Madras High Court
Senior Intelligence Officer vs M/S.Shri Nandhi Dhall Mills India ... on 23 February, 2022
W.A.No.1441 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 23.02.2022
CORAM :
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
Writ Appeal No. 1441 of 2021
and
C.M.P. No. 8962 of 2021
---
1. Senior Intelligence Officer
Directorate General of Goods and Services Tax Intelligence
Trichy Regional Unit,
No.47-47A, Heber road, Beema Nagar, (New address)
Trichy – 620001.
2. Directorate General of Goods and Services Tax Intelligence,
Trichy Regional Unit
No.47-47A, Heber road, Beema Nagar, (New address)
Trichy – 620001
3. Directorate General – South Zone,
Directorate General of Goods and Services Tax Intelligence
C-3, C-Wing, II Floor,
Rajaji Bhawan, Besant Nagar
Chennai – 600 090.
4. The Directorate General of Goods and Services Tax
Intelligence (HQ)
West Block-8, Wing No.6,
2nd Floor, R.K.Puram
New Delhi – 110066. .. Appellants
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Versus
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W.A.No.1441 of 2021
1. M/s.Shri Nandhi Dhall Mills India Private Limited,
Rep by its Managing Director Mr.S.A.Kumar,
270, Narsimman Road, Salem – 636 002.
2. State GST Authority/The Assistant Commissioner (ST) (FAL)
Annathanapatty Circle, Salem.
(R2 impleaded vide Court order dated
02.09.2021 made in C.M.P.No.14363 of
2021 in W.A.No.1441 of 2021) .. Respondents
Writ Appeal filed under Clause 15 of Letters Patent against the order
dated 07.04.2021 passed in W.P. No.5192 of 2020 on the file of this Court.
For Appellants : Mr. Sankara Narayanan,
Additional Solicitor General
assisted by Mr. V. Sundareswaran
Senior Standing Counsel
For Respondent-1 : Mr. Hari Radhakrishnan
For Respondent-2 : Mr. Prasanth Kiran
Government Advocate
JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.)
This intra-court appeal is filed by the appellants, aggrieved by the order
dated 07.04.2021 passed in WP No. 5192 of 2020. By the said order dated
07.4.2021, the learned Judge directed the appellants to refund the sum of Rs.2
crores, collected from the writ petitioner/first respondent herein towards
Goods and Service Tax due, within a period of four weeks.
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W.A.No.1441 of 2021
2. The first respondent in this appeal has filed the above said Writ
Petition No. 5192 of 2020 praying to issue a Writ of Mandamus, restraining
the respondents 1 and 2 in the writ petition/appellants 1 and 2 from demanding
any amount from them except by following due process of law and further
direct to refund the sum of Rs.2 crores along with statutory interest under
CGST Act, 2017 and also return the documents seized at the time of search on
22.10.2019.
3. The writ petitioner/first respondent is an assessee under the
provisions of the Goods and Service Tax Act, 2017 (in short, the Act) and they
are a private limited company engaged in supply of pulses, dhall and flour.
According to the writ petitioner/first respondent, they are prompt in filing the
monthly and annual returns, as required under the Act. While so, on
22.10.2019, a search was conducted in the business premises purportedly on
receipt of information that the writ petitioner/first respondent indulged in
evasion of tax. During the course of such search, certain documents have been
seized. The officers attached to the office of the first and second appellants
have also recorded the statement of Thiru. S.A. Kumar, Managing Director of
the firm, who said to have voluntarily given a statement, admitting the tax
liability payable by the firm. The aforesaid S.A. Kumar also voluntarily
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W.A.No.1441 of 2021
admitted to pay the entire tax due in instalments. On the date of search, a sum
of Rs.1 crore was paid and the Managing Director of the firm also assured to
clear the remaining amount towards tax due, as per the schedule of instalment
given at the time of inspection. A week after the search, the writ
petitioner/first respondent firm also paid another sum of Rs.1 crore, as per the
schedule of instalment. However, the writ petitioner/first respondent
submitted an application dated 27.11.2019 for refund of the sum of Rs.2 crores
on the ground that such amount were paid under coercion, threat and duress
and that the inspection team have subjected the employees of the writ
petitioner/first respondent to sheer harassment to collect the tax due. After
filing such an application for refund of the sum of Rs.2 crores, the writ
petitioner/first respondent has filed the writ petition before this Court.
4. The writ petition was vehemently opposed by the
respondents/appellants herein by contending inter alia that the Managing
Director of the first respondent/writ petitioner had given a statement
voluntarily, free from any coercion. On the date of search, a sum of Rs.1 crore
was paid towards admitted tax liability with an assurance to pay the balance
tax amount as per the schedule given to the enforcement officials. Even a
further sum of Rs.1 crore was also paid by the first respondent/writ petitioner,
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W.A.No.1441 of 2021
however, the writ petitioner/first respondent retracted from the statement and
alleged that the amount was recovered by exerting pressure. According to the
respondents/appellants, such a statement is far from truth and the inspecting
team did not harass the employees of the writ petitioner firm in any manner.
The fact remains that huge sums of tax remains unpaid by the writ petitioner's
firm purportedly on the ground that none of their products are sold under
registered brand names and therefore, they are not liable to pay tax for supply
of goods under an un-registered brand name and usage of logo. In any event,
the amount was paid by the writ petitioner/first respondent voluntarily and the
question of exerting pressure to collect the tax amount does not arise.
Therefore, the respondents have prayed for dismissal of the writ petition.
5. The learned Judge, upon appraisal of the facts pleaded by both
sides, placed reliance on the interim order passed by the Division Bench of the
Gujarat High Court in S.C.A. No. 3196 of 2021 in the case of M/s. Bhumi
Associate vs. Union of India, through the Secretary. In that decision, the
Division Bench has formulated certain guidelines for recovery of the tax due.
It was specifically directed that no recovery in any mode, by cheque, cash,
epayment or adjustment of Input Tax Credit should be made at the time of
search/ inspection even if the assessee voluntarily comes forward to make
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W.A.No.1441 of 2021
payment. The relevant portion of the order passed by the Division Bench
reads as follows:-
"?The Central Board of Indirect Taxes and Customs as
well as the Chief Commissioner of Central/State Tax of the
State of Gujarat are hereby directed to issue the following
guidelines by way of suitable circular/instructions:
(1) No recovery in any mode by cheque, cash, epayment
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 DRC03, the assessee should
be asked/advised to file such Form DRC03 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 aforestated directions,
then strict disciplinary action should be initiated against the
concerned officer.?"
6. By applying the aforesaid decision to the facts pleaded by the writ
petitioner/first respondent, the learned Judge allowed the writ petition and
directed the appellants to refund the sum of Rs.2 crore to the writ petitioner.
7. Assailing the order passed by the learned Judge, the learned
Additional Solicitor General appearing for the appellants submitted that the
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W.A.No.1441 of 2021
transaction involved in this case is required to be taxed under the provisions of
the Act. But on the other hand, such transaction has been suppressed by the
writ petitioner/first respondent and only upon investigation, it was unearthed.
The liability of the writ petitioner/first respondent crystallised by the writ
petitoner themselves by virtue of the payments made in instalments, while so,
the direction issued by the learned Judge is not warranted.
8. Heard the learned counsel for the appellants as well as the learned
counsel for the first respondent/writ petitioner and the learned Government
Advocate for the second respondent.
9. After advancing some arguments, the learned Additional Solicitor
General appearing for the appellants as well as the learned counsel for the writ
petitioner/first respondent ultimately submitted that an enquiry has to be
conducted and the actual tax liability of the writ petitioner/first respondent, if
any, has to be determined in the light of the available materials. Therefore, in
unison, it was prayed that the appellants may be directed to conduct an
enquiry, determine the tax liability of the writ petitioner/first respondent and
thereafter to proceed in accordance with law.
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W.A.No.1441 of 2021
10. In the light of the above submission of the counsel on either side,
to give a quietus to the dispute, this Court is inclined to dispose of this writ
appeal with the following directions:-
(i) The appellants are directed to issue a show cause notice calling
upon the writ petitioner/first respondent to produce documents to prove that
they are not liable to pay any tax under the Act or they have paid the entire tax
due to the department, within a period of four weeks from the date of receipt
of a copy of this order
(ii) On receipt of such notice, the writ petitioner/first respondent shall
submit their objections, if any, along with documentary evidence, within a
period of two weeks thereafter.
(iii) Thereafter, the appellants are directed to afford an opportunity of
personal hearing to the writ petitioner/first respondent by specifying a date in
advance.
(iv) The writ petitioner/first respondent shall appear before the
appellants on the date fixed for personal hearing and make their submissions
(v) After hearing the writ petitioner/first respondent or their
authorised representative on the date fixed for personal hearing, the appellants
are directed to pass appropriate orders on merits determining the amount of
tax, if any, payable by the writ petitioner/first respondent inter alia their
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W.A.No.1441 of 2021
entitlement to get refund of the sum of Rs.2 crores already paid by them. Such
an order shall be passed by the appellants, within a period of four weeks
thereafter.
11. With the above directions, the order dated 07.04.2021 passed by
the learned Judge in W.P. No.5192 of 2020 is modified and the Writ Appeal
stands disposed of. Consequently, the connected miscellaneous petition is
closed. No costs.
(R.M.D.,J.) (J.S.N.P.,J.)
23.02.2022
kas/rsh
Index :Yes / No
Internet : Yes / No
Speaking /Non-Speaking Order
To
State GST Authority/The
Assistant Commissioner (ST) (FAL)
Annathanapatty Circle, Salem.
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W.A.No.1441 of 2021
R.MAHADEVAN, J
and
J. SATHYA NARAYANA PRASAD, J
kas/rsh
WA No. 1441 of 2021
23.02.2022
https://www.mhc.tn.gov.in/judis
