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2023 (12) TMI 738 - HC - GSTRefund of the amount that was made through its cash ledger - amount was coercively recovered by from the Petitioner alongwith interest - conduct of search and seizure operation - HELD THAT - 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 its property and infringes its rights under Article 300A of the Constitution of India. In the facts 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 complied with in the present case. It is not disputed that any voluntary deposit in Form GST DRC-03 is to be followed by an acknowledgement accepting the payment as being voluntarily made by issuance in Form GST DRC- 04. The respondents, admittedly, have not issued Form GST DRC-04 as required under the CGST Rules. This Court also relied upon the judgment passed by the Gujarat High Court in M/s Bhumi Associate v. Union of India 2021 (2) TMI 701 - GUJARAT HIGH COURT 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 petitioner s claim for refund is allowed and the respondents are directed to forthwith process the same - petition allowed.
Issues Involved:
1. Refund of coercively recovered amount. 2. Validity of deficiency memos. 3. Requirement of adjudication of SCN for processing refund claims. 4. Compliance with procedural rules under CGST. Summary: 1. Refund of Coercively Recovered Amount: The petitioner sought a refund of Rs. 2,30,00,000/- allegedly coercively recovered during a search operation by the GST Anti-Evasion department. The court noted that the petitioner was coerced to make the deposit during the search and inspection proceedings, which extended beyond normal business hours. The court emphasized that any amount collected without authority of law infringes the petitioner's rights under Article 300A of the Constitution of India. The court concluded that the deposit was made under duress and not voluntarily, thus directing the respondents to process the refund claim forthwith. 2. Validity of Deficiency Memos: The petitioner contended that the second set of deficiency memos issued by the respondents were in contravention of the guidelines provided in the Circular dated 18.11.2019, which stipulates that no second deficiency memo should be issued unless the earlier deficiencies remain unrectified or any other substantive deficiency is noted subsequently. The court did not find it necessary to adjudicate this issue separately since the refund was directed to be processed. 3. Requirement of Adjudication of SCN for Processing Refund Claims: The petitioner argued that the adjudication of the Show Cause Notice (SCN) dated 23.06.2022 is not a pre-requisite for processing the refund claims. The court held that since the deposit was involuntary, the respondents should process the refund claim without waiting for the adjudication of the SCN. The court clarified that it has not decided anything on the merits of the SCN or the petitioner's liability to pay GST. 4. Compliance with Procedural Rules under CGST: The court noted that the requisite procedure under Rule 142 of the CGST Rules was not complied with by the respondents, as no acknowledgment in Form GST DRC-04 was issued following the deposit made by the petitioner. This non-compliance further supported the conclusion that the deposit was not voluntary. Conclusion: The court allowed the writ petition, directing the respondents to process the refund claim of Rs. 2,30,00,000/- and clarified that the respondents are not precluded from taking necessary steps in accordance with the law to protect the interest of the Revenue. The court did not adjudicate other issues raised by the petitioner, as the primary relief was granted.
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