one of the entities which has receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and interfered with by the learned Single Judge. 20. He also stated that, the learned Single Judge had also failed to appreciate that Rule 142 (1) (a) of the CGST Rules which regulate the procedure in the case of voluntary payment under Section 74 (5) of the CGST Act, a notice was issued to the respondent as the respondent had made payment in part (voluntarily) and in response to the same, the respondent gave a reply dated 24.11.2022 denying the entire liabiliby including the voluntary payment made by him and hence, a show-cause notice was issued for the entire liability by proposing to appropriate the amount which was already paid voluntarily by the respondent. 21. Sri. Kamath has drawn our attention to the affidavit filed along with the writ petition by the respondent to state that, the plea of coercion of the respondent was primarily related to the statement recorded by the appellants' Officers and not in respect of the payment made voluntarily by the respondent. In other words, to say that statements were taken under coercion is different from the fact that the respondent was coerced to deposit the amount of Rs. 2,50,00,000/-. Since no such stand has been taken that the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is subject to judicial review. She also stated, the case of the appellants that statement of Vijay Kumar Gupta of M/s Raj Chemicals was recorded, cannot be accepted by the respondent as no such statement was provided to the respondent at the time of investigation. Whether such a statement is relevant or not need to be determined at the stage of investigation. In any case, the respondent had the occasion to obtain confirmation letter dated 14.12.2021 from M/s Raj Chemicals which prove that the entire transactions of sale and purchase are genuine. 24. She highlights the fact that the appellants visited the respondent on 29.07.2021 in the morning. Subsequently, the investigation continued for 48 hours wherein the respondent was detained illegally in the Office by the Investigation Department for almost two days without any rest or respite. The investigation was not completed at 11:30 p.m. on 30.07.2021 as in fact the appellants had left at 12:30 a.m. on 31.07.2021 after forcibly taking an undertaking from the proprietor to arrange funds and make the payment of Rs. 1,00,00,000/- next day morning, else the proprietor would be arrested. The payment was made within 12 hours. The investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation of ascertainment of liability being paid by the taxpayer, the Officer would make available an acknowledgement in DRC 04 on online portal. Neither the respondent had intimated the payment to the Officer nor the Officer/appellants provided any DRC 04 which aspect had been noted by the learned Single Judge. In support of her submission that specific instructions given by the GST Investigation Wing clearly lays down how the investigation is to be conducted and no deposit of tax can be made voluntarily, she has relied upon the judgment of the Delhi High Court in the case of Lovelesh Singhal -Vs.- Commissioner, Delhi Goods and Services Tax and others [(2024) 121 GSTR 422 (Delhi)]. She states, in the given facts, the present appeal filed by the appellants is liable to be rejected. Analysis: 27. Having heard the learned counsel for the parties and perused the record, the learned Single Judge has allowed the writ petition on a finding that the deposit of the amount of Rs. 1,00,00,000/- on 31.07.2021 and Rs. 1,50,00,000/- on 03.08.2021 cannot be treated as a self-ascertainment as the element of voluntariness is absent. According to the learned Single Judge, the sine qua non of self- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the amount remain deposited with the appellants? The answer has to be "NO", more so when it is concluded by the learned Single Judge that the same was not voluntary, with which we agree. 31. Having said that, insofar as the affidavit dated 10.08.2021 is concerned, the plea of Sri. Kamath is, such an affidavit was not given to the Authorities and it is for the first time filed along with the writ petition with an intention to resile out of the statements made to the appellants cannot be relied upon, is unsustainable. This we say so because, the only stand of the appellants in the appeal/affidavit is, the same is belated. If that be so it is noted, the affidavit is dated 10.08.2024 i.e., one week after the statement dated 03.08.2024 was made. One week is not a large period to be considered as fatal/belated. Learned counsel for the respondent is justified in relying upon the judgment of the Delhi High Court in the case of Lovelesh Singhal (supra), wherein the Delhi High Court has, in paragraphs No.21 to 24, 28 to 32, 35 and 36, held as under: "21. The next question to be examined is whether the petitioner is entitled to reversal of the ITC that was debited from his ECL. As noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o issuance of notices (either under section 73 or section 74 of the CGST Act) to avail of the benefit of absolving themselves from the liability to pay penalty either in entirety or in excess of 15 per cent. of tax payable as the case may be; in cases where the said tax is collected under coercion, the same is required to be returned. 29. It is not necessary to examine in detail any controversy whether such payments were made voluntarily. Clearly, where a taxpayer turns around and states that the payments had not been made involuntarily and the circumstances prima facie indicate so, the taxpayer must be granted the benefit of withdrawing such payments. Obviously, in such cases, the taxpayer would forfeit immunity from levy of any penalty and the concerned authorities are not precluded from proceeding against the taxpayer in respect of any default and to the full extent as permissible under law. 30. It is relevant to note that the payment of tax on a self-ascertainment basis would necessarily require acceptance of the grounds on which such payments had been made. In the present case, it would be necessary for the petitioner to acknowledge the underlying liability on account of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer in respect of such issues, either during the course of such proceedings or subsequently. 4. Therefore, it is clarified that there may not be any circumstance necessitating 'recovery' of tax dues during the course of search or inspection or investigation proceedings...". " 31. The judgment was sought to be distinguished by Sri. Kamath by stating the statements which were recorded in the relied upon case were in the midnight and it is on that basis, the Court has come to the conclusion that the deposits made were under coercion and duress. The said submission is not appealing. The Court need to look into the facts in totality to come to a conclusion whether there was threat and coercion resulting in the statements recorded and also the deposits made. On a cumulative reading of the facts of this case, we are of the view that the learned Single Judge is right in coming to a conclusion in paragraphs No.24 and 28 of the impugned order which we have reproduced above that the payments were recovery and were contrary to law. 32. Insofar as the submission of Sri. Kamath as the writ petition involved disputed question of facts, the same could not have been gone into in proceedings u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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