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TMI Blog2022 (3) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of investigation or not - petition filed by company suffers from delay or laches or not? Whether the amount paid during the investigation by the company was voluntarily paid, under section 74(5) of CGST Act? - HELD THAT:- Section 74 of the Act deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts - The payment is made as an extension of goodwill and bonafide. It is without prejudice to and with full reservation of our rights and contentions to seek necessary refund at the appropriate time and therefore should not be regarded as an admission of liability. Thus it is evident that payments have not been made admitting the liability. On the other hand, the company reserved its right to seek refund and made it expressly clear that payment of the amount should not be treated as admission of its liability. Besides the aforesaid, there is no material on record to establish that guidelines issued by division bench of High Court of Gujarat were followed - the issue is answered in the negative and it is held that the amount was not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court in exercise of its power under Article 226 of the Constitution may not enquire into belated and stale claims is not a rule of law but a rule of practice based on sound and proper exercise of discretion. The question of delay has to be decided in the facts of each case. The principle on which relief to a party on the grounds of delay and laches is denied is that rights may have accrued to others by reason of delay in filing the Writ Petition should not be allowed to be disturbed unless there is a reasonable explanation for the delay. The lapse of time is not attributable to any laches or negligence. In the instant case, the only provision which permits deposit of an amount during pendency of an investigation is section 74(5) of CGST Act, which is not attracted in the fact situation of the case - it is evident that amount has been collected from Company in violation of Article 265 and 300-A of the Constitution. Therefore, the contention of the Department that amount under deposit be made subject to the outcome of the pending investigation can not be accepted. The Department, therefore, is liable to refund the amount to the Company. Appeal dismissed. - HON BLE MR. JUSTICE AL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany incorporated under the provisions of Companies Act on 08.02.2016 and its Annual General Meeting was held on 31.03.2021 as per the official website of Ministry of Corporate Affairs portal. For the period under the investigation i.e. 2017-20, Green Finch provided 10,31,464 Temp DEs to the Company which in turn provided 2,91,75,667 food deliveries through them. 4. For providing aforesaid services, Green Finch raised valid tax invoices on the Company and charged applicable GST which was paid to Green Finch which deposited the same with the Department by filing GSTR-3B return. The Company availed input tax credit in terms of Section 16 of Central Goods and Services Tax, 2017 (hereinafter referred to as 'the CGST' for short). 5. An investigation was initiated by the Department with regard to services provided to the Company by third party service providers namely Green Finch by Director General of Goods and Services Tax Intelligence, Hyderabad Zonal Unit (hereinafter referred to as 'the DGGI' for short) on the ground that Green Finch was a non-existent entity and accordingly, the input tax credit availed by the Company and the GST component paid by it to Green Finch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of mandamus directing the Department to forthwith refund the amount of ₹ 27,51,44,157/- along with interest at the rate of 12% from the date of deposit till its refund. The petitioner also assailed the validity of Section 16(2)(c) of the CGST Act as well as Karnataka Goods and Services Tax Act, 2017 as unconstitutional on the ground that it is violative of Article 14, 19(1)(g) and 300A of the Constitution. 8. The appellants filed a detailed statement of objections in which inter alia it was pleaded that investigation was initiated in exercise of powers conferred under the Act relating to wrongful availment of input tax credit during which it was noticed that Green Finch, so also its suppliers were non-existent entities and in the course of such investigation, summons were issued to the Directors and Officers of the Company. It is also asserted that during the course of the investigation, the deposit of the amount was voluntarily made by the Company. 9. The learned Single Judge, by an order dated 14.09.2021 inter alia held that payment of the amount made by the Company during the course of investigation was involuntary. It was further held that Court does not desire to place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of aforesaid submissions, reliance has been placed on the decision of High Courts of Kerala and Gujarat in 'SURESH KUMAR P.P. VS. DY.DIRECTORATE GENERAL OF GST INTELLIGENCE (DGGI), THIRUVANANTHAPURAM', 2020 (41) G.S.T.L. 17 (KER.), 'COMMISIONER OF CCC ST HYD. - 11 VS. PEERS TECHNOLOGIES PVT. LTD.', 2019 (27) G.S.T.L. TIOL (TRI. HYD), 'CEGAT, SOUTHERN REGIONAL BENCH, MADRAS - S.P.A.M. KRISHNA CHETTIAR VS. COLLECTOR OF CUSTOMS AND CENTRAL EXCISE MADURAI', 1985 (22) E.L.T. 63 (TRIBUNAL). 12. On the other hand, Learned Senior Counsel for the company submitted that Greenfinch is a company in existence which is evident from the official website of the ministry of corporate affairs portal and has obtained GST registration from the Department. It is also pointed out that the aforesaid company has periodically filed its returns until September 2019. It is also pointed out that on the basis of the stand taken by the department, the company had suspended the services availed by it from Greenfinch with effect from 09.12.2018 and had terminated the agreement. Thereupon Greenfinch initiated arbitration proceedings viz., CMP No.155/2021 for appointment of an Arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides for complete and detailed machinery for levy, collection and recovery of tax. Section 39 of the CGST Act deals with furnishing of returns. Section 54 provides for refund of tax, and mandates a claimant to make an application before the expiry of two years from the relevant date. 15. In the obtaining factual matrix following issues arise for our consideration:- (I) Whether the amount was voluntarily paid during the investigation by the company under section 74(5) of CGST Act? (II) Whether the amount was recovered from the company during investigation under the coercion and threat of arrest? (III) Whether the DGGI officers conducted in a High handled and arbitrary manner during the course of investigation? (IV) Whether writ petition filed by company suffers from delay or laches? 16. Now we may proceed to deal with issues ad seriatim. (I) WHETHER THE AMOUNT PAID DURING INVESTIGATION BY THE COMPANY WAS VOLUNTARILY PAID, UNDER SECTION 74(5) OF THE CGST ACT? 17. Section 74 of the Act deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaint / grievance is filed by assessee and officer is found to have acted in defiance of the afore stated directions, then strict disciplinary action should be initiated against the concerned officer. The guidelines issued by the division bench are intended to regulate the powers of officers carrying out search and seizure as well as to safeguard the interest of the assessee. 19. The issue which arises for consideration is whether amount of ₹ 27,51,44,157/- has been paid by the company on its own ascertainment under section 74(5) of the Act. In the instant case, there is no material on record to indicate that the amount of ₹ 15 Crores and an amount of ₹ 12,51,44,157/- which were paid at about 4AM and 1PM on 30.11.2019 and 27.12.2019 respectively were paid on admission by the Company about its liability. There is no communication in writing from company to the proper officer about either self ascertainment or admission of liability by company to infer that such a payment was made under Section 74(5) of the Act. The company intimated the Department vide Communication dated 30.11.2019 that it reserves its right to claim refund of the amount and the same should not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f our rights and contentions to seek necessary refund at the appropriate time and therefore should not be regarded as an admission of liability. 21. Thus it is evident that payments have not been made admitting the liability. On the other hand, the company reserved its right to seek refund and made it expressly clear that payment of the amount should not be treated as admission of its liability. Besides the aforesaid, there is no material on record to establish that guidelines issued by division bench of High Court of Gujarat were followed. Thus for the aforementioned reasons, the first issue is answered in the negative and it is held that the amount was not paid voluntarily under Section 74(5) of the CGST Act. (II) WHETHER THE AMOUNT WAS RECOVERED FROM THE COMPANY DURING INVESTIGATION UNDER THE COERCION AND THREAT OF ARREST? 22. The officers of the Department have power of Inspection, search and seizure u/s 67(1) of CGST Act whereas Section 70 of the Act confers the power on the authority to summon person to give evidence as well as to adduce evidence. The relevant extract of Section 67(1) and Section 70 of the Act read as under: 67. Power of inspection, search and seizure. (1) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 365) ELT 32 (P H). 24. In the instant case, an investigation was initiated by DGGI officers and they entered the premises of the Company on 28.11.2019 at 10.30 a.m. in exercise of powers u/s 67(1) of CGST Act. On 30.11.2019 at about 4.00 a.m., a sum of ₹ 15 Crores was deposited by the Company under the GST cash ledger. Thereafter summons were issued to officers of company under section 70 of the Act. The officers of the company made a further deposit of ₹ 12,51,44,157/- at about 1.00 a.m. The aforesaid amounts were not deposited under section 74(5) of the Act. The amounts were deposited by the company at odd hours, without admitting its liability. The company has been regularly filing service tax returns. There is no iota of material on record to indicate that on the day that the company made payment of the amount, any amount was due to the department. Therefore, it can safely be inferred that payment of the amount was made involuntarily. There is also no material on record to hold that any threat of arrest was extended to officers of the company. 25. The question whether any threat was extended to officers of the company is a question of fact which can't be adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys that this Court in exercise of its power under Article 226 of the Constitution may not enquire into belated and stale claims is not a rule of law but a rule of practice based on sound and proper exercise of discretion. The question of delay has to be decided in the facts of each case. The principle on which relief to a party on the grounds of delay and laches is denied is that rights may have accrued to others by reason of delay in filing the Writ Petition should not be allowed to be disturbed unless there is a reasonable explanation for the delay. The lapse of time is not attributable to any laches or negligence. The test to decide the question of delay is not physical running of time ( SEE: DEHRI ROHTAS LIGHT RLY CO. LTD V. DISTRICT BOARD BHOJPUR (1992) 2 SCC 598 AND ROYAL ORCHID HOTELS V. G. JAYARAM REDDY (2011) 20 SCC 608). 29. Section 54 of CGST Act deals with refund of tax. Section 54(1) of the Act is extracted below: 54. Refund of Tax: (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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