2020 (10) TMI 670 - HC - GST

Refund of GST amount deposited during investigation - Search and seizure proceedings initiated by the 1st respondent against the petitioner under Section 67 of GST Act - Revenue Sharing - compensation to the Petitioners for causing damage to the reputation of the Petitioners - HELD THAT - The provisions of the Act like inspection of the premises, powers of arrest and summons to produce documents have been incorporated with the aim to prevent evasion of GST at the hands of the unscrupulous taxpayers. Observation of mine would not be connected with the act of the petitioners as it is a general observation. If at all, the residences of the petitioners were visited by the officers of the GST, they could have produced on record the video recording, as it cannot be expected that the petitioners, who are Managing Director and Director of a Media Company would not have installed cameras outside their houses - This Court during the course of the hearing specifically asked the learned senior counsel for the petitioners as to whether the cheque has been encashed or not. On instructions, he said that there is no such information with the same. Thus the statement of the Mr.Sreelal Warrier that the cheque has not been presented on the perpetual request for the time being remained unrebutted. To interference in the process issued for auditing of the books as well as order of seizure of the documents would help the department in co-relating the entries in the documents and at the time of auditing of the account. The procedure for taking further action has been prescribed under Chapter 15 of 2017 Act regarding the determination of the tax not paid, short paid, erroneously refunded, input tax credit wrongly availed, utilized etc., and Section 74 deals with short payment of tax or not paid or erroneously refunded or input tax wrongly availed or utilized for any willful misstatement of suppression of the facts. It would be too premature to comment upon the act of the respondents and cannot be said to be against the provisions of the statute or misuse, warranting interference under Article 226 of the Constitution of India. It would not be appropriate for this Court to form an opinion with regard to the alleged conduct of the petitioners which is not supported by any material to prima facie bring the case within the realm of judicial review - Petition dismissed.

Summary

Issues:
1. Alleged arbitrary, illegal, and malafide action by respondents under Section 67 of the CGST Act, 2017.
2. Violation of personal liberty of petitioners by respondents.
3. Extortion of Rs. One Crore from petitioners.
4. Search and seizure proceedings initiated by the 1st respondent.
5. Liability of petitioners to pay GST on revenue share retained by the LCO.
6. Compensation for damage to reputation and mental agony of petitioners.
7. Maintainability of the writ petition.

Analysis:

Issue 1:
The petitioners approached the court against the alleged arbitrary and illegal actions of the respondents, particularly the Assistant Commissioner-GST, under Section 67 of the CGST Act, 2017. The petitioners claimed that their personal liberty was violated when they were taken into custody, and an amount of Rs. One Crore was extorted from them. The respondents' actions were challenged as being unauthorized and against the guidelines issued by the Central Board of Indirect Taxes and Customs.

Issue 2:
The petitioners argued that the actions of the respondents, including the search and seizure proceedings initiated by the 1st respondent, were not in accordance with the provisions of the Act. They contended that the seizure of documents was not done by a proper officer and that the statutory authority must operate within the boundaries of the law.

Issue 3:
The petitioners disputed their liability to pay GST on the revenue share retained by the Local Cable Operator (LCO). They sought a declaration that they were not obligated to pay GST on the revenue share and highlighted that they had not defaulted on any statutory responsibilities.

Issue 4:
The petitioners also sought compensation for the damage caused to their reputation and mental agony due to the actions of the respondents. They claimed that the respondents' actions were without authority of law and that the notices issued did not specify the provisions of the Act under which they were summoned.

Issue 5:
An objection was raised regarding the maintainability of the writ petition, arguing that the actions of the respondents were within the powers granted by the Act. It was contended that the officers empowered under Sections 70, 69, and 71 of the Act had the authority to issue summons, conduct audits, and access business premises.

Conclusion:
The court dismissed the writ petition, finding no merit in the arguments presented by the petitioners. The court held that the provisions of the Act aimed to prevent GST evasion by unscrupulous taxpayers. It noted that interference with the auditing process and document seizure would aid the department in correlating entries and determining tax liabilities. The court found no grounds for judicial review based on the evidence presented and concluded that it was premature to comment on the alleged conduct of the petitioners without sufficient material support.