CHANDER MOHAN GOEL, PROPRIETOR OF M/S. GOEL BROS. VERSUS UNION OF INDIA & ORS.

Liability of Interest – delayed submission of GSTR-3B – Section 50 of the CGST Act – petitioner’s submission is that upon credit into the electronic cash ledger of the petitioner assessee, the amount stands credited into the account of the government – HELD THAT:- Prima-facie, we do not agree with the submission. However, since the matter is still at preliminary stage, we do not wish to say anything further on this aspect lest the same has a bearing on the final decision of the Court.

The demand raised by the respondents only in respect of interest on the ITC, which was lying to the credit of the petitioner assessee, is stayed – List on 8th October, 2020.

No.- W.P.(C) 2739/2020

Dated.- March 13, 2020

MR. MANMOHAN AND MR. SANJEEV NARULA JJ.

Petitioner Through Ms. Nidhi Gupta with Mr. Bharat Bhushan, Advocates  

Respondent Through Mr. Vivekanand Mishra, Sr. Panel Counsel for R-1/UOI. Mr. Harpreet Singh, Sr. Standing Counsel with Mr. Ankit Singh, Advocate for R-2, 3 and 4.

O R D E R  

C.M. No. 9540/2020

Allowed, subject to just exception.

W.P.(C) 2739/2020 & CM No. 9539/2020

Issue notice.

Mr. Vivekanand Mishra, learned senior panel counsel accepts notice on behalf of respondent no. 1. Mr. Harpreet Singh, learned senior standing counsel accepts notice on behalf of respondent nos. 2, 3 and 4.

We have heard learned counsels on the aspect of grant of interim relief. The instant petition impugns demand notice bearing No. GSTW/DL/KN/R-98/Interest Liability/1558/2019-20 dated 12th February, 2020 issued under Section 50 of the CGST Act for delayed submission of GSTR-3B. The aforesaid notice raises a demand of ₹ 2,34,836/- which comprises of interest on cash component of ₹ 19,548/- and ₹ 2,15,288/- in respect of tax paid by utilization of Input Tax Credit.

The submission of learned counsel for the petitioner is that upon credit into the electronic cash ledger of the petitioner assessee, the amount stands credited into the account of the government.

Prima-facie, we do not agree with the submission. However, since the matter is still at preliminary stage, we do not wish to say anything further on this aspect lest the same has a bearing on the final decision of the Court.

Accordingly, we stay the demand raised by the respondents only in respect of interest on the ITC, which was lying to the credit of the petitioner assessee.

The respondents shall file their counter-affidavit(s) within four weeks. Rejoinder, if any, be filed before the next date.

List on 8th October, 2020.

M/S. GLOBAL CERAMICS PVT. LTD. VERSUS THE UNION OF INDIA AND 8 ORS.

Refusal of the system in uplodading the data to enable the petitioner to claim transitional credit of eligible duties in respect of stock held by the petitioner – Section 140 of Central Goods & Service Tax Act, 2017 – HELD THAT:- The Nodal Officer, GST Division Range is directed to look into the aforesaid issue so that the petitioner can upload the correct figure and the revised GST-TRAN- 1 form so that he can get the benefit of the input tax credit.

Petition disposed off.

No.- WP(C) 814/2020

Dated.- March 13, 2020

MR. N. KOTISWAR SINGH J.

Advocate for the Petitioner : Mr. D Saraf

Advocate for the Respondent : Asstt.S.G.I.

ORDER  

Heard Mr. D. Saraf, learned counsel for the petitioner. Also heard Mr. B. Choudhury, learned Standing Counsel, Finance and Taxation Department for respondent Nos. 2, 7, 8 & 9.

The matter pertains to refusal of the system in uplodading the data to enable the petitioner to claim transitional credit of eligible duties in respect of stock held by the petitioner in terms of Section 140 of Central Goods & Service Tax Act, 2017.

According to the petitioner, the petitioner is entitled to an amount of ₹ 13,11,274/- as input tax credit on the appointed day. However, because of erroneous uploading of a lesser amount of ₹ 3,11,274/-, though he is entitled to ₹ 13,11,274/- the petitioner is not getting the benefit.

According to the petitioner, the endeavour of the petitioner to upload the correct figure was declined by the system, because of which the petitioner approached the authorities, but the authorities are also not co-operating.

Mr. Choudury, learned Standing Counsel, Finance and Taxation submits that the matter relating to technical glitch in uploading correct figure of amount and the inadvertent error made by the petitioner will be looked into by the Nodal Officer, GST Division Range in spite of earlier refusal to do so, because of which the petitioner has approached this Court.

In view of the submission made by the learned Standing Counsel, Finance and Taxation Department, the Nodal Officer, GST Division Range is directed to look into the aforesaid issue so that the petitioner can upload the correct figure and the revised GST-TRAN- 1 form so that he can get the benefit of the input tax credit.

Accordingly, the present petition is disposed of in the light of the above submission made and direction issued.

UNION OF INDIA VERSUS M/S. SARAF NATURAL STONE

Interest on delayed refunds – Section 56 of the CGST Act – this Court directed the applicants herein to pay simple interest on the delayed payment @ 9% per annum. This Court also directed the applicants to look into the chart provided by the writ applicants Annexure-D page-30 of the main matter.

By this application, the applicants seek review of our order to the limited extent that the directions could not have been for making payment @ 9% per annum but, in fact, it should have been @ 6% per annum as provided under Section 56 of the CGST Act.

HELD THAT:- No case is made out for review of the order passed by this Court dated 10.07.2019. Having regard to the peculiar facts and circumstances of the case, this Court thought fit to award interest @ 9% per annum.

Application dismissed.

No.- MISC. CIVIL APPLICATION (FOR REVIEW) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 15925 of 2018

Dated.- March 13, 2020

Citations:

  1. Commissioner of Income Tax, Gujarat Versus Gujarat Fluoro Chemicals – 2013 (10) TMI 117 – Supreme Court
  2. K.T. Plantation Pvt. Ltd. & Anr Versus State Of Karnataka – 2011 (8) TMI 1107 – Supreme Court
  3. Sandvik Asia Limited Versus Commissioner Of Income-Tax And Others – 2006 (1) TMI 55 – Supreme Court
  4. M/s SARAF NATURAL STONE Versus UNION OF INDIA – 2019 (7) TMI 1282 – GUJARAT HIGH COURT
  5. State of Gujarat Versus Doshi Printing Press – 2015 (3) TMI 211 – GUJARAT HIGH COURT
  6. Gujarat Flourochemicals Ltd. Versus Commissioner of Income Tax & 3 & 1 – 2015 (2) TMI 453 – GUJARAT HIGH COURT
  7. SHIV KUMAR JAIN Versus UNION OF INDIA – 2003 (11) TMI 99 – HIGH COURT AT CALCUTTA

MR.J.B. PARDIWALA AND MR.A.C. RAO JJ.

Appearance:

VIRAL K SHAH for the PETITIONER(s) No.

MR VINAY SHRAFF FOR MR.VISHAL J DAVE for the RESPONDENT(s) No.

IA ORDER

(PER : MR.J.B.PARDIWALA)

Rule returnable forthwith. Mr. Vishal J. Dave, the learned standing counsel, waives service of notice of rule for and on behalf of the opponents.

This is an application at the instance of the original respondents of the Special Civil Application No.15925 of 2018 with the following prayers :

“a) This Hon’ble Court is pleased to admit and allow this petition.

b) This Hon’ble Court be pleased to recall or review order dated 10.07.2019 passed in Special Civil Application No.15925 of 2018 in the interest of justice;

c) Such other and further relief as this Hon’ble Court may deem just, fit and expedient be granted in favour of the petitioner.”  

While disposing of the main matter i.e. the Special Civil Application No.15925 of 2018 vide order dated 10.07.2019, this court observed in paragraphs 14 to 25 as under :

“14. Section 56 of the CGST Act provides that if any tax ordered to be refunded under subsection( 5) of Section 54 to any applicant is not refunded within sixty days from the date of receipt of the application under subsection (1) of that section, interest at such rate not exceeding 6% as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of the application under the subsection till the date of refund of such tax. Section 56 of the CGST Act reproduced herein below:

Section 56: Interest on Delayed Refunds:

If any tax ordered to be refunded under subsection (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under subsection (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said subsection till the date of refund of such tax:

Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.

Explanation: For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under subsection (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said subsection (5).

15. Rule 94 of the CGST provides for the order sanctioning interest on delayed refunds. It reads as follows:

Rule 94: Order Sanctioning Interest on Delayed Refunds:

Where any interest is due and payable to the applicant under section 56, the proper officer shall make an order along with a payment order in FORM GST RFD-05, specifying therein the amount of refund which is delayed, the period of delay for which interest is payable and the amount of interest payable, and such amount of interest shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund.

16. We shall now look into few decisions of different High Courts including our High Court on the subject.

17. The Calcutta High Court in the case of Shiv Kumar Jain Vs. Union of India reported in 2004 (168) E.L.T. 158 (Cal.) held as under:

“4. In my view, the time taken for refund of the money in terms of the CEGAT’s order is unreasonable. CEGAT’s order was passed on 21st June, 2001 so one could expect either the matter to be taken to higher up, and for this, under law ninety days time is given and on expiry of this time the department was expected to refund this money, since it is a Government Department. So, unlike the ordinary citizen another three months of grace time may be given for taking action. So, the department should have released this amount within the reasonable time of six months, namely by 31st December, 2001. Unfortunately, this has not been done. So, I think after expiry of 31st December, 2001 the Government has no justification for withholding this money, and I hold this is an negligent inaction on the part of the Government. The Government cannot deprive the enjoyment of the property without due recourse to law and this withholding cannot be termed to be a lawful one nor an established procedure under the law. Therefore, this inaction is wholly unjustified and this has really caused the deprivation of the petitioner’s enjoyment of the property namely the aforesaid amount. Therefore, this is positively violative of the provision of Article 300A in Chapter IV under Part XII of the Constitution of India. When there is breach of constitutional right either by omission or by commission by the State such breach can be remedied under Article 226 of the Constitution of India. The petitioner could have earned interest during this period but because of the withholding this could not be done. I find in support of my observation from the judgment cited by Mr. Chowdhury as above. In that case a pre deposit amount was directed to be refunded with interest at the rate of 15% per annum. Of course at that point of time the rate of interest of Bank might be higher, but having regard to the present facts and circumstances of this case the rate of interest as allowable now admittedly by the Reserve Bank of India in case of its bond not exceeding 8% per annum, will be appropriate. Therefore, I direct the respondents to pay interest at the rate of 8% on the aforesaid amount of ₹ 10 lacs to be calculated from January 2002 till 3rd April, 2003 when the payment of principal amount was effected. This payment of interest shall be made within a period of three months from the date of communication of this order. However, there will be no interest for this period.”

18. A Five Judge Bench of the Supreme Court in the matter of K.T. Plantation Pvt. Ltd. & Anr. Vs. State of Karnataka reported at (2011) 9 SCC 1 in para 143 held that:

……..

(e) Public purpose is a pre-condition for deprivation of a person from his property under Article 300A and the right to claim compensation is also inbuilt in that Article and when a person is deprived of his property the State has to justify both the grounds which may depend on scheme of the statute, legislative policy, object and purpose of the legislature and other related factors.

……..

19. A Division Bench of this Court in the matter of State of Gujarat Vs. Doshi Printing Press reported at MANU/GJ/0420/2015 held that:

16. From the conjoint reading of the decision of the Apex Court in the case of Sandvik Asia Limited Vs. Commissioner of Income Tax & Others (supra) and the latter decision of the Larger Bench in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra) it appears that the liability to pay interest on interest by the Revenue is not approved and to that extent the contention of the Revenue can be maintained. But the further contention of the Revenue that no interest whatsoever would be payable if the refund of the amount of tax or refund of the amount deposited towards tax is to be made, no interest whatsoever would be available by way of compensatory measure.

17. In our view, the general principles for awarding compensation to the Assessee for the delay in receiving monies properly due to it is not disapproved by the Larger Bench of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra).”

13. In our view, the above-referred observation made by this Court in the above-referred decision in case of Gujarat Fluoro Chemicals (supra) is a complete answer to the contention of the learned A.G.P. that the interest can be awarded even if not expressly barred by the statute or that the taxing statute is silent about the same”.

20. The word ‘Compensation’ has been defined in P. Ramanatha Aiyar’s Advanced Law Lexicon 3rd Edition 2005 page 918 as follows:

“An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury; the consideration or price of a privilege purchased; some thing given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer.”

21. We may now reproduce the Chart indicating the delay in days:

Delay in refund for SARAF NATURAL STONE

Month

Invoice Date Refund Amount Date of filing of GSTR 3 7 days from Return Filing Date of Refund Delay in days
July’17 06/07/17 12018 25/08/2017 01/09/17 18/06/2018 290
10/07/17 16380 25/04/2018 236
10/07/17 12763 25/04/2018 236
11/07/17 2,33,103 04/12/17 94
12/07/17 2,77,949 04/12/17 94
13/07/2017 9183 25/04/2018 236
13/07/2017 2,17,718 04/12/17 94
13/07/2017 12534 25/04/2018 236
14/07/2017 1,97,712 04/12/17 94
14/07/2017 2,26,655 04/12/17 94
14/07/2017 19720 25/04/2018 236
15/07/2017 16274 04/12/17 94
15/07/2017 25464 25/04/2018 236
15/07/2017 12333 25/04/2018 236
15/07/2017 14917 25/04/2018 236

22. The position of law appears to be well-settled. The provisions relating to an interest of delayed payment of refund have been consistently held as beneficial and nondiscriminatory. It is true that in the taxing statute the principles of equity may have little role to play, but at the same time, any statute in taxation matter should also meet with the test of constitutional provision.

23. The respondents have not explained in any manner the issue of delay as raised by the writ-applicants by filing any reply.

24. The chart indicating the delay referred to above speaks for itself.

25. In the overall view of the matter, we are inclined to hold the respondents liable to pay simple interest on the delayed payment at the rate of 9% per annum. The authority concerned shall look into the chart provided by the writ-applicants, which is at Page30, Annexure-D to the writ-application and calculate the aggregate amount of refund. On the aggregate amount of refund, the writ-applicants are entitled to 9% per annum interest from the date of filing of the GSTR-03.

The respondents shall undertake this exercise at the earliest and calculate the requisite amount towards the interest. Let this exercise be undertaken and completed within a period of two months from the date of receipt of the writ of this order. The requisite amount towards the interest shall be paid to the writ-applicants within a period of two months from the date of receipt of the writ of this order.”

Thus, this Court directed the applicants herein to pay simple interest on the delayed payment @ 9% per annum. This Court also directed the applicants to look into the chart provided by the writ applicants Annexure-D page-30 of the main matter.

By this application, the applicants seek review of our order to the limited extent that the directions could not have been for making payment @ 9% per annum but, in fact, it should have been @ 6% per annum as provided under Section 56 of the CGST Act.

“Section 56:

Interest on Delayed Refunds: If any tax ordered to be refunded under subsection (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under subsection (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said subsection till the date of refund of such tax:

Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.

Explanation: For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under subsection (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said subsection (5).”

Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are of the view that no case is made out for review of the order passed by this Court dated 10.07.2019. Having regard to the peculiar facts and circumstances of the case, this Court thought fit to award interest @ 9% per annum.

In view of the above, this application fails and is hereby rejected. Rule is discharged.

UNION OF INDIA VERSUS WILLOWOOD CHEMICALS PVT. LTD.

Interest on delayed refunds – section 56 of CGST Act – this Court directed the applicants herein to pay simple interest on the delayed payment @ 9% per annum – case of applicant is that the directions could not have been for making payment @ 9% per annum but, in fact, it should have been @ 6% per annum as provided under Section 56 of the CGST Act.

HELD THAT:- No case is made out for review of the order passed by this Court dated 10.07.2019. Having regard to the peculiar facts and circumstances of the case, this Court thought fit to award interest @ 9% per annum.

Application dismissed.

No.- MISC. CIVIL APPLICATION (FOR REVIEW) NO. 1 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 18591 of 2018

Dated.- March 13, 2020

Citations:

  1. Commissioner of Income Tax, Gujarat Versus Gujarat Fluoro Chemicals – 2013 (10) TMI 117 – Supreme Court
  2. K.T. Plantation Pvt. Ltd. & Anr Versus State Of Karnataka – 2011 (8) TMI 1107 – Supreme Court
  3. Sandvik Asia Limited Versus Commissioner Of Income-Tax And Others – 2006 (1) TMI 55 – Supreme Court
  4. WILLOWOOD CHEMICALS PVT. LTD. And 1 other (s) Versus UNION OF INDIA And 2 other (s) – 2019 (7) TMI 1328 – GUJARAT HIGH COURT
  5. M/s SARAF NATURAL STONE Versus UNION OF INDIA – 2019 (7) TMI 1282 – GUJARAT HIGH COURT
  6. State of Gujarat Versus Doshi Printing Press – 2015 (3) TMI 211 – GUJARAT HIGH COURT
  7. SHIV KUMAR JAIN Versus UNION OF INDIA – 2003 (11) TMI 99 – HIGH COURT AT CALCUTTA

Mr. Justice J.B. Pardiwala And Mr. Justice A.C. Rao

For the Petitioner : Viral K Shah

For the Respondent : Mr Vinay Shraff For Parth S Shah

IA ORDER

(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)

Rule returnable forthwith. Mr. Parth S. Shah, the learned counsel, waives service of notice of rule for and on behalf of the opponents.

This is an application at the instance of the original respondents of the Special Civil Application No.18591 of 2018 with the following prayers :

“a) This Hon’ble Court is pleased to admit and allow this petition.

b) This Hon’ble Court be pleased to recall or review order dated 10.07.2019 passed in Special Civil Application No.18591 of 2018 in the interest of justice;

c) Such other and further relief as this Hon’ble Court may deem just, fit and expedient be granted in favour of the petitioner.”

While allowing the main matter i.e. the Special Civil Application No.18591 of 2018 vide order dated 10.07.2019, this Court observed in paragraph 14 to 25 of the similarly situated writ application being Special Civil Application No.15925 of 2018 as under :

“14. Section56 of the CGST Act provides that if any tax ordered to be refunded under sub-section(5) of Section 54 to any applicant is not refunded within sixty days from the date of receipt of the application under sub-section (1) of that section, interest at such rate not exceeding 6% as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of the application under the sub-section till the date of refund of such tax. Section56 of the CGST Act reproduced herein below:

Section-56: Interest on Delayed Refunds:

If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax:

Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.

Explanation: For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5).

15. Rule 94 of the CGST provides for the order sanctioning interest on delayed refunds. It reads as follows:

Rule 94: Order Sanctioning Interest on Delayed Refunds:

Where any interest is due and payable to the applicant under section 56, the proper officer shall make an order along with a payment order in FORM GST RFD-05, specifying therein the amount of refund which is delayed, the period of delay for which interest is payable and the amount of interest payable, and such amount of interest shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund.

16. We shall now look into few decisions of different High Courts including our High Court on the subject.

17. The Calcutta High Court in the case of Shiv Kumar Jain Vs. Union of India reported in 2004 (168) E.L.T. 158 (Cal.) held as under:

“ 4. In my view, the time taken for refund of the money in terms of the CEGAT’s order is unreasonable. CEGAT’s order was passed on 21st June, 2001 so one could expect either the matter to be taken to higher up, and for this, under law ninety days time is given and on expiry of this time the department was expected to refund this money, since it is a Government Department. So, unlike the ordinary citizen another three months of grace time may be given for taking action. So, the department should have released this amount within the reasonable time of six months, namely by 31st December, 2001.

Unfortunately, this has not been done. So, I think after expiry of 31st December, 2001 the Government has no justification for withholding this money, and I hold this is an negligent inaction on the part of the Government. The Government cannot deprive the enjoyment of the property without due recourse to law and this withholding cannot be termed to be a lawful one nor an established procedure under the law. Therefore, this inaction is wholly unjustified and this has really caused the deprivation of the petitioner’s enjoyment of the property namely the aforesaid amount. Therefore, this is positively violative of the provision of Article 300A in Chapter IV under Part XII of the Constitution of India. When there is breach of constitutional right either by omission or by commission by the State such breach can be remedied under Article 226 of the Constitution of India. The petitioner could have earned interest during this period but because of the withholding this could not be done. I find in support of my observation from the judgment cited by Mr. Chowdhury as above. In that case a pre deposit amount was directed to be refunded with interest at the rate of 15% per annum. Of course at that point of time the rate of interest of Bank might be higher, but having regard to the present facts and circumstances of this case the rate of interest as allowable now admittedly by the Reserve Bank of India in case of its bond not exceeding 8% per annum, will be appropriate. Therefore, I direct the respondents to pay interest at the rate of 8% on the aforesaid amount of ₹ 10 lacs to be calculated from January 2002 till 3rd April, 2003 when the payment of principal amount was effected. This payment of interest shall be made within a period of three months from the date of communication of this order. However, there will be no interest for this period.”

18. A Five Judge Bench of the Supreme Court in the matter of K.T. Plantation Pvt. Ltd. & Anr. Vs. State of Karnataka reported at (2011) 9 SCC 1 in para 143 held that:

……..

(e) Public purpose is a pre-condition for deprivation of a person from his property under Article 300A and the right to claim compensation is also inbuilt in that Article and when a person is deprived of his property the State has to justify both the grounds which may depend on scheme of the statute, legislative policy, object and purpose of the legislature and other related factors.

……..

19. A Division Bench of this Court in the matter of State of Gujarat Vs. Doshi Printing Press reported at MANU/GJ/0420/2015 held that:16.

From the conjoint reading of the decision of the Apex Court in the case of Sandvik Asia Limited Vs. Commissioner of Income Tax & Others (supra) and the latter decision of the Larger Bench in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra) it appears that the liability to pay interest on interest by the Revenue is not approved and to that extent the contention of the Revenue can be maintained. But the further contention of the Revenue that no interest whatsoever would be payable if the refund of the amount of tax or refund of the amount deposited towards tax is to be made, no interest whatsoever would be available by way of compensatory measure.

17.In our view, the general principles for awarding compensation to the Assessee for the delay in receiving monies properly due to it is not disapproved by the Larger Bench of the Apex Court in the case of Commissioner of Income Tax, Gujarat Vs. Gujarat Fluoro Chemicals (supra).”

13. In our view, the above-referred observation made by this Court in the above-referred decision in case of Gujarat Fluoro Chemicals (supra) is a complete answer to the contention of the learned A.G.P. that the interest can be awarded even if not expressly barred by the statute or that the taxing statute is silent about the same”.

20. The word ‘Compensation’ has been defined in P. Ramanatha Aiyar’s Advanced Law Lexicon 3rd Edition 2005 page 918 as follows:

“An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury; the consideration or price of a privilege purchased; some thing given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer.”

21. We may now reproduce the Chart indicating the delay in days:-

Delay in refund for SARAF NATURAL STONE

Month Invoice Date Refund Amount Date of filing of GSTR 3 7 days from Return Filing Date of Refund Delay in days
July’17 06/07/17 12018 25/08/2017 01/09/17 18/06/2018 290
10/07/17 16380 25/04/2018 236
10/07/17 12763 25/04/2018 236
11/07/17 2,33,103 04/12/17 94
12/07/17 2,77,949 04/12/17 94
13/07/2017 9183 25/04/2018 236
13/07/2017 2,17,718 04/12/17 94
13/07/2017 12534 25/04/2018 236
14/07/2017 1,97,712 04/12/17 94
14/07/2017 2,26,655 04/12/17 94
14/07/2017 19720 25/04/2018 236
15/07/2017 16274 04/12/17 94
15/07/2017 25464 25/04/2018 236
15/07/2017 12333 25/04/2018 236
15/07/2017 14917 25/04/2018 236

22. The position of law appears to be well-settled. The provisions relating to an interest of delayed payment of refund have been consistently held as beneficial and non-discriminatory. It is true that in the taxing statute the principles of equity may have little role to play, but at the same time, any statute in taxation matter should also meet with the test of constitutional provision.

23. The respondents have not explained in any manner the issue of delay as raised by the writ-applicants by filing any reply.

24. The chart indicating the delay referred to above speaks for itself.

25. In the overall view of the matter, we are inclined to hold the respondents liable to pay simple interest on the delayed payment at the rate of 9% per annum. The authority concerned shall look into the chart provided by the writ-applicants, which is at Page30, Annexure-D to the writ-application and calculate the aggregate amount of refund. On the aggregate amount of refund, the writ-applicants are entitled to 9% per annum interest from the date of filing of the GSTR-03.

The respondents shall undertake this exercise at the earliest and calculate the requisite amount towards the interest. Let this exercise be undertaken and completed within a period of two months from the date of receipt of the writ of this order. The requisite amount towards the interest shall be paid to the writ-applicants within a period of two months from the date of receipt of the writ of this order.”

Thus, this Court directed the applicants herein to pay simple interest on the delayed payment @ 9% per annum. This Court also directed the applicants to look into the chart provided by the writ applicants Annexure-D page-30 of the main matter.

By this application, the applicants seek review of our order to the limited extent that the directions could not have been for making payment @ 9% per annum but, in fact, it should have been @ 6% per annum as provided under Section 56 of the CGST Act.

“Section56: Interest on Delayed Refunds:

If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax:

Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.

Explanation: For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5).”

Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are of the view that no case is made out for review of the order passed by this Court dated 10.07.2019. Having regard to the peculiar facts and circumstances of the case, this Court thought fit to award interest @ 9% per annum.

In view of the above, this application fails and is hereby rejected. Rule is discharged.

M/S. BHATTER TRADERS AND ANR, RAJESH BHATTER VERSUS THE STATE OF ASSAM AND 5 ORS., ASSAM STATE AGRICULTURAL MARKETING BOARD, ASSAM STATE MARKETING COMMITTEE, CHIEF EXECUTING OFFICER, SIVASAGAR DISTRICT REGULATED MARKET COMMITTEE, JORHAT DISTRICT REGULATED MARKET COMMITTEE

Collection of cess of the respondent Assam State Agricultural Marketing Board – Restriction on collection due to restraint order – Section 21 of the Assam Agricultural Produce Market Act, 1972, as amended – HELD THAT:- The respondent Board has been permitted to collect the cess in accordance with the judgment and order passed by the Division Bench of this Court on 12.09.2008[2008 (9) TMI 1012 – GAUHATI HIGH COURT ].

In so far as the contention regarding impermissibility to levy cess in terms of the provisions of Section 21 of the Act, 1972 in view of the advent of GST, a communication dated 31.07.2017 issued by the Government of Assam in the Agricultural Department to the Chief Executive Officer of the respondent Board has been brought to the notice of this Court. On perusal of the same, it transpires that the State Government has observed that normal realization of cess under Section 21 of the Act, 1972 on specified agricultural commodities from market areas will continue.

It is observed therein that prudence, discretion and circumspection are called for at the time of passing such an interim order. Mere existence of a prima facie case is not sufficient to grant an interim order against Revenue but several other factors like balance of convenience, irreparable injury, public interest, etc. are also to be taken into consideration.

Having due regard to the observations made in the order dated 30.03.2010 which is stated to be in operation till date; the fact situation obtaining in the present case and the consideration required to be given before passing any interim order against collection of revenue, as laid down in Dunlop India Ltd. [1984 (11) TMI 63 – SUPREME COURT ] and in P. V. Suresh [1993 (9) TMI 367 – SUPREME COURT ], I am of the prima facie view that the extension of the interim order dated 26.02.2020 is not found expedient at this stage and accordingly, the same is not extended.

List the matter on 08.04.2020.

No.- Case No. : WP(C) 1326/2020

Dated.- March 13, 2020

Citations:

  1. Union Territory of Pondicherry and Ors. Versus P.V. Suresh and Ors. – 1993 (9) TMI 367 – Supreme Court
  2. Assistant Collector of Central Excise, Chandan Nagar Versus Dunlop India Limited And Other – 1984 (11) TMI 63 – Supreme Court
  3. Assam Roller Flour Mills Association and Ors. Versus State of Assam and Ors. – 2008 (9) TMI 1012 – GAUHATI HIGH COURT
  4. Tinsukia Trading Co. Versus State of Assam and Ors. – 2001 (4) TMI 951 – GAUHATI HIGH COURT
  5. ASSAM ROLLER FLOUR MILLS ASSOCIATION Versus STATE OF ASSAM & ORS. – 2013 (10) TMI 1537 – SC Order

Honourable Mr. Justice Manish Choudhury

For the Petitioner : Ms. M L Gope

For the Respondent : SC, Agriculture Marketing Board.

ORDER

Heard Ms. N. Gogoi, learned counsel for the petitioner and Mr. A. Choudhury, learned counsel for the respondent nos. 2, 4, 5 & 6.

At the outset, it is submitted by Mr. Choudhury that there is no entity called “Assam Marketing Committee”, arrayed in this writ petition as party respondent no. 3.

Ms. Gogoi has submitted that the matter may be taken up on some other date, as she is led by other learned counsel in the case and they are not available in the Court today because of their personal difficulties. On the other hand, Mr. Choudhury expressing urgency in the matter, has strongly objected to such prayer and submitted that in view of the nature of the interim order passed on 26.02.2020 making the same operative till today as the returnable date, that too, without assigning any reason, the same has affected the entire operation of collection of cess of the respondent Assam State Agricultural Marketing Board (the Board, for short). Due to the restraint order, the Board has been prevented from collecting the cess which it is otherwise entitled to collect under the provisions of Section 21 of the Assam Agricultural Produce Market Act, 1972, as amended, (the Act, 1972, for short).

The respondent Board has, in the meantime on 12.03.2020, filed their affidavit-in-opposition in the matter. The respondent Board authorities as applicants, have also preferred an interlocutory application, I.A. (Civil) 938/2020, seeking vacation/modification of the interim order dated 26.02.2020, with the alternative prayer not to extend the operation of the interim order dated 26.02.2020 beyond the returnable date i.e. 13.03.2020. Mr. Choudhury referring to the order dated 26.02.2020, has submitted that in view of the interim order so passed, a prima facie consideration for extension or otherwise of the said interim order on the returnable date is necessary upon consideration of the issues involved in the writ petition. For ready reference, the interim order dated 26.02.2020 is reproduced hereunder :-

Heard Ms M. L. Gope, learned counsel for the petitioner. Mr. S. Barua, learned Standing Counsel, ASAMB representing respondent no.2 sought for two weeks time to file affidavit-in-opposition. Considering the same time is allowed.

However keeping in view the interim prayer as sought for, respondents shall not collect cess till the next returnable date.

List on 13.3.2020.”

Upon consideration of the said interim order, I find sufficient force in the said submission of Mr. Choudhury. Accordingly, a prima facie consideration for extension or otherwise of the above order is found necessary.

In the writ petition, it is projected that the petitioner is a proprietorship firm which is engaged in the business of “agricultural produce” like pulses, chana, etc. and for the said purpose, it brings raw materials from outside the State of Assam. In respect of the agricultural produce brought by the petitioner from outside to the State of Assam, the Board has been levying cess in purported exercise of the powers under Section 21 of the Act.

Section 21 of the Act states as under :

Power to levy cess21.

(1) Every Market Committee shall levy and collect a cess on the agricultural produce bought or sold in the market area at a rate not exceeding two rupees for every one hundred rupees of the aggregate amount for which a specified agricultural produce is bought or sold whether for cash or for deferred payment or other valuable considerations.

(2) The Assam State Agricultural Marketing Board shall also have the power to levy and collect cess for any or all of the Market Committee(s) in the market areas in addition to the powers of the Market Committee (but not both), whenever felt necessary with approval of the State Government, on the agricultural produce bought or sold in such market area(s) at a rate not exceeding two rupees for every one hundred rupees of aggregate amount for which a specified agricultural produce is bought or sold whether for cash or for deferred payment or other valuable considerations.

(3) No cess will be levied on goods manufactured from the agricultural produce on which cess is proposed to be levied and which are ultimately exported out of the Country.

Provided that no cess will be levied on goods manufactured from the agricultural produce on which cess is proposed to be levied and which are ultimately exported out of the country.

Explanation –– 1. For the purpose of this section all Specified Agricultural Produce shall unless the contrary is proved be deemed to be bought or sold in notified market area if –

(i) Such produce is taken out or proposed to taken out of the said area; or

(ii) the agreement of sale or purchase thereof in respect of such produce is entered into the said area; or

(iii) in pursuance of sale or purchase or the agreement of sale or purchase such produce is delivered in the said area to the purchaser or to some other person on behalf of the purchaser.]

Explanation ––2. The cess referred to in Section 21 shall be paid by the purchaser of the specified agricultural produce concerned.”

It has been contended that the levy of cess under Section 21 of the Act was challenged in a similar event before this Court and a Full Bench of this Court vide its judgment and order dated 04.04.2001 passed in Writ Appeal No. 392/1999 (Tinsukia Trading Co. vs. The State of Assam), reported in 2001 (1) GLT 520, has held that the respondent Board authorities under the Act, 1972 have no authority to collect cess for “agricultural produce”, which are transported into the notified market area in the State of Assam. The further contention is to the effect that to overcome the effect of the said judgment and order dated 04.04.2001, the respondent Board in order to collect cess on “agricultural produce”, has inserted Section 21A in the Act, 1972 by amendment in the year 2006. Another contention is that after the enactment of the Goods and Services Act, 2017 which has come into force w.e.f. 01.07.2017, the cess which is being levied by the respondent Board authorities, has been subsumed in the Goods and Services Tax (GST). Thus, no State is empowered to levy cess in respect of buying, selling and supply of goods and services. Apart from the above, a number of other contentions have been raised which are not required to be gone into at this stage of prima facie consideration for extension or otherwise of the interim order dated 26.02.2020, quoted above.

As regards the judgment and order dated 04.04.2001 of the Full Bench, it has emerged that the said judgment and order was assailed by the respondent Board before the Supreme Court of India in a special leave petition which was eventually numbered as Civil Appeal No. 3969/2001 after grant of leave. It was contended therein that a Full Bench by its order dated 04.04.2001 had struck down Rule 21(7) of the Assam Agricultural Produce Market (General) Rules, 1975 but at the time of striking down the said rule, it was no longer in existence, having been amended by the Assam Agricultural Produce Market (Amendment) Act, 2000 (the 2000 Amendment Act, for short). By an order dated 13.08.2001, the Supreme Court had stayed the operation and effect of the decision of the Full Bench on the condition that in the event of the appeal being dismissed, any amount which had been collected and became refundable shall have to be paid by the respondent Board authorities with interest.

Civil Appeal No. 3969/2001 was disposed of by taking into consideration the amendments made during the pendency of the Civil Appeal, by an order dated 08.12.2005 holding, interalia, that any amount which should be collected by the respondent Board authorities would be subject to the outcome of the writ petition, W.P.(C) No. 5491/2001 (Assam Roller and Floor Mills Association vs. State of Assam and others) and other similar writ petitions, then pending before this Court. It is contended on behalf of the respondents herein that by the above 2000 Amendment Act, Section 21 of the Act has been amended. The said batch of writ petitions, W.P.(C) No. 5491/2001 (Assam Roller Flour Mills and others vs. State of Assam and other) and other writ petitions, came to be disposed of by a Division Bench of this Court by a common judgment and order dated 12.09.2008, reported in 2008 (4) GLT 366. In the said batch of writ petitions, a number of provisions which had been inserted by the Assam Agricultural Produce Market (Amendment) Act, 2000 and the Assam Agricultural Produce Market (Amendment) Act, 2006 including the amendments brought in Section 21 of the Act, 1972, were assailed. In respect of the challenge made to the amendments brought in Section 21 of the Act, 1972, the Division Bench in paragraph 48 has observed as under :

The legal fiction thus comprehends a licit supposition of eventualities, which may or may not exist to achieve a legislative purpose. A court on the discernment of the objective, can permissibly infer the existence of hypothetical state of affairs and all conceivable consequences and corollaries logically ensuing therefrom. A purposive construction of the legal fiction needs to be adopted to achieve the legislative goal, the only constraint being that thereby the purpose of the fiction ought not to be stretched beyond the intended. The statutory purpose of the legal fiction, axiomatically is the controlling determinant, all other assumptions of relevant facts subsisting or not, to attain the same, being allowable. The significance and essentiality of a legal fiction being to fructify some legislative end, it ought to be permitted a full play subject to the restraint of unintended extension thereof annihilating the vey objective of its creation.

Section 21 of the Act authorizes the levy and collection of cess specified on the agriculture produce bought or sold in the market area at the rate specified.

Explanation-I envisages a rebuttable presumption that unless the contrary is proved, a specified agricultural produce would be deemed to have been bought or sold in the notified market area in the three eventualities enumerated in Clause (i), (ii) and (iii) thereof. The obvious legislative aim is to obviate the possibility of any transaction of sale or purchase of a specified agricultural produce in the notified market area going unnoticed and to prevent consequential evasion of cess. The presupposition is not in absolute terms and is liable to be displaced, if proved otherwise. Though three incidents have been comprehended which signify to hypothesize a sale or purchase of such produce in the notified area, these per se are neither antithetical nor incompatible with the essential attributes of such transactions as contemplated in law. Instead, the contingencies referred to in the three Clauses infer the existence thereof and seek to complement the same. The events, namely agreement of sale or purchase, delivery of the produce involved and the movement thereof as a consequence, can by no means be dismissed as features totally alien to a transaction of sale or purchase as known in law. Having regard to the market proliferation of such transactions in the recent times, the fiction understandably at the first instance seeks to relieve the Market Committee or the Board as the case may be of the seemingly impracticable task of stalking each and every transaction effected in the notified area and instead furnishes an option to the person concerned to dislodge the presumption of deemed sale or purchase. The legal fiction obligates the traders/dealers to be scrupulously vigilant and law compliant. Indubitably, they are obliged to pay the cess, if realizable in law.

There is no scope to presume that the levy would be exacted even if not payable. The eventualities comprehended in the three clauses of Explanation I are plausible consequences and/or corollaries relatable to a transaction of sale or purchase of a specified agricultural produce in a notified area and are not in our view transgressive of the contours of the purpose for which the legal fiction had been envisioned. The fiction is neither extra territorial nor ipso facto repugnant to the legally acknowledged features of sale and/or purchase. It is also not sui generis in its form or characteristics, identical provisions being available in many contemporaneous laws. More significantly it is vividly arranged on a corresponding provision in the Model Act, 1998 enacted in alignment with the recommendations of the High Power Committee on agricultural marketing suggesting measures to remove disparities in different State Marketing Acts and for their effective implementations. The Model Act 1998 present a paradigm of provisions so as to facilitate a balanced development of the agricultural marketing system of the country through uniform implementation of the agricultural produce marketing Acts. The legal fiction understandably seeks to cater to a mandate of national consensus in agricultural marketing system. The challenge to the amendment in Explanation I of Section 21 by the Act 2000 on this count therefore does not commend to us for acceptance.”

The Division Bench had also taken note of the fact that the Agricultural Produce Market (General) Rules, 1975, as amended by the Agricultural Produce Market (General) (Amendment) Rules, 2003 framed in exercise of the power under Section 49 of the Act, 1972 amongst others have provided for a detailed procedure for levy and collection of cess. Rule 25 of the said Rules provides for refund of market fee recoverable in excess of amount actually due or on a transaction which is exempted under the Rules. The amount recoverable is to be repaid out of the market development event or market committee fund dependable on the account on which it had been credited. The Division Bench in paragraph 94 has further observed as under :-

94. The realization of the cess, however, by all means would have to be in scrupulous observance of the necessary preconditions embodied in Section 21 of the Act and Rule 21, 22 and 23 of the Rules as discussed hereinabove.

The legal fiction engrafted in Section 21 would apply only in absence of any direct evidence of sale to the contrary. The levy and collection of cess on the specified agricultural produce would ensue only on the sale or purchase thereof in the market area as comprehended therein as well as at the rate specified.

The fictional factors would hold the sway only in absence of any direct evidence of sale or purchase repelling the same, in other words, the legal fiction would operate if the trader/dealer concerned fails to establish against sale or purchase of the specified agricultural produce in the concerned notified market area. This is so, be the collector of the cess is the concerned Market Committee or the Board on its behalf. In the latter eventuality, the additional pre-requisites as prescribed by Section 21(2) namely necessity of such realization and approval of the State Government would have to be essentially complied with.”

The above judgment of the Division Bench dated 12.09.2008 has been challenged before the Supreme Court of India in Special Leave to Appeal No. 11317/2009 and other connected matters by a number of traders stated to have dealt in agricultural produce. Leave was granted in those matters by an order dated 25.10.2013 and accordingly, the matters have been numbered as Civil Appeal No. 9655/2013, 9656/2013, 9657/2013 and 9666/2013.

It is submitted on behalf of the respondent Board that as on date, the said civil appeals are pending before the Supreme Court without any interim restraint order. It is found that, in the interregnum, a contempt petition being Cont. Case (C) No. 401/2008, came to be filed against certain officials of the respondent Board alleging forceful recovery of cess in violation of the judgment and order dated 12.09.2008. In a judgment rendered on 23.10.2009, a Division Bench of this Court had held a number of officials of the respondent Board guilty of contempt and punishments were imposed accordingly. Against the said order dated 23.10.2009 passed in Cont. Case(C) No. 401/2008, the contemnors preferred an appeal being Criminal Appeal No. 1967/2009. Certain observations made by the Division Bench in the judgment and order dated 23.10.2009 had also been challenged before the Supreme Court in a special leave petition, which has been numbered as SLP(C) No. CC 2765/2010. The permission has been granted to file the special leave petition on 30.03.2010 by the following order :

Permission to file SLP is granted.

Issue notice on the application for condonation of delay as well as on the special leave petitions.

Assam State Agricultural Marketing Board is permitted to collect tax in accordance with the Judgment passed by the Division Bench of High Court dated 12.9.2008, uninfluenced by the Order passed in the contempt proceedings dated 23.10.2009.

Post along with SLP(C) No. 11317 of 2009.”

From a perusal of the above order dated 30.03.2010, it prima facie appears that the respondent Board has been permitted to collect the cess in accordance with the judgment and order passed by the Division Bench of this Court on 12.09.2008, uninfluenced by the order dated 23.10.2009 passed in Cont. Case(C) No. 2310/2009. It is submitted by Mr. Choudhury that the above order dated 30.03.2010 is operative as on date. It is by virtue of the operation of the said order, the respondent Board is authorized to levy and collect cess in terms of the provisions of Section 21 of the Act. In so far as the contention regarding impermissibility to levy cess in terms of the provisions of Section 21 of the Act, 1972 in view of the advent of GST, a communication dated 31.07.2017 issued by the Government of Assam in the Agricultural Department to the Chief Executive Officer of the respondent Board has been brought to the notice of this Court. On perusal of the same, it transpires that the State Government has observed that normal realization of cess under Section 21 of the Act, 1972 on specified agricultural commodities from market areas will continue. As in its judgment and order dated 12.09.2008, it is observed that the Act, 1972 and the Rules have put a detailed mechanism for refund of cess in place, it is found that in the event the petitioner is able to demonstrate that the cess is not leviable in its case, any cess collected illegally is liable to be refunded by the respondent Board. I have also taken note of the decisions of the Supreme Court of India in Assistant Collector of Central Excise Chandan Nagar West Bengal vs. Dunlop India Ltd. & Ors., reported in (1985) 1 SCC 260 and in Union Territory of Pondicherry vs. P.V. Suresh and Ors., reported in (1994) 2 SCC 70, wherein the factors required to be considered at the time of passing interim orders against revenue have been indicated on the premises of existence of alternative statutory remedy. It is observed therein that prudence, discretion and circumspection are called for at the time of passing such an interim order. Mere existence of a prima facie case is not sufficient to grant an interim order against Revenue but several other factors like balance of convenience, irreparable injury, public interest, etc. are also to be taken into consideration.

Having due regard to the observations made in the order dated 30.03.2010 which is stated to be in operation till date; the fact situation obtaining in the present case and the consideration required to be given before passing any interim order against collection of revenue, as laid down in Dunlop India Ltd. (supra) and in P. V. Suresh (supra), I am of the prima facie view that the extension of the interim order dated 26.02.2020 is not found expedient at this stage and accordingly, the same is not extended. It is, however, made clear that if the respondent Board collects cess in connection with the business of the petitioner and if the petitioner succeeds in the writ petition, the respondent Board authorities shall be liable to refund such cess collected from the petitioner during the pendency of the writ petition. This common order is passed both in respect of the present writ petition and the interlocutory application, I.A.(Civil) No. 938/2020. Consequently, the interlocutory application, I.A.(Civil) No. 938/2020 stands closed.

Ms. Gogoi has submitted that she has received a copy of the affidavit-in-opposition filed by the respondent Board authorities today and an affidavit-in-reply will be filed on behalf of the petitioner by 26.03.2020.

List the matter on 08.04.2020.

K.P. SUGANDH LTD. VERSUS STATE OF CHHATTISGARH, COMMISSIONER CHHATTISGARH GOODS AND SERVICES TAX, ATAL NAGAR, JOINT COMMISSIONER CHHATTISGARH GOODS AND SERVICES TAX, BILASPUR, DEPUTY COMMISSIONER CHHATTISGARH GOODS AND SERVICES TAX AND KAY PAN SUGANDH LTD VERSUS STATE OF CHHATTISGARH, COMMISSIONER CHHATTISGARH GOODS AND SERVICES TAX, JOINT COMMISSIONER CHHATTISGARH GOODS AND SERVICES TAX, DEPUTY COMMISSIONER CHHATTISGARH GOODS AND SERVICES TAX

Release of vehicle alongwith the goods – discrepancies in the valuation of the goods – Section 129(3) of the Central Goods and Service Tax Act, 2017 – HELD THAT:- When the vehicle was intercepted from the 14.01.2020, the person Incharge of the conveyance was in fact carrying the requisite documents, which he was supposed to carry in the course of transportation of the goods. As regards the discrepancy found in the course of inspection, the only observation made by the authorities concerned is that the valuation does not seem to have been properly conducted.

Merely because the manufacturer sells his products to its customer or dealer at a price lower than the MRP, as such cannot be a ground on which the product or the vehicle could be seized or detained. If at all if this, according to the respondents, is contrary to the law, the authorities are supposed to draw an appropriate proceeding under the law – The Inspecting Authorities for the alleged discrepancy could have only intimated the Assessing Authority for initiating appropriate proceedings. What is more relevant to take note of is the fact that the details in the invoice bill as well as in the e-way bill matched the products found in the vehicle at the time of inspection except for the price of sale.

Maintainability of petition – alternative remedy available to the petitioner – HELD THAT:- This Court is of the opinion that since the case of the petitioners at the outset itself was that the entire proceedings for detention of the vehicle and the seizure of the goods being in total contravention to the GST law, relegating the petitioners to avail the alternative remedy of appeal under Section 107 would not be proper, legal and justified – when this Court also finds that the proceedings of detention and seizure of the goods and the vehicle by the respondents is without any authority of law.

This Court is of the opinion that under valuation of a good in the invoice cannot be a ground for detention of the goods and vehicle for a proceeding to be drawn under Section 129 of the Central Goods and Service Tax Act, 2017 read with Rule 138 of the Central Goods and Service Tax Rules, 2017 – Petition allowed.

No.- WPT No. 36 of 2020 WPT No. 49 of 2020

Dated.- March 16, 2020

Citations:

  1. ALFA GROUP Versus THE ASSISTANT STATE TAX OFFICER STATE GOODS AND SERVICE TAX DEPARTMENT, ALAPPUZHA, THE DEPUTY COMMISSIONER OF STATE TAX, ALAPPUZHA AND THE COMMERCIAL TAX OFFICER, STATE GOODS AND SERVICE TAX DEPARTMENT, ALAPPUZHA – 2019 (11) TMI 943 – KERALA HIGH COURT
  2. SAKUL NAZAR MOHMD Versus STATE OF GUJARAT – 2019 (9) TMI 1091 – GUJARAT HIGH COURT

Hon’ble Shri Justice P. Sam Koshy

For the Petitioners : Mr. Rohit Sharma, Advocate Mr. Manoj Paranjpe, Advocate

For the State Mr. Jitendra Pali, Dy. A.G. Ms. Sunita Jain, G.A.

ORDER

1. Since the facts and grounds raised in both these writ petitions and the dates also being identical and the impugned orders also being same, both these writ petitions are being decided by this common judgment.

2. The challenge in the present writ petition is to the order dated 17.01.2020 (Annexure P/1) passed by the respondents for the purpose of release of the vehicle carrying goods belonging to the petitioners from the manufacturing centers to the dealer.

3. The relevant facts, which are relevant for the adjudication of the present dispute is that the petitioners are the limited companies under the provisions of the Companies Act. The petitioners herein are the manufacturers of ‘Pan Masala and Tobacco Products’. On 14.01.2020, the petitioners dispatched goods both Pan Masala and Tobacco Products to its customer vide Maxi Truck Plus 1.2 TPS No. CG 04 ME 3494 belonging to the transporter Shyam Transport Company. The vehicle was being driven by one Shanker Yadav, resident of Ward No.3, Tilda, District Raipur. The customer to which the goods were being dispatched was M/s. Ravi Agency at Jhulelal Market, Raipur. While the goods were being transported, the petitioners/ establishment had issued with a tax invoice as well as e- way bill generated and handed the same to the Incharge of the conveyance i.e. the driver namely Shanker Yadav. When the said vehicle/conveyance left for Raipur on 14.01.2020, the vehicle was intercepted by the officials of the respondents/ Department and asked for the details of the consignment. The driver of the vehicle i.e. the person, who was Incharge of the conveyance at the time of interception produced before the authorities the relevant invoice bill and also produced the e-way bill as was required under the Act to the authorities concerned.

4. Inspite of the Incharge of the conveyance producing the necessary invoice bill and the e-way bill the respondent authorities seized the vehicle and the goods on the grounds of there being discrepancies in the valuation of the goods and thereafter detained the vehicle and the goods. Subsequently, a notice (Annexure P/4) dated 14.01.2020 FORM GST MOV-07 under Section 129(3) of the Central Goods and Service Tax Act, 2017 was issued to the person Incharge of the conveyance i.e. the driver. Immediately, thereafter the petitioners moved an application for release of the vehicle vide their response dated 17.01.2020. Without considering any of the contentions raised by the petitioners in the said reply to the notice, the respondents have passed the impugned order (Annexure P/1) whereby they have assessed the tax payable on the goods as also the penalty applicable on the said assessment made for the purpose of releasing of the goods and the vehicle. It is this order which is under challenge in the present writ petition.

5. The contention of the petitioners primarily is that when a transport vehicle is intercepted by the authorities of the respondents all that person Incharge of the conveyance is required to keep along with him is the documents as is required under Section 68 of the Central Goods and Service Tax Act of 2017 and Rules 138 & 139 of the Central Goods and Service Tax Rules of 2017. According to the counsel for the petitioners, discrepancies in the valuation of the goods is not a ground, which would be available for the Department for detaining and seizure of the vehicle and goods. According to the counsel for the petitioners, while intercepting the transport vehicle carrying goods all that Inspector has to verify is that whether the person Incharge of the conveyance has the invoice bill for the goods being transported and whether the driver also has the e-way bill.

6. According to the petitioners, the respondents if at all in the course of inspection of the vehicle or the moment they find that there was discrepancy in the valuation, they could not have seized and detained the vehicle or the goods rather should have permitted the vehicle to proceed further to the destination of supply as per the invoice. It was the contention of the petitioners that as regards the dispute of valuation, the respondent authorities could have initiated a proceeding against the petitioners in accordance with law as is applicable for evasion of tax. According to the petitioners, the item seized by the respondent authorities is also perishable and it has its own shelf life. It was further contended that in case if the goods are not immediately released, the petitioners shall be put to substantial irrecoverable loss for no fault of theirs. It was lastly contended by the petitioners that the plain reading of the notice under Section 129 issued vide Annexure P/4 and the order passed by the respondents (Annexure P/1) would clearly reveal that there is no specific details of the evasion of tax as such reflected from the notice except for a bald allegation of discrepancy in valuation.

7. The State counsel on the contrary opposing the petition submits that it is a case where during the course of inspection of the conveyance, the Inspecting Agencies found discrepancies in the valuation of the goods being transported and that was the reason for detention of vehicle and the seizure of the goods. According to the respondents, the respondent authorities had immediately issued a notice under Section 129 to which the petitioners also submitted their reply on 17.01.2020 and since the reply of the petitioners were not convincing, satisfactory or acceptable, the respondent authorities have passed the order under Section 129. The contention of the petitioners is that the impugned order under Section 129 is one which is appealable under Section 107, therefore the writ petition for this reason itself is not maintainable. The State counsel on instructions submits that as regards the discrepancy it has been informed that the price at which product was sold to the customer was not matching the MRP of the product, which reflected in the packet transported. The second ground raised by the respondents is that subject to the compliance of the order (Annexure P/1), the respondent authorities would release the goods and the vehicle seized and detained by the respondents and thus prayed for the rejection of the writ petition.

8. Having heard the contentions put forth on either side and on perusal of record, some of the undisputed rather admitted positions from the submissions made on behalf of either side is that the petitioners are in the business of manufacturing of Pan Masala and Tobacco Products since 14.01.2020 from the petitioners-establishment. Some consignments of goods were transported to the consumer at Raipur and the product was being transported on a Maxi Truck Plus 1.2 TPS bearing registration No. CG 04 ME 3494. The said vehicle belonged to the Shyam Transport Company. The vehicle was being driven by the Driver Shanker Yadav. What is further to be seen is that undisputedly when the vehicle was subjected to inspection, the person Incharge of the conveyance i.e. the driver had with him the invoice bill duly issued which matched the quantity found in the vehicle. In addition, the driver also was in possession of the e-way bill duly generated and which also was posted in the Web portal of the Department, which again had the details of the consignment and also the details of the tax paid and both of which was produced to the Inspecting Authorities, who had intercepted the vehicle on 14.01.2020. While the goods was being transported from the petitioner/ manufacturer to its consumer at Raipur.

9. Thus, from the aforesaid factual admitted position, as it stands when the vehicle was intercepted from the 14.01.2020, the person Incharge of the conveyance was in fact carrying the requisite documents, which he was supposed to carry in the course of transportation of the goods. As regards the discrepancy found in the course of inspection, the only observation made by the authorities concerned is that the valuation does not seem to have been properly conducted.

10. Merely because the manufacturer sells his products to its customer or dealer at a price lower than the MRP, as such cannot be a ground on which the product or the vehicle could be seized or detained. If at all if this, according to the respondents, is contrary to the law, the authorities are supposed to draw an appropriate proceeding under the law. If at all what the State counsel has submitted is to be accepted, even then it would be only a case of an alleged sale of a product at a lower costs than the MRP. The Inspecting Authorities for the alleged discrepancy could have only intimated the Assessing Authority for initiating appropriate proceedings. What is more relevant to take note of is the fact that the details in the invoice bill as well as in the e-way bill matched the products found in the vehicle at the time of inspection except for the price of sale.

11. The High Court of Kerela in the case of “Alfa Group v. Assistant State Tax Officer” (2020) 113 taxmann.com 222 (Kerela) in an identical set of facts has held as under:

“On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I find that none of the reasons stated in Ext. P2 order justify detention of the goods. There is no provision under the GST Act which mandates that the goods shall not be sold at prices below the MRP declared thereon. Further, there is nothing in Ext. P2 order that shows that, on account of the alleged wrong classification of the goods there was any difference in the rate of tax that was adopted by the assessee. In my view when the statutory scheme of the GST Act is such as to facilitate a free movement of goods, after self assessment by the assessees concerned, the respondents cannot resort to an arbitrary and statutorily unwarranted detention of goods in the course of transportation. Such action on the part of department officers can erode public confidence in the system of tax administration in our country and, as a consequence, the country’s economy itself. Under such circumstances, I quash Ext. P2 detention order and direct the respondents to forthwith release the goods belonging to the petitioner on the petitioner producing a copy of this judgment before the said authority. I also direct the Commissioner, Kerala State Taxes Department, Thiruvananthapuram to issue suitable instructions to the field formations so that such unwarranted detentions are not resorted to in future. The Registry shall communicate a copy of this judgment to the Commissioner, Kerala State Taxes Department, Thiruvananthapuram for necessary action.”

12. A similar view has also been taken by the High Court of Gujarat for grant of an interim relief in the case of “Sakul Naza Mohmd v. State of Gujarat” in Special Civil Application No. 15655/2019.

13. So far as the ground of an alternative remedy available to the petitioner as pleaded by the State Government is concerned, this Court is of the opinion that since the case of the petitioners at the outset itself was that the entire proceedings for detention of the vehicle and the seizure of the goods being in total contravention to the GST law, relegating the petitioners to avail the alternative remedy of appeal under Section 107 would not be proper, legal and justified. More particularly when this Court also finds that the proceedings of detention and seizure of the goods and the vehicle by the respondents is without any authority of law.

14. Given the said facts and circumstances of the case, this Court is of the opinion that under valuation of a good in the invoice cannot be a ground for detention of the goods and vehicle for a proceeding to be drawn under Section 129 of the Central Goods and Service Tax Act, 2017 read with Rule 138 of the Central Goods and Service Tax Rules, 2017. In view of the aforesaid the impugned order Annexure P/1 i.e. the order passed under Section 129 and the order of demand of tax and penalty both being unsustainable deserves to be and is accordingly set-aside/quashed. The respondents are forthwith directed to release the goods belonging to the petitioners based on the invoice bill as well as the e-way bill.

15. Quashment of the impugned order by itself would not preclude the State Authorities from initiating appropriate proceedings against the petitioners for the alleged act of under valuation of the goods as compared to the MRP on the product in accordance with law.

16. With the aforesaid observations, the present writ petitions stand allowed.

M/S. BENGAL HAMMER INDUSTRIES (P) LTD. VERSUS UNION OF INDIA & ORS.

Filing of FORM GST TRAN-1 and/or revised TRAN-1 Form – HELD THAT:- The GSTN authorities (Authority that manages the portal) are directed to open the portal for the petitioners till March 31, 2020. This order shall not create any equity in favour of any of the petitioners insofar as their claim is concerned and the same shall be subject to scrutiny by the concerned authority.

Petition disposed off.

No.- WP 240 of 2019

Dated.- March 16, 2020

Citations:

  1. M/s. Rishi Graphics Pvt. Ltd., M/s. Print Sales Company, M/s. Steel Authority of India Ltd., M/s. Das Auto Centre, Joydev Ghosh, Sumit Ghosh, Sanjay Kr. Karu, M/s. Rudra Autoparts Distributor, M/s. Vertiv Energy Pvt. Ltd., Amit Tibrewal Projector of M/s. PLY King, Amitava Biswas, Propritors of M/s. N.N. Enterprises, M/s. Ray Indra Chandra & Anr., M/s. Chandras Chemical Enterprises Pvt. Ltd. & Anr., M/s. Rene Impex Pvt. Ltd., M/s. Krishna Hi-Tech Infrastructure Pvt. Ltd. & Anr., M/s. Hazemag India Pvt. Ltd. & Anr. Versus Union of India & Ors. – 2020 (3) TMI 358 – CALCUTTA HIGH COURT

SHEKHAR B. SARAF J.

Appearance:

Mr. N.K. Chwodhury, Adv. Mr. A. Chakrabarti, Adv. Mr. N. Chowdhury, Adv. Mr. P. Bera, Adv.

Mr. S. Roychowdhury, Adv. Mr. M. Bandopadhyay, Adv.

The Court: The writ petitioner has approached this Court with a prayer for allowing the writ petitioner to file/upload in GST TRAN-1. The petitioners intend to file TRAN-1 Form and/or revised TRAN-1 Form.

It is to be noted that the issue has been resolved by an order passed by this Court on March 4, 2020 in WP 17234(W) of 2019 along with several other writ petitions.

In light of the same, I direct the GSTN authorities (Authority that manages the portal) to open the portal for the petitioners till March 31, 2020. This order shall not create any equity in favour of any of the petitioners insofar as their claim is concerned and the same shall be subject to scrutiny by the concerned authority.

With the above observations, WP 240 of 2019 is disposed of.

There will be no order as to costs.

Urgent photostat certified copy of this order, if applied for, be given to the parties upon compliance of all necessary formalities.

ORION SECURITY SOLUTIONS & ANR. VERSUS COMMISSIONER OF CGST DELHI EAST

Freezing of petitioner’s Bank Accounts – It is alleged the bona fide of the petitioner can be ascertained from the very fact that even while its M.D. was in custody, the petitioner have been paying some or the other amount in the account of the respondent towards clearing its tax liability – HELD THAT:- On payment of ₹ 5.5 crores within two days from the date of defreezing of its all accounts, no coercive action be taken against the petitioner till it continue abiding by the undertaking given today. An undertaking be filed in the course of the day. This order shall be without prejudice to rights and contentions of both the parties on merits.

Petition disposed off.

No.- W.P.(CRL) 695/2020, CRL.M.A.No.5333/2020

Dated.- March 16, 2020

MR. YOGESH KHANNA J.

Petitioners Through : Mr. Vikas Pahwa, Sr Adv with Mr. Jayant Mehta, Mr. Sukant, Vikram, Mr. Abhijit Mittal, Mr. Joby P Varghese, Mr Anukalp Jain, Mr. Kumar Shashwant, Mr. Varun Bhati, Adv.s. Mr. Maj Ashutosh Jha For MD Company.  

Respondent Through : Mr. Harpreet Singh, Senior Standing Counsel with Mr Arunesh Sharma, Adv.

O R D E R

The learned counsel for the Department says as of today the total GST liability of the petitioner qua Delhi is about ₹ 11.5 crores and for PAN India’s is ₹ 59.24 crores approximately. The learned senior counsel for the petitioner says there are 35,000 person on the rolls of the petitioner concern and its monthly expenditure bill runs to approximately ₹ 60.87 crores, hence freezing of its accounts is damaging the petitioner day by day. It is alleged the bona fide of the petitioner can be ascertained from the very fact that even while its M.D. was in custody, the petitioner have been paying some or the other amount in the account of the respondent towards clearing its tax liability. It is also submitted ₹ 11.5 crores due includes a major chunk of interest.

The learned senior counsel for the petitioner urges qua the liability of ₹ 11.5 crores, an amount of ₹ 5.5 crores shall be deposited with the department within two days from the date of defreezing of its bank accounts and whereas the remaining liability, including of India shall be discharged within 120 working days from today. Any default in making payment within 120 days shall entail consequences under the CGST Act.

In the circumstances, on payment of ₹ 5.5 crores within two days from the date of defreezing of its all accounts, no coercive action be taken against the petitioner till it continue abiding by the undertaking given today. An undertaking be filed in the course of the day. This order shall be without prejudice to rights and contentions of both the parties on merits. Petition stands disposed of in terms of above.

Copy of this order be given dasti under signature of the Court Master to both the parties.

PAXAL CHEMICAL INDUSTRY (P) LTD., VERSUS ASST. STATE TAX OFFICER (INTELLIGENCE) , STATE GOODS AND SERVICES TAX DEPARTMENT, SQUAD II, CHENGANNUR, COMMISSIONER, STATE GOODS AND SERVICES TAX DEPARTMENT,

Detention of Consignment invoices – the driver of the truck by negligence failed to carry the invoices showing the transaction between the petitioner and the 3rd respondent – Section 129 of GST Act – HELD THAT:- This court would not be an appropriate authority to adjudicate the controversy to either of the human error or intentional or willful. It would be the domain of the adjudicating authority – For the time being, the goods detained can be released, subject to the compliance of conditions referred to in Sec.129(1) of the Act and Rule 43 of 2017. In case the petitioner furnishes the bank guarantee along with other charges, as per the provisions of Sec.129, on deposit of the requisite Bank Guarantee, the goods and the vehicle detained are ordered to be released; subject to the outcome of the controversy by adjudicating authority.

No.- WP(C).No.7980 OF 2020(V)

Dated.- March 16, 2020

MR. AMIT RAWAL J.

PETITIONER/S:  BY ADVS. SRI.T.V.GEORGE SRI.JIMMY GEORGE (THADATHIL)

RESPONDENT/S: GP DR THUSHARA JAMES  

JUDGMENT

The present Writ Petition is directed against the action initiated by the respondents detaining the consignments invoices covered by Ext.P-1 and P-2 and detained by Ext.P-8 and P-9.

2. The learned counsel on the behalf of petitioner submits that the petitioner being a private limited company, established in the year 1984 had been working without any legal hassles. On the basis of the purchase order placed by the 3rd respondent at Kollam in Kerala, the petitioner being distributor of Godrej Industries, placed orders for certain goods to Godrej Industries. For the aforementioned purpose, the service of Kerala Roadways (KRS), a transporter, was engaged to collect the goods from Valia, Bharuch District in Gujarat.

3. The aforementioned transporter was entrusted with two consignments and in this regard, two tax invoices were raised by the Godrej Industries on the same day i.e. on 17th February, 2020. The tax invoices envisaged the delivery of consignment to be at Kollam while the petitioner with Bangalore Address was named as consignee. The invoices of Godrej Industries revealed the fact that the delivery was to be at Kollam by Kerala Road Ways. The documents were delivered to the transporter’s office in Bangalore. Unfortunately, the driver of the truck by negligence failed to carry the said invoices showing the transaction between the petitioner and the 3rd respondent. On 24.02.2020, the vehicle was intercepted and found that the documents tendered by the driver of the transportation of the consignments from Gujarat to Kollam were defective, resulting into detention order Ext.P8 and 9. He submits this as a human error, as E-Way bill reflected entry of Kollam. Therefore the detention as per Sec.129 is not sustainable.

4. Dr. Thushara James, the learned government pleader submits that opening line of the Sec.129 of the Goods and Services Tax Act that in case of any violation, goods are liable to be detained.

5. Having heard, I am of the view that this court would not be an appropriate authority to adjudicate the controversy to either of the human error or intentional or willful. It would be the domain of the adjudicating authority. For the time being, the goods detained can be released, subject to the compliance of conditions referred to in Sec.129(1) of the Act and Rule 43 of 2017. In case the petitioner furnishes the bank guarantee along with other charges, as per the provisions of Sec.129, on deposit of the requisite Bank Guarantee, the goods and the vehicle detained are ordered to be released; subject to the outcome of the controversy by adjudicating authority. It is made clear that the respondents will not en-cash the bank guarantee till the controversy involved is adjudicated by the concerned authority.

RCI INDUSTRIES & TECHNOLOGIES LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS UNION OF INDIA AND OTHERS

Seeking to conclude the process of adjudication within the shortest possible time – petition has a chequered history – handing over copies of documents seized by the Respondent from the Petitioner during a search – HELD THAT:- The Court is of the considered view that the search proceedings which took place on 7th March, 2020 without the authority of law and cannot be sustained. The Panchnama drawn up on 7th March, 2020 is hereby quashed – Notwithstanding that Petitioner No.2 may have earlier appeared pursuant to the summons issued and may have provided documents, it is directed that the Petitioner No. 2 will now appear before the Senior Intelligence Officer of the DGGSTI at Gurugram on 25th March, 2020 at 11 a.m. He will be provided with the list of documents/ information that is required by the Respondents and Petitioner No.2 will cooperate in providing that information within a reasonable time to be provided to him by the Respondents.

In order to ensure that there is strict compliance with the above directions, the Court lists the present petition for further hearing on 17th April, 2020.

No.- C. W. P. No. 7145 of 2020

Dated.- March 18, 2020

Citations:

  1. M/s RCI Industries & Technologies Ltd. Versus Union of India & anr. – 2020 (3) TMI 1371 – PUNJAB AND HARYANA HIGH COURT
  2. M/s. RCI Industries & Technologies Ltd. Versus Directorate General of Goods and Service Tax Intelligence, Gurugram and Another – 2020 (5) TMI 193 – PUNJAB AND HARYANA HIGH COURT

DR. S. MURALIDHAR and AVNEESH JHINGAN, JJ.

Tarun Gulati , Senior Advocate with  Surender Kumar  and  A. K. Babbar  for the petitioners.

Sourabh Goel , Senior Panel Counsel for Union of India for the respondents.

JUDGMENT

Notice of motion.

2. Mr. Sourabh Goel, Senior Panel Counsel for Union of India accepts notice on behalf of the Respondents.

3. This petition has a chequered history. Petitioner No.1/Company was earlier before this Court with CWP No.18523 of 2019 which was disposed of by an order dated 18th February, 2020, noting the circumstances under which the Petitioner had approached the Court seeking directions to the Respondent i.e. the Directorate General of Goods and Service Tax Intelligence, Gurugram, to conclude the process of adjudication within the shortest possible time after issuing a show cause notice etc. The Court noted that the main prayer in the petition was about the Respondent handing over copies of documents seized by the Respondent from the Petitioner during a search conducted on 9th July, 2018 at the Head Office as well as godown of the Petitioner.

4. On the issue of safeguard from arrest, the Court noted that a summons dated 6th February, 2020 had been issued to the Petitioner informing it that the personal appearance of its Managing Director i.e. Mr. Rajeev Gupta (Petitioner No.2 herein) was not required.

5. The Court then specifically noted in para 4 of its order that “As regards any future apprehension of arrest of any person, it is clarified that the respondents shall act in accordance with law.”

6. In view of the above development, the petition was disposed of on 18th February, 2020, limiting the attachment to amounts which were lying to the credit of the Petitioner in its Cash Credit Accounts, at the time of freezing.

7. On the very next date i.e. 19th February, 2020 another summons was issued, this time to Mr. Rajeev Gupta, the Managing Director of Petitioner No.1, who is Petitioner No.2 herein. This led to a further Writ Petition being filed i.e. CWP No. 5762 of 2020 (O&M), which came to be disposed of by this Court on 2nd March, 2020 by the following order :-

“This petition has been filed against impugned summon dated 19.02.2020 (Annexure P-7) to quash the impugned summon dated 06.02.2020 (Annexure P-8) being malafide and in violation of guidelines issued by respondent.

Notice of motion.

On the asking of the Court, Mr. Satya Pal Jain, Additional Solicitor General of India with Mr.Sourabh Goel, Sr. Panel Counsel accepts notice on behalf of the respondents.

The contention of the learned counsel for the petitioner is that the Managing Director has already appeared 10 times.

Today the learned Additional Solicitor General appearing with Mr. Sourabh Goel, Sr. Panel Counsel has very fairly stated that as per the last summons which were served upon to the petitioner (which he has received) it has been clarified that the Managing Director need not appear in person but the representative who appears with the documents must be in a position to answer the queries, and in the absence thereof the requirement for the presence of the Managing Director may arise.

In view of this clarification nothing survives.

Petition stands disposed of.

Since the main case has been decided, the pending civil miscellaneous application, if any, also stands disposed of.”

8. It now appears that on 6th March, 2020, a summons was issued to Mr. Rajeev Gupta asking him to appear on 16th March, 2020 at 11:00 a.m. in the office of Respondent No.1. However, on the very next day i.e. 7th March, 2020 in the early hours at around 6:00 a.m., a search was conducted at the residential premises of Mr. Rajeev Gupta. The Panchnama drawn up at his residential premises the search has been enclosed as Annexure P-9 to the present petition.

9. One of the grievances in the present petition is that with the Petitioners being prepared to cooperate with the Respondents, there was no need for the Respondent to resort to an extreme step of conducting search and, that too, without following the due process under the Central Goods and Service Tax Act, 2017 and, in particular, Section 67 thereof, which requires that the proper officer, not below the rank of Joint Commissioner, pursuant to an inspection carried out under Section 67(2) to have “reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place.”

10. Mr. Tarun Gulati, learned Senior Counsel appearing for the Petitioners reiterates the submissions earlier made in the above writ petitions before this Court that the Petitioners have always been willing to cooperate with the Respondents in providing whatever the documents and information are sought for and that there was no warrant whatsoever to resort to the extreme measure of a search only to record a statement of the Managing Director of the Petitioner No.1.

11. Mr. Sourabh Goel, learned Senior Panel Counsel appearing for the Respondents submits that the authorized representative of Petitioner No.1, who had earlier appeared before the Respondents, was not cooperative and was not providing the requisite information sought for by the Respondents. It is further pointed out that a different officer of Petitioner No.1 appears on each occasion and is unable to provide requisite information.

12. However, Mr. Goel does not dispute that the procedure outlined under Section 67 of the Act was perhaps not resorted to in going in for a search of the residential premises of Petitioner No.2. Further having issued summons to Petitioner No.2 to appear on 16th March, 2020, there was absolutely no need to resort to a search on the very next date.

13. The Court is of the considered view that the search proceedings which took place on 7th March, 2020 without the authority of law and cannot be sustained. The Panchnama drawn up on 7th March, 2020 is hereby quashed.

14. At the same time, against the background present litigation the Court cannot be unmindful of the need for investigation to proceed in accordance with law, for which purpose the cooperation of the Petitioners is essential. Notwithstanding that Petitioner No.2 may have earlier appeared pursuant to the summons issued and may have provided documents, it is directed that the Petitioner No. 2 will now appear before the Senior Intelligence Officer of the DGGSTI at Gurugram on 25th March, 2020 at 11 a.m. He will be provided with the list of documents/ information that is required by the Respondents and Petitioner No.2 will cooperate in providing that information within a reasonable time to be provided to him by the Respondents.

15. In order to ensure that there is strict compliance with the above directions, the Court lists the present petition for further hearing on 17th April, 2020.

16. Till such time, no coercive steps of arresting Petitioner No.2 shall be resorted to. However, it is made clear that if the Court is satisfied that the Petitioners are not cooperating with the Respondents in providing the requisite documents/ information, the Court may be constrained to reconsider extending such protection to the Petitioner No.2.