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TMI Blog2023 (4) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... er to make payment of tax, interest and penalty due. The very fact that in two years time, no notice has been issued, the deposit of tax during search cannot be retained by the department till the adjudication of notice, which can take more time in future. A direction is being given to the respondents to return the amount of Rs.2.54 crores to the petitioner(s) along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made. This amount will be refunded to the petitioner within a period of 10 days from the date of receipt of certified copy of this judgment. Petition allowed. - HON'BLE MS. JUSTICE RITU BAHRI AND HON'BLE MR. JUSTICE KULDEEP TIWARI Present: For the Petitioners : Mr. Sanjay Kaushal, Senior Advocate, with Mr. Saurabh Kapoor, Advocate. For the Respondents : Mr. Sourabh Goel, Sr. Standing Counsel. Ritu Bahri, J. The petitioners are seeking direction to the respondents to refund an amount of Rs. 2.54 crores and supply copy of Panchnama dated 05.03.2020 and 15.01.2021 along with other electronic gadgets, including mobiles, resumed from the premises of the petitioner. As per the facts stated in the petition, on 05.03.2020, of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als of his supplier and ask him to supply his GST returns. He can further ensure that sale made to him is duly reflected in the return but beyond it, he has no control. The petitioner is manufacturer of pesticides for the last more than 30 years and is purchasing inputs to manufacture finished goods. The petitioner is selling its product in domestic market as well as exporting out of country. Details of pesticides manufactured and sold during the last five years are given as under:- Year Domestic Exports Total Sale 2020-21 7.94 120 128 2019-20 3.60 127 131 2018-19 4.38 120 125 2017-18 20.05 107 128 2016-17 70.66 57.76 128.43 On the roll out of GST w.e.f. 01.07.2017, the petitioner migrated to GST and started paying tax under CGST, PGST and IGST Act, 2017. The petitioner exported goods worth more than 128 crores and average export of last 3 years was more than 125 crores. After the introduction of CGST Act, during 2018-19, 2019-20 and 2020-21, the petitioner purchased inputs worth approximately Rs.8.5 crores and cleared finished goods approximately worth Rs.382 crores. The domestic sale is negligible, whereas export turnover is substantial. At the time of purchase of inputs, the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and other officials of the petitioner-company. The petitioner made a detailed representation dated 09.10.2020/12.10.2020 (Annexure P-9). The respondents issued summons dated 22.12.2020 (Annexure P-11) to Mr. Sahil Sharma, Chartered Accountant of the company. The business premises of the petitioner was searched second time on 15.01.2021. Mr. Avtar Singh, Director of the company is 78 years old, but the respondents forcibly took him to their office and detained till 1.00 A.M. on 16.01.2021. The respondents pointed out that they had purchased goods from M/s Ralph Agri Science, M/s Best Agro Chem M/s United Chemical and as per investigation carried out by other GST offices, the suppliers of aforesaid three entities were cancelled dealers. Thus, the petitioner was liable to pay GST on inputs purchased from the aforesaid three entities. As per petitioner, the IGST involved with respect to purchase from the aforesaid three entities was Rs.3.77 crores. In the Electronic Credit Ledger, on 16.01.2021, credit of Rs.1.18 crore was lying. The respondent forced the Director of the petitioner to reverse aforesaid amount. The amount was reversed by way of DRC-3 dated 16.01.2021 (Annexure P-12). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used domestic goods for manufacturing goods for exports. During Business Inteligence and Fraud Analytics (BIFA) analyzation, the party was found to be availing irregular Input Tax Credit from cancelled tax payer. In this badckdrop, premises of the petitioner was searched on 15.01.2021. On 16.01.2021, Sahil Sharma, Chartered Accountant of M/s Modern Insecticides Ltd. had made a statement that refund application will be withdrawn and amount will be re-credited to the ITC ledger, which will immediately be reversed by issuance of DRC 03. On that day, he had ensured that he would submit the proof of the same to the department. It is stated that this amount has not been debited by the petitioner so far. Copy of Panchnama dated 05.03.2020 and 15.01.2021 (Annexure R-1) along with resumed documents were handed over to the petitioner after conclusion of the search. It is stated that vide letter dated 05.11.2020, the petitioner was asked to supply certain information, but he did not answer each and every query of the respondents. With respect to the search conducted on 15.01.2021, it is stated that after issuing summons under Section 70 of the Central Goods and Services Tax Act, 2017, the Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06.03.2023. Thereafter, official of the petitioner had appeared, however, he had sought time till 14.03.2023 to provide the documents/detail. Learned counsel for the respondents has referred to Section 74 (6) of the CGST Act, which provides that a 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. While referring to Section 74 (6) of the CGST Act, learned counsel for the respondents states that in case of voluntary deposit by the assessee towards, tax, interest and penalty or any other amount, no notice under sub Section (1) of Section 74 is to be served by the proper officer. After making voluntary deposit, if the amount is short of the amount actually payable, then he can proceed to issue notice under sub-section (1) in respect of such amount, which falls short of the amount actually payable. Thereafter, he has referred to Rule 142 (2) of the CGST Rules, 2017, which provides that question of issuance of acknowledgment in form DRC-04 would come only when the assessee has discharged his liability towards tax, interest, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax not paid or Input Tax Credit has been wrongly availed. The above provisions of Section 74 have been examined by the Delhi High Court in Vallabh Textiles vs. Senior Intelligence Officer and others, 2022 SCC OnLine Del 4508 . In that case, the Delhi High Court was examining the issue, where an amount of Rs.1,80,10,000/- was deposited on behalf of the petitioner, during search proceedings carried out between 16.02.2022 and 17.02.2022. The question for consideration was, whether the said deposit was voluntary act or not. During the search proceedings, an officer of the company was detained for several hours and was allowed to leave only when he appended his signatures on the documents. The Delhi High Court examined the provisions of Section 74 (1) of the CGST Act, 2017 along with Rule 142 of the CGST Rules. The Court also examined the Government instructions dated 25.05.2022 issued by the CBIC with respect to the GST investigation. These instructions were issued keeping in view the observations made by the Gujarat High Court in Bhumi Associate vs. Union of India, SCA No.3196 of 2021 (decided on 16.02.2021). As per said instructions, no recovery of tax should be made during search, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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