2021-TIOL-2073-HC-KAR-GST
Bundl Technologies Pvt Ltd Vs UoI
GST - Petitioner is registered and operates an e-commerce platform under the name 'Swiggy' - It is stated that during holidays and festive season, owing to spike in food orders, the third party service providers are engaged -Furthermore, the third party service providers charge consideration for delivery and supply of food alongwith GST and the GST paid by the petitioner to third party service providers is availed as Input Tax Credit by the petitioner -It is alleged by the Directorate General of Goods and Services Tax Intelligence, Hyderabad Zonal Unit that the alleged third party service provider i.e. Greenfinch was a non-existent entity and accordingly, the Input Tax Credit availed by the petitioner were fraudulent - Petitioners seeks for issuance of a writ of mandamus directing the respondents to refund an amount of Rs.27,51,44,157/- allegedly illegally collected from the petitioner, issuance of an appropriate writ in the nature of direction to the respondents not to take any coercive action against the petitioner and its officials during the pendency of ongoing investigation, issuance of a writ directing the respondents to pay interest of 12% p.a. on the amount the refund etc. - Petitioner has also sought for issuance of a writ or order holding Section 16(2)(c) of the Act, 2017 as unconstitutional.
Held:
Refund and alternative remedy
+ No doubt the application for refund has been filed by the petitioner invoking the statutory remedy, but insofar as such of the applications, the Department has responded by way of communication dated 13.10.2020, wherein Department has merely asserted that the claim for refund is premature, as the same is made during the course of investigation. [para 27]
+ It must be noted that if there is an amount that has been wrongfully withheld, which could be demonstrated to be so, there is no bar for exercising writ jurisdiction to issue appropriate directions directing the respondent to make good the petitioner's claim for refund. [ Godavari Sugar Mills Ltd. v. State of Maharashtra and Others reported in (2011) 2 SCC 439 relied upon] [para 28]
Self-ascertainment under Section 74(5) of CGST Act
+ It is clear that the procedure of self-ascertainment under sub-section (5) of Section 74 contains a scheme that is concluded after following the procedure under sub-sections (6), (7) and (8) of Section 74 of the CGST Act. In the present case, it must be noted that though there is payment of tax and even if it is accepted that payment of tax is also followed by requisite Challan DRC-03, the mere payment of tax cannot be construed to be a payment towards self-ascertainment as contemplated under Section 74 (5) of CGST Act. [para 35]
+ The scheme of self-ascertainment as contained in sub-sections (5), (6), (7), (8) of Section 74 of CGST Act would not admit of making of payment and continuance of investigation. Upon payment of tax after collection of the same with penalty, if the same is accepted even before the issuance of notice under Section 74(1) during investigation, there ends the matter and there is nothing further to be proceeded with. [para 37]
+ If it is that the petitioner has paid tax on self-ascertainment, the question of respondents contending that the investigation is pending would also indicate that the contention of self-ascertainment as made out by the respondent is clearly an afterthought. Accordingly, the contention of payment being made by way of self-ascertainment is liable to be rejected. [para 38]
Amount paid under coercion
+ Insofar as the aspect as to whether amount is paid under coercion as asserted by the petitioner, suffice it to say that the amounts are paid contemporaneous to the very dates when investigation was being made and during times when the petitioner's Officers or Directors were at the place of investigation, which fact is not in dispute.
+ Instead of allowing investigation to proceed and be concluded, it appears that the Department has acted in undue haste insofar as to ensure that taxes were paid during the process of investigation. While considering the time at which the amount was deposited in the Cash Ledger and the date of deposit, it would indicate that amounts were paid during times when there was no legal obligation to make payment. [para 45]
+ The manner in which investigation was carried out in late hours of the night and the early hours of the morning with physical closing of the gates during the investigation would reasonably create an apprehension in the mind of any person including the persons of the standing of Directors of the Assessee Company and its officers. The fear of police powers are such that would shake a man irrespective of their position in society.
+ In the context of the facts as made out, the payment cannot be stated to have been made voluntarily. [para 46]
Right of Bona fide Tax Paver to be treated with dignity:-
+ It must be noted that filing of return and payment of substantial taxes by the petitioner would clearly warrant for treating such taxpayers with certain element of dignity. Such a taxpayer who has been filing returns and paying taxes but who may dispute the Department's claim as regards certain transactions only can be construed to be bona fide taxpayer. [para 53]
+ A bonafide taxpayer is required to be treated better than a 'detenu and arrestee'.
+ No doubt, the power of investigation cannot be interfered with nor can the court direct investigation be made in a particular manner, however, during all such investigation, it cannot be held that the Fundamental Rights including the right of a bona fide tax payer to be treated with appropriate dignity as enshrined under Article 21 of the Constitution of India would be kept in abeyance. [para 55]
Video Recording of Investigation
+ Court by a considered interim order in the present proceedings on 20.04.2021 has recorded a legal mandate of installing of CC TV in all offices where interrogation is being carried out. Installation of CC TV as ordered by the Apex Court would take within itself recording of all that would fall within the range of CC TV. [para 56, 57]
Validity of s.16(2)(c) of Act, 2017.
+ Court would not readily embark upon adjudication of constitutional validity of the provision when the grievance of the petitioner would otherwise be redressed. In the present case, in light of disposal of the writ petition, providing substantial relief to the petitioner and as the legality of the said provision has not been adverted to in detail in oral arguments, the court refrains from adjudication relating to the constitutional validity of Section 16(2)(c) of the Act and the contentions of the parties as regards constitutional validity of Section 16(2)(c) is kept open. [para 59]
Conclusion:
+ Consideration of the right of refund in the present factual matrix would be independent of the process of investigation and the two cannot be linked together.
+ Refund applications are to be considered and suitable orders be passed within a period of four weeks. [para 61, 62]
- Petition is disposed of: KARNATAKA HIGH COURT
2021-TIOL-2072-HC-KERALA-GST
MSA Plywood Vs State of Kerala
GST - Petitioner challenges the summons issued as well as the order of confiscation - Petitioner submits that the goods which were detained u/s 129 of the Act, 2017 on 02.07.2021 is with the 4th respondent for the last two months and in spite of the petitioner expressing his willingness to furnish security or even pay the tax and penalty contemplated u/s 129(1) of the Act, the 4th respondent was not willing to release the goods, under one pretext or the other - In the meantime, order u/s 130 has been issued on 07.08.2021 - Petitioner also informs that they have paid the entire penalty, fine and tax imposed, however, the goods have not been released till date and, therefore, they seek urgent orders for release - Counsel for Revenue submits that the goods can be released as contemplated u/s 130(2) only to the owner of the goods and the 4th respondent believes that the petitioner is not the owner.
Held: The word 'owner' is not defined under the Central Goods and Services Tax Act, 2017 - Under the Goods and Services Tax Act, 2017, which deals with the sale or supply of goods and services, the word 'owner' of goods can mean the person who claims right to the goods by virtue of an invoice or by any other means which proves the right to claim ownership of the goods - Admittedly, Ext.P2 is the invoice relating to the transaction between the petitioner and the consignee in Maharashtra, during the transportation of which the goods were intercepted - Thus, it was the petitioner who had generated the invoices for the goods on 02.07.2021, immediately prior to interception of the goods - Since the invoice is in the name of the petitioner, he shall be deemed to be the owner of the goods - It is clear upon reading the Circular No. 76/50/2018-GST that when the goods are accompanied by an invoice, there is no discretion upon the officer to adjudicate as to the ownership of the said goods - It is elementary that in sale of goods when there is an invoice that covers goods, the title to the goods are determined by the said invoice - Mandate of Section 130 will be defeated if the goods are not released to the person who holds the invoice at the time of interception when the entire penalty, fine and tax are tendered - Since on 17.08.2021, petitioner had tendered the entire fine, penalty and tax in lieu of confiscation, there is no justification for the 4th respondent to retain or detain goods and the vehicle any further - 4th respondent is directed to release the goods covered by the confiscation order, at any rate, not later than 24 hours from the date of receipt of copy of this order - For filing counter affidavit, matter posted on 20.09.2021: High Court [para 7, 9, 10, 12, 13]
- Petition disposed of: KERALA HIGH COURT |
