The Delhi High Court directed Goods and Service Tax (GST) department to refund Rs.10 Lakhs, involuntary deposit of Goods and Service Tax (GST) demand under Coercion.
The issue to be decided was whether the petitioner emphasizes that the search conducted by Delhi GST Authorities on October 18, 2022, should legally preclude subsequent actions by central officers. The interpretation of Section 6(2) (b) of the CGST Act becomes pivotal in determining the legality of the ongoing proceedings.
The revelation that the petitioner procured goods from a supplier, later determined to be nonexistent at their primary business location, holds significant relevance in establishing the suspicion that the petitioner improperly benefited from Input Tax Credit (ITC). This information directly contributes to the formation of the belief that the petitioner engaged in wrongful utilization of the ITC. Upon careful consideration, it is evident that there is no basis to declare any search or inspection carried out on November 12, 2022, as unlawful or compromised. This conclusion is reached based on the absence of grounds to argue that there was no reasonable cause to believe that the petitioner had unlawfully availed the ITC.
The respondent counsel Aditya Singla, Arushi Sharma, Mr. Asheesh Jain, Gaurav Kumar, Ankita Kedia & Ms. Seema Singh, stated that on November 12, 2022, CGST officers visited the petitioner’s premises under FORM GST INS-01 authorization, finding it closed. The petitioner, upon notification, arrived with his son, opened the premises, and promised document submission by November 15, 2022. The petitioner voluntarily deposited ₹10, 00,000/- through FORM GST DRC-03. Respondents claim ineligible Input Tax Credit of ₹47, 38,137/-, yet the petitioner chose to deposit only ₹10, 00,000/-
The petitioner A. K. Babbar & Mr. Surender Kumar, was acknowledged to have utilized approximately ₹3.24 crores in Input Tax Credit (ITC) from multiple suppliers, whose registrations have since been revoked. The respondents have provided specifics on these 19 suppliers. Notably, Ridhi Sidhi Polymers, one of these suppliers, is currently under investigation by CGST, North. The probe centers on allegations of establishing fraudulent firms to illegitimately benefit from Input Tax Credit (ITC).
Petitioner’s contention that the inspection conducted by the central officers were illegal. The provisions of Section 6(2) (b) of the CGST Act does not preclude the central officers from conducting an inspection for concluding an ongoing investigation merely because a prior inspection or search was conducted by the DGST authorities.
The petitioner counsel argued that deposited ₹10, 00,000/- around 9:00 pm during the inspection conducted by respondents Aditya Singla, Arushi Sharma, Mr. Asheesh Jain, Gaurav Kumar, Ankita Kedia & Ms. Seema Singh, in response, on November 14, 2022, the petitioner asserted in a letter that the deposit was made involuntarily and under coercion. It is acknowledged that FORM GST DRC-03 was submitted using the laptop carried by the inspecting team. Notably, the petitioner filed the current petition on November 23, 2022, within a span of less than ten days, seeking a refund of the amount paid.
A Division Bench of Justice Vibhu Bakharu and Amit Mahajan instructed the respondents to reimburse the amount of ₹10, 00,000/- that the petitioner deposited through FORM GST DRC-03 on November 12, 2022. It’s crucial to note that this directive does not prevent the respondents from pursuing actions to safeguard the interests of revenue, including issuing an order under Section 83 of the CGST Act or Rule 86(A) of the Central Goods & Services Tax Rules, 2017, provided the conditions for exercising such powers are met.
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