In a recent decision the Delhi High Court ruled that the orders under Rule 86A of the Central Goods and Services Tax (CGST) Rules, 2017 can be passed by Commissioner or duly authorized officer on reason to believe that input tax credit (ITC) available in electronic cash ledger (ECL) has been fraudulently availed
According to the respondents, the concerned officers of the department had reached the principal place of business as well as other additional places of business. The respondents state that the petitioner provided access to its additional place of business but the relevant documents were not available at the said place.
Accordingly, the officers had insisted that the access to the principal place of business which was closed, be provided. The respondents have averred in their counter affidavit that the “Petitioner also requested not to break open or seal the premises as it would bring bad name to its business and the Petitioner requested the Officers to wait at the additional place of business at Tri Nagar till the time keys got arranged by some family member at 12:30 AM.”
Admittedly, the petitioner had deposited a sum of ₹18,72,000/- at 2:06 am by debiting the ECL. Concededly, the search and inspection proceedings were continuing at the material time.
The petitioner had been subjected to the search/inspection operations way beyond the normal business hours. Admittedly, the petitioner was called upon to provide copies of various books of accounts. The statement recorded on the said date – which is also relied upon by the respondents – clearly indicates that the petitioner had provided several documents to the concerned officers including the Trading Account etc.
In the present case the petitioner has disputed that he is liable to pay any tax. There is no determination of the petitioner’s liability to pay tax. Clearly, in such circumstances, the tax deposited by the petitioner cannot be considered as voluntary and within the scheme of Section 73(5) of the CGST Act.
A Division Bench comprising Justices Vibhu Bakhru and Amit Mahajan observed that “It is clarified that this would not preclude the respondents from taking any other steps in accordance with law. In the event the Commissioner or a duly authorized officer has reason to believe that the ITC available in the ECL of the petitioner has been fraudulently availed or is ineligible, the concerned officer is not precluded from passing an appropriate order including any order under Rule 86A of the CGST Rules, if the conditions as set out therein are satisfied. The respondents are also not precluded from taking steps to protect the interest of the Revenue in accordance with law.”
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