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TMI Blog2021 (4) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... emanding any amount from the petitioner except by following the due process of law and a further direction to refund a sum of Rs. 2 crores along with statutory interest under the provisions of the Central Goods and Service Tax Act, 2017 (in short 'Act') and return the documents seized at the time of search on 22.10.2019. Post amendment, pleadings have been completed and detailed submissions of the parties have been heard. 3.The petitioner is registered as a Small Scale Industry under the MSME Act and is an assessee under the provisions of the Goods and Service Tax Act, 2017 (Act). An investigation was conducted in the premises of the petitioner on 22.10.2019 and various documents and registers seized. In the course of that investigation, a statement was recorded from one S.A.Kumar, who has also deposed to the affidavit filed in support of this writ petition, to the effect that the petitioner has not discharged its GST liability correctly. In the statement, he accepts the mistakes in completion of GST and assures the respondents that the liability would be discharged at the earliest with applicable interest. A scheme of payment has also been set out for the tax remaining unpaid, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... office has not provided us with the workings of actual determination of tax liability despite receiving frequent follow up calls from your office on enquiry of discharge of tax liability for which we are not bound to make any payment as per the provisions of CGST Act, 2017; 15) Based on the above facts, we would like to bring to your notice that Shri.S.A.Kumar signed the MAHAZAR and paid an amount of Rs. 2,00,000/- under the influence of coercion, threat and in a state of panic without giving an opportunity to read the content of the Mahazar and without providing the workings of the actual determination of tax liability; ........ 6. Thus, the petitioner has stated that it has no liability to tax, that the MD and officials were forced to accept liability to tax and the admission was, by no means, voluntary. The petitioner has also made serious allegations about the high handedness of the authorities during the conduct of search and the scant regard expressed for the sentiments of the family of the Managing Director and employees of the petitioner. They state that the visit was on the eve of Deepavali and investigation was carried out in an intrusive and acrimonious fashion. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion leading to the issuance of show cause notice, will take, not less than six months. It is in these circumstances that the petitioner presses the mandamus seeking refund of the amount of Rs. 2 crores paid at the time of investigation. According to the respondents, the amounts have been paid in line with the schedule of payments voluntarily suggested by the petitioner and as such there is no justification whatsoever for seeking such refund. Though I am only concerned with the legal issue of whether the collection of any amount during the process of investigation is statutorily permitted, some facts would have to be adverted to in deciding this issue. 10.The petitioner is a dealer in pulses, dhals and flour and manufactures food products, grain mill products and dhal. The dispute revolves around the short compass of whether the products sold are branded or unbranded. If unbranded, then there is no liability to GST. While the petitioner use the trade marksShivam, Trishul, Cycle and Nandhi, they claim that these are not registered marks and moreover that the petitioner voluntarily forgoes any actionable claim or enforceable right in regard to the usage of the aforesaid marks. An af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to the condition that the grounds relied upon in the said statement, except the ground of fraud, or any wilfulmisstatement or suppression of facts to evade tax, for periods other than those covered under sub-section (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under subsection (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsection (1) states that if the officer feels that the aforesaid circumstances arise in any case, he shall issue a show cause notice to the person concerned calling for an explanation in this regard and also proposing interest under Section 50 and penalty equivalent to the tax proposed to be levied. Sub-section (2) states that the notice shall be issued at least six months prior to the time limit specified in Section 74(10) for issuance of the order of assessment. 14.Sub-section (3) states that where a notice has been issued under subsection (1), it shall be supported by a statement containing the details of tax unpaid, short paid or erroneously refunded or ITC wrongly availed or utilized for such purpose other than those covered under sub-section (1) of Section 73. According to sub-section (4), the statement referred to is the same as in subsection (3) of Section 73, however additionally mentioning as a pre-condition the alleged fraud, willful misstatement or suppression of facts with the intention to evade tax. 15.Sub-section (5) read with sub-section (6), which is critical to the present case, provides the first opportunity to an assessee for an amicable settlement of an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere. This consciously opens the door for a contest as the assessee, had it been inclined to settle matters amicably, would/should have chosen the avenues presented to it under sub-sections (5) and (8) and (11) of Section 74. Henceforth, an adversarial and contested position emerges. This, in my understanding, is the scheme of assessment under Section 74. 19.The remittance under Section 74(5) is in terms of Rule 142 of the Central Goods and Services Tax Rules, 2017 (in short 'Rules') and has to be made in Form GST DRC-03. Both the Rule and the Form (the latter as executed by the petitioner) are extracted below: 142. Notice and order for demand of amounts payable under the Act.-(1) The proper officer shall serve, along with the (a) notice issued under section 52 or section 73 or section 74 or section 76 or section 122 or section 123 or section 124 or section 125 or section 127 or section 129 or section 130, a summary thereof electronically in FORM GST DRC-01, (b) statement under sub-section (3) of section 73 or sub-section (3) of section 74, a summary thereof electronically in FORM GST DRC-02, specifying therein the details of the amount payable. (1A) The proper officer shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 124 or section 125 or section 127 or section 129 or section 130 shall be uploaded electronically in FORM GST DRC-07, specifying therein the amount of tax, interest and penalty payable by the person chargeable with tax. (6) The order referred to in sub-rule (5) shall be treated as the notice for recovery. (7) Where a rectification of the order has been passed in accordance with the provisions of section 161 or where an order uploaded on the system has been withdrawn, a summary of the rectification order or of the withdrawal order shall be uploaded electronically by the proper officer in FORM GST DRC-08. FORM GST DRC- 03 [See rule 142(2) & 142 (3)] Intimation of payment made voluntarily or made against the show cause notice (SCN) or statement 1. GSTIN 33AACCN9858N1ZR 2. Name SHRI NANDHI DHALL MILLS INDIA PRIVATE LIMITED 3. Cause of Payment Voluntary 4. Section under which voluntary payment is made 74(5) Voluntary 5. Details of show cause notice, if payment is made within 30 days of its issue Reference No.: N.A. Date Of issue : N.A. 6. Financial Year 2017-2018 7. Details of payment made including interest and penalty, if applicable (Amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue that the collection of amounts in advance has attained statutory sanction, provided the same are voluntary in Form GST-DR03. 23. Thus, according to the revenue, the remittances made by the petitioner during investigation in terms of Section 74(5) amount to 'self- ascertainment'. Having remitted two instalments of the tax as per its own ascertainment, it cannot now pray for a mandamus seeking refund of the amount. After all, revenue argues, the petitioner is well aware of the fact that its transactions are liable to tax and any remittances effected would be adjusted against final tax liability. 24. The basis of this argument is flawed as I am not in agreement with the submission that Section 74(5) is a statutory sanction for advance tax payment, pending final determination in assessment. In my view, this is contrary to the scheme of assessment set out under Section 74, as I have noticed in paragraphs 12 to 16 above. 25. The ratio of the decisions relied by the petitioner and several more besides, are to the effect that no collection can be insisted upon prior to a final determination of liability being made. These decisions, in my view, still hold the field. What Section 74( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows: 16. We are clear in our minds and from the scheme of the Act and the Law as a whole that coercive measures, including effecting any arrest, would arise only when investigation has been completed and on launching the prosecution. If the prosecution is a criminal prosecution, then, there is no question of deviating or defeating from the Criminal Law. The Criminal Law contains several provisions including protective measures, which would enable the Petitioners to resist any arrest, as apprehended. In the scheme of the Criminal Law and particularly the Finance Act, 1994 as well, if it contains any penal provisions, it is not as merely because the investigations are underway that the arrest would be effected. Eventually, all that the Respondents are presently contemplating is to investigate the matter. The Petitioners do not dispute the right to investigate and in accordance with law. That they have already attended the offices of the concerned Respondents and once the statement of the Petitioners was recorded goes without saying that on further summons being issued and on called upon to attend the Officers of the Respondents, they will attend and co-operate in these investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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