2019 (5) TMI 895 - HC - GST

Allegation of indulged in Bill Trading activity - offence u/s 132 of GST - Seizure of records and documents - Production of copies of the documents and records seized during the inspection as well as copies of statements recorded by the inspecting authorities - Whether the petitioner is entitled to a mandamus as prayed for in regard to supply of the documents and statements sought for by it in the light of the provisions of the Act? - HELD THAT - The Act provides for an assessment to be made after notice to be issued to the assessee - In the present case, the petitioner/assessee has been filing monthly returns regularly. This is not disputed. However, the Department apprehended that the petitioner was engaging in bill trading activities and launched an investigation in the premises to verify the business activities of the petitioner and its compliance with the provisions of the Act. The main prayer of the petitioner is for furnishing of copies of documents and records seized from its premises on 15.10.2018, 16.10.2018 17.10.2018. Thus, if the Department was of the view that this prayer was not liable to be granted for reasons that the documents were sensitive or such production would prejudice its interests, it ought to have said so in counter. In the absence of any such averment I must only conclude that there is no such apprehension in the mind of the Department and the prayer of the petitioner is thus, liable to be accepted. Copies of the documents sought will be furnished within a period of two (2) weeks from the date of receipt of a copy of this order upon remittance of copying charges. - the issue decided in favor of petitioner. Whether the interim protection sought for to prevent the respondents from invoking the powers under Section 69 of the Act read with Section 132 thereof in respect of the petitioner is liable to be granted? - HELD THAT - In the present case, the Department does not dispute that action was intended or envisaged in the light of Section 132 of the CGST Act, the counter fairly stating that the provisions of Section 132 of the CGST Act were shown to the Assessee. There is thus no doubt in my mind that the Department intended to intimidate the petitioner with the possibility of punishment under 132 and this action is contrary to the scheme of the Act. While the activities of an assessee contrary to the scheme of the Act are liable to be addressed swiftly and effectively by the Department, (the statute in question being a revenue statute where strict interpretation is the norm), officials cannot be seen to be acting in excess of the authority vested in them under the statute - the power to punish set out in Section 132 of the Act would stand triggered only once it is established that an assessee has committed an offence that has to necessarily be post-determination of the demand due from an assessee, that itself has to necessarily follow the process of an assessment - the issue decided in favor of petitioner. Whether the petitioner's request for a direction to the respondents to complete adjudication and make an assessment after following the due process of law is liable to be accepted? - HELD THAT - The Issue is allowed, directing the respondents to conclude the process of adjudication within a period of twelve (12) weeks from today, after issuing show cause notice to the petitioner setting out the proposals for assessment, affording full opportunity to the petitioner to respond to the same and advance submissions in person, and pass a reasoned and speaking order, in accordance with law. Petition allowed.

Summary

Issues Involved:
1. Entitlement to mandamus for supply of documents and statements.
2. Interim protection against coercive actions under Section 69 of the CGST Act.
3. Direction for respondents to complete adjudication and assessment following due process.

Issue-wise Detailed Analysis:

1. Entitlement to Mandamus for Supply of Documents and Statements:
The petitioner, an assessee under the CGST Act, 2017, faced an investigation starting from 15.10.2018, resulting in the seizure of documents and records. Despite repeated requests, the petitioner was not provided with copies of these documents or statements recorded during the investigation. The court noted that Section 67(5) of the CGST Act allows withholding documents if it prejudices the investigation, but the respondents did not claim such prejudice in their counter affidavit. Therefore, the court directed the respondents to provide copies of the seized documents and statements within two weeks upon remittance of copying charges. This issue was resolved in favor of the petitioner.

2. Interim Protection Against Coercive Actions Under Section 69 of the CGST Act:
The petitioner alleged harassment and intimidation by the department, including threats of arrest under Section 69 of the CGST Act. The court emphasized that punishment under Section 132 of the CGST Act requires a determination of the offence post-assessment. It referenced the Delhi High Court's decision in Make My Trip (India) Pvt. Ltd. v. Union of India, which was upheld by the Supreme Court, stating that arrest powers should not be used without following due process. The court found the department's actions premature and contrary to the scheme of the Act, granting interim protection to the petitioner. This issue was also resolved in favor of the petitioner.

3. Direction for Respondents to Complete Adjudication and Assessment Following Due Process:
The petitioner sought a directive for the respondents to complete the adjudication process and make an assessment in accordance with the law. The court directed the respondents to issue a show cause notice, provide the petitioner an opportunity to respond, and complete the adjudication process within twelve weeks. The court clarified that its observations were limited to the procedural issues and would not prejudice the final assessment. This issue was resolved in favor of the petitioner.

Additional Observations:
- The court rejected the department's request to direct the petitioner to deposit a sum as security, stating that a statement is not a substitute for an assessment.
- The court highlighted Section 83 of the CGST Act, which allows for provisional attachment of property to protect revenue interests, suggesting that the department could use this provision if necessary.

Conclusion:
The writ petition was allowed, directing the respondents to provide the requested documents and statements, granting interim protection to the petitioner, and instructing the respondents to complete the adjudication process within twelve weeks. The court emphasized adherence to due process and statutory provisions in the investigation and assessment under the CGST Act.