The Union Of India vs M/S Bundl Technologies Private ...
2022 Latest Caselaw 3535 Kant

                               1



     IN THE HIGH COURT OF KARNATAKA AT BENGALURU   R
        DATED THIS THE 3RD DAY OF MARCH 2022

                          PRESENT

         THE HON'BLE MR. JUSTICE ALOK ARADHE

                            AND

          THE HON'BLE MR.JUSTICE M.G.S.KAMAL

               W.A. No.1274 OF 2021 (T-RES)
                            IN
               W.P.No.4467 OF 2021 (T-RES)

BETWEEN:

1.     THE UNION OF INDIA
       REP. BY THE SECRETARY
       DEPARTMENT OF REVENUE
       MINISTRY OF FINANCE
       128-A/NORTH BLOCK
       NEW DELHI - 110 001.

2.     DIRECTORATE GENERAL OF GOODS
       AND SERVICES TAX INTELLIGENCE
       NEW DELHI
       5TH FLOOR, MTNL TELEPHONE EXCHANGE
       BUILDING, 8, BHIKAJI CAMA PLACE
       NEW DELHI- 110 066.

3.     SENIOR INTELLIGENCE OFFICER
       DIRECTORATE GENERAL OF GOODS
       AND SERVICES TAX INTELLIGENCE
       HYDERABAD ZONAL UNIT - 500 016
       H NO. 1-11-222/4 LANE OPP HDFC BANK
       HYDERABAD-560016.

4.     DEPUTY DIRECTOR
       DIRECTORATE GENERAL OF GOODS
       AND SERVICES TAX INTELLIGENCE
                               2



       HYDERABAD ZONE UNIT - 500 016
       H NO. 1-11-222/4
       LANE OPP HDFC BANK
       HYDERABAD 560016.

5.     ADDITIONAL DIRECTOR
       DIRECTORATE GENERAL OF GOODS
       AND SERVICES TAX INTELLIGENCE
       HYDERABAD ZONE UNIT - 500 016
       H NO. 1-11-222/4 LANE OPP HDFC BANK
       HYDERABAD 560016.

6.     PRINCIPAL ADDITIONAL DIRECTORATE GENERAL
       DIRECTORATE GENERAL OF GOODS
       AND SERVICES TAX INTELLIGENCE
       HYDERABAD ZONE UNIT - 500 016
       H NO. 1-11-222/4 LANE OPP HDFC BANK
       HYDERABAD 560016.

                                             ... APPELLANTS

(BY MR. M.B. NARGUND, ADDL. SOLICITOR GENERAL A/W
    MR. AMIT ANAND DESHPANDE, ADV.,)

AND:

1.     M/S. BUNDL TECHNOLOGIES PRIVATE LIMITED
       A COMPANY REGISTERED UNDER THE
       INDIAN COMPANIES ACT
       HAVING ITS REGISTERED OFFICE AT NO.55
       SY. NO. 8-14, GROUND FLOOR
       I AND J BLOCK, EMBASSY TECH VILLAGE
       OUTER RING ROAD, DEVARBISANAHALLI
       BENGALURU - 560 103
       (REP. BY ITS DIRECTOR
        PANDURANGA ACHARYA
       DIRECTOR - LEGAL).

2.     THE STATE OF KARNATAKA
       THROUGH ITS PRINCIPAL SECRETARY
       FINANCE DEPARTMENT
       VIDHANA SOUDHA
       BENGALURU-560001.
                                3



3.   COMMISSIONER OF STATE TAX
     GOODS AND SERVICE TAX
     BENGALURU-560071.
                                           ... RESPONDENTS

(BY MR.   LAKSHMI KUMARAN, ADV., FOR
    MR.   RAVI RAGHAVAN, ADV.,
    MR.   SYED M. PEERAN, ADV.,
    MR.   SIDDHARTH BALVE, ADV.,)
                             ---

      THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT, PRAYING TO SET ASIDE THE ORDER OF THE
LEARNED SINGLE JUDGE PASSED IN WP NO.4467/2021 DATED
14.09.2021.

     THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED
FOR   JUDGMENT    ON   24.02.2022, COMING   ON   FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ALOK ARADHE J.,
MADE THE FOLLOWING:

                        JUDGMENT

This intra Court appeal takes an exception to order

dated 14.09.2021 passed by the learned Single Judge by

which the writ petition preferred by the respondent No.1 has

been disposed of with the direction to the appellants to

consider the applications for refund submitted by the

respondent No.1 and to pass suitable orders thereon within a

period of four weeks, in the light of observations made in the

order. In order to appreciate the appellants' grievance,

relevant facts need mention.

2. The respondent No.1 namely M/s. Bundl

Technologies Pvt. Ltd. (hereinafter referred to as 'the

Company' for short) operates an e-commerce platform under

the brand name of 'Swiggy'. On the aforesaid platform, the

consumers can place orders for delivery of food from nearby

restaurants, which is made through delivery partners which

include pick up and delivery partner (PDP) who are directly

engaged by the Company as well as temporary delivery

executives (Temp DEs) whose services are procured by the

Company through third party service providers. During

normal operations, the deliveries are carried out by the PDPs

which accounts for 90% of the total food deliveries.

However, on account of sudden spike in food orders during

holidays, festive season and weekends, the company

engages Temp DEs from third party service providers to cater

to sudden spike in food orders.

3. In case of PDPs who are directly engaged by the

Company, no goods and services tax (hereinafter referred to

as 'the GST' for short) is charged as they are below the

threshold limit for registration. However, third party service

providers charge the Company the consideration paid to

Temp DEs along with mark up 5.5 - 10% along with GST on

the entire consideration. The Company entered into an

agreement dated 20.05.2017 and 14.11.2017 with a third

party service provider namely Green Finch Team

Management (P) Ltd. (Green Finch). Under the aforesaid

agreement, Green Finch provided temporary DEs to the

Company on a cost-plus mark-up basis and also charged GST

on the entire sale consideration. Green Finch is a Company

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 against the

invoices raised by Green Finch were fraudulent. The Officers

of the Department entered the premises of the Company on

28.11.2019 at 10.30 a.m. During the course of the

investigation from 28.11.2019 till 30.11.2019, DGGI Officers

issued spot summons to the Directors and employees of the

Company and their statements were recorded by the DGGI

Officers. On 30.11.2019 at about 4.00 a.m., a sum of Rs.15

Crores was deposited by the Company under the GST cash

ledger. On 30.11.2019 itself the Officers of the Company

handed over the documents to DGGI officers between 6.45

a.m. to 8 a.m.

6. Thereafter, the Directors of the Company received

summon to appear before DGGI office at Hyderabad on

26.12.2019. The Directors of the Company namely

Mr.Harsha Majety, Mr.Bharat Arora, Director (Finance and

Accounts), Mr.Mehul Shah, Senior Manager (Taxation) and

Mr.G.Prahalad, Advocate, visited the office of the DGGI at 11

a.m. Thereafter, statements of Mr.Harsha Majety was

recorded. Mr.Rahul Jaimini appeared before DGGI Officers

on 26.12.2019 in response to the summons issued to him.

The statement of aforesaid Mr.Rahul Jaimini was recorded.

Thereafter, Mr.Obul Lakshminandan Reddy appeared at

around 4 p.m. on 26.12.2019 in the DGGI office. It is

averred that the Directors were present till late hours on

26.12.2019 in the DGGI office and about 8 p.m. were locked

in DGGI office. It is also averred that threats of arrest were

held out to them during the investigation and they were not

allowed to leave till early hours of 27.12.2019. The Officers

of the Company therefore made a further sum of

Rs.12,51,44,157/- at about 1 a.m. in order to secure the

release of three directors of the company. Thus, in all, a

sum of Rs.27,51,44,157/- was illegally collected from the

Company during the course of investigation under the threat

and coercion without following the procedure prescribed

under the CGST Act.

7. Despite a lapse of about 10 months of initiation

of investigation, no show cause notice was issued to the

Company. The Company therefore submitted a letter dated

29.09.2020 seeking refund of the amount of

Rs.27,51,44,157/-. Thereafter, the Company also filed an

application on 16.12.2020 before the jurisdictional GST

office. However, the application submitted by the petitioner

failed to evoke any response. The Company thereupon filed

the petition seeking a writ of mandamus directing the

Department to forthwith refund the amount of

Rs.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 any sort of fetter on the power of investigation of the

officers of the Department. However, it was held that

consideration of the right to seek refund of the amount

deposited by the Company is independent of the process of

investigation and two cannot be linked together.

Accordingly, the writ petition was disposed of with the

direction to consider and pass suitable orders on the

applications for refund filed by the Company within a period

of four weeks from the date of release of the order. The

Department was directed to consider the applications for

refund in the light of the observations made in the order. In

the aforesaid factual background, this appeal has been filed.

10. Learned ASGI for the appellants submitted that

input was received by the Department that Green Finch is a

non-existing company and huge input tax credit is being

credited to the company. It is further submitted that

respondent did not receive any services from Green Finch or

its inward suppliers and is therefore not entitled to claim

input tax credit on the same. It is also submitted that the

Company did not disclose that it has deposited an amount of

Rs.4.74 Crores during investigation in respect of a different

issue which was not claimed as refund and therefore, has not

approached this Court with clean hands. It is urged that

Company voluntarily paid an amount of Rs.27,51,44,157/- on

self-ascertainment basis in terms of Section 74(5) of CGST

Act. It is contended that allegations of threat and coercion

are misconceived as the DGGI Officers had no power to

arrest the Directors of the Company which is evident from

spot summons issued to the Directors which clearly state that

Officers of the Company were summoned to give evidence

under Section 71 of the CGST Act.

11. It is further contended that in any case, neither

the issue of coercion can be examined in a writ proceeding

nor any finding can be recorded on the said issue as the

same is a question of fact. It is also pointed out that the

Company approached this Court by filing a writ petition after

a period of 15 months from which an inference can safely be

drawn that allegations of threat and coercion are clearly an

after thought. Lastly it is contended that a time limit be

prescribed for issuance of notice under Section 74 of the Act

and the amount deposited by the company be made subject

to outcome of the proceeding. In support 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 Arbitrator, which is

pending before this court. It is also pointed out that

Greenfinch raised valid tax invoices on the company charging

applicable GST. Therefore, the allegation that Greenfinch is

an non existing entity and that the company had not received

any services from Greenfinch is factually incorrect. It is also

urged that the amounts were recovered from the company

on 30.11.2009 between 6.00 am to 6.30 a.m. and in the mid

night hours of 26.12.2019 / 27.12.2019 and the company

was compelled to deposit the amount in electronic cash

ledger. Thus, it is also urged that under the apprehension of

arrest and imprisonment, the amount was recovered from

the company.

13. It is contended that recovery of tax during the

investigation is illegal and unconstitutional and therefore, the

company is entitled to refund of the amount deposited by it

under threat and coercion. Our attention has also been

invited to the communication dated 30.11.2019 sent by the

company to the department and it has been pointed out that

the company reserves its rights to claim the refund and the

same cannot be treated as admission of its liability.

Therefore, it is contended that the amounts has not been

deposited in term of Section 71(5) of the Act. It is pointed

out that Section 54 of the act provides for time limit of two

years from the date of payment for the claim of refund and

the same was filed with the department within time on

16.12.2020. It is urged that the company initially sought

refund from the department and thereafter filed the writ

petition, as the attempts of the company to seek refund

failed to evoke any response from the department.

Therefore, in the facts of the case there is no delay in filing

the writ petition. It is contended that action of DGGI officers

in detaining the Directors of the company till late in the night

and in coercing the company to deposit the amount at odd

hours during the course of investigation is high handed and

arbitrary and honest tax payers like officers of the company

have to be treated with dignity. In support of aforesaid

submissions, reliance has been placed on the decisions in

'DABUR INDIA LTD. Vs. STATE OF UTTAR PRADESH'

(1990) 4 SCC 113, 'D.K.BASU Vs. STATE OF WEST

BENGAL' (1997) 1 SCC 416 AND 'MAKEMYTRIP (INDIA)

PVT. LTD. Vs. UNION OF INDIA' (2016) 44 S.T.R.481

(Del.).

14. The CGST Act is a code in itself and provides 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

relevant extract of section 74 reads as under:-

74. (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax, he shall serve notice on the person chargeable with tax which

has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice.

XXX (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.

Thus Section 74(5) of the Act gives an option to a

person to make payment of tax, along with interest and 15%

of penalty on its own ascertainment of the tax ascertained by

proper officer and inform him in writing about such payment.

18. It is pertient to note that a division bench of

Gujarat High Court in M/S BHUMI ASSOCIATE VS. UNION

OF INDIA by an interim order directed the Central Board Of

Indirect Taxes And Customs was directed to enforce the

following guidelines by issuing suitable circular / instructions:

(1) No recovery in any mode by cheque, cash e-

payment or adjustment of input tax credit should

be made at the time of search / inspection

proceedings under Section 67 of the Central /

Gujarat Goods and services Tax Act, 2017 under

any circumstances.

(2) Even if the assessee comes forward to make

voluntary payment by filing Form DRC 03, the

assesee should be asked / advised to file such Form

DRC 03 on the next day after the end of search

proceedings and after the officers of the visiting

team have left the premises of the assessee.

(3) Facility of filing complaint / grievance after

the end of search proceedings should be made

available to the assessee if the assessee was forced

to make payment in any mode during the pendency

of the search proceedings.

(4) If complaint / 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 Rs.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 Rs.15 Crores and an amount of

Rs.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 be treated as admission of its liability. The

relevant extract of communication dated 30.11.2019 reads

as under:-

BUNDL TECHNOLOGIES PRIVATE LIMITED Registered Office, 4th Floor, Annex Building, Maruthi Chambers, Survey No.17/9B Begur Hobli, Roopana Agrahara, Bengaluru, Karnataka, India 560068 CIN:U74110KA2013PTC096530

November 30, 2019 To, The Office of the Commissioner, Directorate General of Goods and Service Tax Intelligence, Hyderabad H.No.1-11-222/4, Lane Opp.HDFC Bank Nalli Silks, Begumpet, Hyderabad-500016. Sub: Submission related to investigation Ref: Inspection dt:28/29 November 2019 by DGGSTI Officials at BTPL's offices situated at Bangalore, Gurugram and Hyderabad.

Dear Sir, XXXXX

As an extension of our goodwill conduct and bonafide, we have deposited INR 15,00,00,000/- (Rupees Fifteen Crores Only) with the Exchequer of Government during the pendency of inspection proceedings. The above deposit 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. The challan of payment of the aforesaid deposit is enclosed herewith for your ready reference as Annexure E.

We assure you of our full co-operation in this matter going forward.

20. The company has also reiterated its stand in GST

DRC-03 generated on 2.12.2019, the relevant portion of

which is reproduced below:

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

ARN:AD291219000080K Date: 02.12.2019

1. GSTIN 29aafcb7707d1zq

2. Name Bundl Technolgies Private Limited

3. Cause of payment Others

4. Section under which voluntary Others payment is made

5. Details of show cause notice, if Reference No.NA Date of issue: NA payment made within 30 days of its issue

6. Financial year 2017-18

7. Details of payment made including interest and penalty if applicable (Amount in Rs.) Tax Act Place of Tax / Interest Penalty if Others Total Ledger Debit Date of Sr. period supply cess applicable utilized entry debit No (Cash / No. entry Credit)

1. Jul 2017 ITST Karnatak 5,056, 0.00 0.00 0.00 5,056 Cash DC29 02/12/201

- a 604.0 ,604. 12190 9 Mar 2018 0 00 00330

8. Reasons, if any:

The above payment is made as an extension of our 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.

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) Where the proper officer, not below the rank of Joint Commissioner, has reasons to believe that -

(a) a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand , or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or the rules made thereunder to evade tax under this Act; or

(b) any person engaged in the business of

transporting goods or an owner or operator of a warehouse or a godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act.

He may authorise in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place.

70. Power to summon person to give evidence and produce documents.

(1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).

(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a "judicial proceedings" within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).

23. In VODAFONE ESSAR SOUTH LTD VS. UNION

OF INDIA', 2009 (237) ELT 35 (BOM) it was held by

Division Bench of Bombay High Court that without

adjudication of liability, during the course of an investigation

the assessee should not be forced to pay any amount.

Similar view was taken by Delhi High Court in MAKEMYTRIP

(INDIA) PVT. LTD. VS. UNION OF INDIA, 2016 (44)

STR 481 DEL and it was held that amount collected during

investigation proceeding without any adjudication is liable to

be refunded. In CENTURY KNITTERS (INDIA) LTD. VS.

UNION OF INDIA', 2013 (293) ELT 504 (P & H) it was

held that any amount illegally collected cannot be retained

without issuance of show cause notice and adjudication of

liability and such amount is liable to be refunded. Similar

view was taken in CONCEPTS GLOBAL IMPEX VS. UNION

OF INDIA, 2019 (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 Rs.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 Rs.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

adjudicated in a summary proceeding under Article 226 of

the Constitution of India. Liberty is reserved to the parties to

agitate the issue of threat and coercion in an appropriate

proceeding. Accordingly the second issue is answered by

stating that amounts were paid by the company involuntarily.

(III) WHETHER THE DGGI OFFICERS CONDUCTED

IN A HIGH HANDLED AND ARBITRARY MANNER

DURING THE COURSE OF INVESTIGATION?

26. DGGI officers have invoked the provisions under

section 67(1) of the CGST Act relating to inspection, search

and seizure and have issued summons under Section 70 of

CGST Act to officers of the company to give evidence. The

company has taken a stand in the writ petition that during

the course of investigation, the DGGI officers have acted in a

high handed and arbitrary manner and that the officers

locked the door and extended threats of arrest to Directors of

the Company. However, the Department has disputed the

aforesaid stand in its objections and has asserted that

investigation took place in a cordial atmosphere in which

officer of the company co-operated with DGGI officers. It is

pertinent to note that company in the writ petition has

neither attributed any specific role to officers of DGGI by

name nor has impleaded them in the writ petition.

Therefore, the same being a question of fact cannot be

adjudicated in a summary proceeding under Article 226 of

the constitution of India.

27. Before parting with the issue we would like to

state that no one in a society governed by rule of law can

take resort to a course of action not permissible in law. A

Statutory power has to be exercised reasonably and in good

faith, and for the purpose for which it is conferred. The power

vested in any Authority by law has to be exercised in

consonance with the spirit as well as letter of the Act. The

broader the sweeper ambit of the power, the more caution

and circumspection is required while invoking such power. A

statutory power has to be exercised within a system of

controls and has to be exercised by relevance and reason. It

needs reiteration that a statutory power should not be

exercised in a manner, so as to instill fear in the mind of a

person.

However, the facts and circumstances of the case the

third issue is kept open to be agitated in an appropriate

proceeding.

IV Whether the Writ Petition filed by the

Company, suffers from Delay or laches:-

28. The rule which says 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:

Thus, an application seeking refund of any tax and

interest if any, under the Act has to be made within a period

of two years.

30. In the backdrop of well settled legal principles

and the statutory provision we may advert to the facts of

case in hand. The Company deposited a sum of Rs.15

Crores at about 4.00 a.m. on 30.11.2019 and a sum of

Rs.12,51,44,157/- on 27.12.2019. The company filed an

application seeking refund on 29.09.2020. Thereafter the

company filed an application seeking refund on 16.12.2020

on 16.12.2020 before jurisdictional GST authority. The

Company requested the department to refund the amount.

When the attempts of the company to seek refund did not

yield any result, the writ petition was filed on 25.02.2021.

Section 54 of the CGST Act provides for a time limit of two

years to claim refund. The company not only filed the claim

for refund within two years but the writ petition as well. No

rights have accrued to the department, as the claim for

refund made by the company is well within time. Therefore in

the light of legal principles referred to in the preceding

paragraph, it can not be said that there was any delay or

laches in filing writ petition. Therefore the fourth issue is

answered by stating that there is no delay or laches in filing

the writ petition.

31. The submission by the company that Green Finch

is neither a non existent entity nor that the company has

rightly availed input tax credit is concerned need not be

adverted to in this proceeding, as the same is pending

investigation. Article 265 of the Constitution mandates that

collection of tax has to be by the authority of law. If tax is

collected without any authority of law, the same would

amount to depriving a person of his property without any

authority of law and would infringe his right under Article

300A of the Constitution of India as well. 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.

Therefore, 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.

For the aforementioned reasons, we concur with the

conclusion recorded by the learned Single Judge. To the

aforesaid extent, the findings recorded by the learned Single

Judge are modified.

In view of preceding analysis, we do not find any merit

in this appeal. The same fails and is hereby dismissed.

Sd/-

JUDGE

Sd/-

JUDGE

SS