9911796707
TMI Blog2023 (6) TMI 406X X X X Extracts X X X X X X X X Extracts X X X X ..... have arisen, learned advocates have requested to deal with petitions conjointly, as a result of this, Special Civil Application No.5978 of 2023 is treated as a lead matter since the issues are identical. 2. In Special Civil Application No.5978 of 2023, petitioner has submitted that petitioner is a company incorporated on 24.1.2019 and has its head office and special economic come operations at the address shown in the cause title of petition. Petitioner Nos.2 and 3 are Directors of the company since they are substantially interested and material affected in the conduct and business of petitioner company and as such has submitted this lead petition. 3. According to petitioners, petitioner company is a wellestablished SEZ Unit in SURSEZ administered under the control and directions of respondent No.3, i.e. Development Commissioner, SEZ, Surat. Petitioner company was granted approval to operate SEZ unit in SURSEZ by respondent No.3 vide LOP No.SSEZ/II/03/2019-20/140 on 1.5.2019. Petitioner is in specific area within SURSEZ which is located for Gem and Jewelry activity and Unit of the petitioner is to be treated as foreign territory for its business operations and as such they are ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to search and seizure operation and premises of the petitioner company were sealed vide a sealing memo dated 3.3.2023 by respondent No.4 at around 3.00 p.m. Sealing memo according to petitioner does not reflect any due process followed by respondent No.4 and same is carried out without arriving at any satisfaction as required under Section 67(1) of GST Act. Premises of petitioner were sealed as all employees were before the office of DRI Surat for recording of statements and as such respondent No.4 has sealed business premises, as indicated above. Simultaneously, respondent No.4 issued summons under Section 70 of CGST/ GST Act, 2017 and directed the Directors of petitioner company to appear before respondent No.4 for recording of statements and for production of books of accounts on 4.3.2023. On very same day, i.e. on 3.3.2023, under some cause of action, another officer of State Tax, i.e. respondent No.5 subjected the residential premises of petitioner for search and seizure operation and sealed the said residential premise on 3.3.2023. According to petitioner, said search operations were carried out under the provisions of Section 67 of the GST Act and again without arriving at a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of State Tax (4), Surat, Respondent No.5 i.e. Assistant Commissioner of State Tax (1), Ahmedabad and 6 i.e. Assistant Commissioner of State Tax, Mumbai against the Petitioners and be further pleased to direct Respondent no. 4 i.e. Assistant Commissioner of State Tax (4), Surat, Respondent No.5 i.e. Assistant Commissioner of State Tax (1), Ahmedabad and 6 i.e. Assistant Commissioner of State Tax, Mumbai not to take any coercive steps against Petitioners pursuant to impugned inquiry proceedings; C. An ex-parte ad-interim relief in terms of prayer "B" above may kindly be granted; and D. Grant such other and further relief/s as may be deemed fit and proper in the interest of justice. 5. Insofar as Special Civil Application No.5979 of 2023 is concerned, almost similar is the circumstance stated by petitioner and aggrieved by the action of respondent Nos.4 to 6 have contended that entire proceedings initiated by respondent is without authority of law and thereby sought a relief for quashing and setting aside the proceedings initiated by respondent Nos.4 and 5 against the petitioners under Section 67 and 70(1) of GGST Act, 2017 as well as CGST Act, 2017 and sought consequential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that in both cases, whether it is an input supply to SEZ unit or is an outward supply by SEZ unit, SEZ unit does not suffer any tax incidence on supply either way. Insofar as incidence of GST Laws are concerned, petitioner's unit will be governed under Integrated Goods and Services Tax (IGST) as it is not to be considered as a part of India. Preamble to IGST Act itself is making it clear that petitioners are not subjected to the domain of any of the respondent authorities, i.e. respondent Nos.4, 5 and 6 and as such, even if proceedings are initiated by respondent Nos.4, 5 and 6, assumed to be sanctioned under Chapter XVI by way of any coercive proceedings, same will not have any sanction at all and as such since entire proceedings initiated by respondents against petitioners being without authority, or jurisdiction, there is hardly any reason to allow said proceedings to be concluded. By referring to certain provisions of SEZ Act, particularly 2nd Proviso of Section 22 read with Clause (2) of Section 21 of SEZ Act 2005 which authorizes only ADG of DRI or ADG of DGCEI as Authorized Officers for the purposes of enforcement of provisions of the Customs Act, Central Excise Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compilation, a contention is reiterated that action of respondent Nos.4, 5 and 6 is beyond the scope of their authority, as such same is not sustainable in the eye of law. 9. Yet another submission is made that there are guidelines also issued for investigating/ visiting or to inspect or search or seizure SEZ and said guidelines which are framed is indicated in a communication dated 1.3.2021 at Annexure-N and even that has not been observed by an authority while taking or dealing with present petitioners and as such, when entire exercise is undertaken without the authority of law, relief prayed for deserves to be granted in the interest of justice. No other submissions have been made. 10. As against this, learned Government Pleader Mrs. Manisha Shah appearing on behalf of respondent Nos.4,5 and 6 has pointed out detailed circumstance which has constrained the authority to initiate action against petitioners and relevant narration has been made with regard to factual background of petitioners from the affidavit-in-reply and a contention is raised that this is not a fit case to exercise extraordinary equitable jurisdiction and has submitted that authority has acted well within the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of Section 7 of the Act indicates that supply of goods or services or both to or by the SEZ unit shall be treated to be a supply of goods or services or both in the course of inter-state trade or both and as such, petitioners are under erroneous belief that once business of petitioners is carried out through SEZ, respondents cannot initiate any proceedings. If this meaning which is tried to be canvassed by petitioners is introduced, then very purpose of the Act or provision would be defeated and same would give license to SEZ unit or to keep themselves away from the rigors of the provisions. Hence, in the absence of any apparent inconsistency between SEZ Act, 2005 and GST Act, 2017, no case is made out by petitioners and here in the instant case, before initiating action, Development Commissioner, SEZ had been duly intimated before search and seizure by departmental officers while carrying out process under Section 67 of the GGST Act, 2017. 11. Learned Government Pleader Mrs. Shah has then invited attention of the Court to circular issued by Assistant Commissioner of Sales Tax Unit-62, Surat dated 3.3.2023 and has referred to Section 72 of the Act and has indicated that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of respondent authorities and has objected to the words which are used in affidavit that transaction is bogus and fictitious and petitioner is engaged in any wrong doing. These words which are used are stoutly objected by learned counsel for petitioners and it has been submitted that if authorities have no jurisdiction, they cannot apply any coercive method against petitioners. In fact, according to Mr. Soparkar, as on the date of rejoinder, offences under GST Act, i.e. CGST Act, IGST Act, GGST Act are notified offences as per Section 21(1) of the Act. Hence, since entire exercise is undertaken without application of mind and is a premeditated act, which since not recognized under law, deserves to be quashed, hence requested to grant the reliefs as prayed for in the petition. 14. At this stage, learned Government Pleader Mrs. Shah has pressed into service three decisions for the purpose of strengthening her stand:- (1) Decision in the case of Essar Steel Limited v. Union of India reported in 2009 (0) AIJEL-HC-222966; (2) Decision in the case of Union of India v. Oswal Agricomm Pvt. Ltd. reported in 2010 SCC OnLine Guj 6618; (3) Decision in the case of Indo International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le: 2 Details of business verticals of the group companies (Petitioners) Sr. No. Company DTA Unit SEZ Unit 1 SAGAR DIAMONDS LIMITED 27AAWCS0068B1 Z8 903, Embassy Chamber, MUMBAI, NARIMAN POINT, 400021 24AAWCS0068B 1ZEPLOT NO 266- B, SEZ DIAMOND PARK, SACHIN, SURAT, Surat, Gujarat, 394230 2 RHCGLOBAL EXPORTS PRIVATE LIMITED 27AAJCR3808D1 ZG604, THE EMBASSY CENTER PREMISES CHS LTD, MUMBAI, NARIMAN POINT,400021 24AAJCR3808D1 ZM(i)UNIT NO. 146 ON PLOT NO. 255, SURAT SPECIAL ECONOMIC ZONE, SACHIN, SACHIN, Surat, Gujarat, 394230 (ii) PLOT NO 278- B, SURAT SPECIAL ECONOMIC ZONE, SACHIN, SURAT, Surat, Gujarat, 394230 3 SAGAREMPIRE JEWELS PRIVATE LIMITED 27ABFCS6904A1 ZK903,Embassy Chamber,Mumbai| Nariman Point,Jamnalala Bajaj Marg,400021 24ABFCS6904A2 ZP PLOT NO-219 AND 220 BLOCK 340,341/P, SEZ Diamond Park, Sachin, Surat, Surat, Gujarat, 394230 7.3. It appears that prima facie based on the above state analytics and intel inputs and system based verification, concrete reasons to believe were arrived at and proposal for search u/s 67 (2) was submitted. Looking to the gravity of the matter, a massive multi state operation including Search and seizure u/s se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners namely Sagar Diamond limited, RHC Global Exports limited, Sagar Empire Jewels Private Limited and promoters of the companies with the help of other persons have planned and executed this massive scam of availing and passing on fraudulent and ineligible Input Tax Credit to their companies. 7.3.4. It appears that prima facie the promoters/ directors of Sagar Diamond Limited, RHC Global Exports limited, Sagar Empire Jewels Private Limited carefully planned the scam by creating 2 verticals within each company one in DTA (Domestic Tariff Area - an area within India that Is outside the Special Economic Zones) and the other in SEZ (SEZ- is a dedicated zone wherein businesses enjoy simpler tax and easier legal compliances. SEZs are located within a country's national borders) Both of these vertical are two parts the same company. They have single common bank account and common balance sheet. 7.4. It appears that prima facie during the search & based on presearch scrutiny, it was found out that in DTA Vertical Sagar Diamond limited, RHC Global Exports limited, Sagar Empire Jewels Private Limited have shown inward supplies from above fictitious firms and obtained fake bills on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agar Diamond limited, RHC Global Exports limited, Sagar Empire Jewels Private Limited has sold goods imported to DTA (Domestic Tarrif Area) without payment of Tax in grey market. Government exchequer has incurred huge loss of revenue in the form of Goods and Services Tax. Tax rate of GST in the case of Jewellery 3% wherein Diamonds/Ruby Stone are fall in 0.25% slab. 7.8. It appears that prima facie below mentioned table is showing export shown by these Companies without receiving any corresponding payment in inward foreign remittances: Sr. No. GSTN Firm Name Export from Sachin SEZ Surat (Amt. in Cr) 1 24AAWCS0068B1ZE SAGAR DIAMONDS LIMITED 12,761.78 2 24AAJCR3808D1ZM RHCGLOBAL EXPORTS PRIVATE LIMITED 11,869.70 3 24ABFCS6904A2ZP SAGAREMPIRE JEWELS PRIVATE LIMITED 5724.51 Total 30,355.99 7.9. Quantum of Tax Evasion: It appears that prima facie as tabulated in Table-1, fraudulent ITC of Rs. 17.64 crs from bogus firms was availed and IGST on Imports amounting to Rs. 75 Crores (approx.) was evaded by importing (duty free) in SEZ unit and disposing the same in DTA units without invoices. 16. In the background of aforesaid factual details, if we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain circumstances. (1) Without prejudice to the provisions of this Act, the officers appointed under the Central Goods and Services Tax Act are authorised to be the proper officers for the purposes of this Act, subject to such conditions as the Government shall, on the recommendations of the Council, by notification, specify. (2) Subject to the conditions specified in the notification issued under sub-section (1),- (a) where any proper officer issues an order under this Act, he shall also issue an order under the Central Goods and Services Tax Act, as authorised by the said Act under intimation to the jurisdictional officer of central tax; (b) where a proper officer under the Central Goods and Services Tax Act has initiated any proceedings on a subject matter, no proceedings shall be initiated by the proper officer under this Act on the same subject matter. (3) Any proceedings for rectification, appeal and revision, wherever applicable, of any order passed by an officer appointed under this Act, shall not lie before an officer appointed under the Central Goods and Services Tax Act." 18. A close perusal of above-stated provisions indicates that respondent authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this, uncontroverted facts which are stated in the affidavit and volume of such would also be one of the considerations which cannot be ignored while exercising equitable jurisdiction and once authorities are empowered, there is hardly any reason for this Court to intercept this process which is going against the petitioners right from March 2023. It appears that action was initiated by an authority by seizing the premises from 3.3.2023 and then it appears that under the guise of this petition, now an attempt is being made to avoid proceedings by conveying to the authorities that since notices have been issued, petitioners would like to wait for orders and directions of the Court which clearly reflects from the reply which has been given by petitioners in response to the summons. So, when the conduct on the part of petitioners is also such in this peculiar background of facts, even otherwise we are not inclined to exercise our extraordinary equitable jurisdiction and conjoint reading of the provisions coupled with factual backgrounds, we feel that this is not a fit case in which we may allow the petitioners to invoke extraordinary jurisdiction. 21. At this stage, out of few de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inarily prevail. In the present case, the movement of goods from the Domestic Tariff Area into the Special Economic Zone is treated as an export under the SEZ Act, 2005, which does not contain any provision for levy of export duty on the same. On the other hand, export duty is levied under the Customs Act, 1962 on export of goods from India to a place outside India and the said Act does not contemplate levy of duty on movement of goods from the Domestic Tariff Area to the Special Economic Zone. Therefore, there is no conflict in applying the respective definitions of export in the two enactments for the purposes of both the Acts and therefore, the non-obstante clause cannot be applied or invoked at all. 41.3.4 Similarly, reliance on Section 53 of the SEZ Act 2005 to contend that a Special Economic Zone is a territory outside India, is misconceived. Section 53 provides that the Zone would be deemed to be a territory outside the customs territory of India for the purposes of undertaking the authorized operations. The term 'customs territory' cannot be equated to the territory of India and in fact, such term has been defined in the General Agreement of Tariffs & Trade, to which Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reported in (2017) 5 SCC 496), which read as under :- "13. This Court must view with disfavour any attempt by a litigant to abuse the process. The sanctity of the judicial process will be seriously eroded if such attempts are not dealt with firmly. A litigant who takes liberties with the truth or with the procedures of the Court should be left in no doubt about the consequences to follow. Others should not venture along the same path in the hope or on a misplaced expectation of judicial leniency. Exemplary costs are inevitable, and even necessary, in order to ensure that in litigation, as in the law which is practised in our country, there is no premium on the truth. 14. Courts across the legal system - this Court not being an exception - are choked with litigation. Frivolous and groundless filings constitute a serious menace to the administration of justice. They consume time and clog the infrastructure. Productive resources which should be deployed in the handling of genuine causes are dissipated in attending to cases filed only to benefit from delay, by prolonging dead issues and pursuing worthless causes. No litigant can have a vested interest in delay. Unfortunately, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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