The Hon’ble Madras High Court in Shri Nandhi Dhall Mills India Pvt. Ltd. v. Senior Intelligence Officer, DGGST & Ors. [W.P. No. 5192 of 2020 and WMP. No. 6135 of 2020] directed the Revenue Department to refund the amount of INR 2 crore collected from the assessee during the investigation. Held that, merely because the assessee had signed a statement admitting tax liability under the stress of investigation and had also made a few payments as per the statement, cannot lead to self-assessment or self-ascertainment.
Facts:
Shri Nandhi Dhall Mills India Pvt. Ltd. (“the Petitioner”) is registered as a Small Scale Industry and is engaged in the business of dealing in pulses, dhals, and flour and also manufactures food products, grain mill products and dal.
An investigation was conducted by the officials of the Director General of Goods and Services Tax (“the Respondents”) in the premises of the Petitioner on October 22, 2019 and various documents and registers were seized. In the course of the investigation, a statement was recorded to the effect that the Petitioner has not discharged its GST liability correctly and it had accepted that there has been a mistake in computation of GST liability and assured the Respondents that the liability would be discharged along with applicable interest.
Further, a scheme of payment was set out and the undertaking was signed by the Managing Director of the Petitioner on October 22, 2019. Further, the Petitioner remitted a sum of INR 1 crore in FORM GST DRC-03 corresponding to Rule 142(2) and Rule 142(3) of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”) read with Section 74(5) of the Central Goods and Services Tax Act, 2017 (“CGST Act”) on the same day. The second installment of the tax amounting to INR 1 crore was paid on October 30, 2019.
Further, the Managing Director of the Petitioner vide letter dated November 05, 2019 retracted its earlier statement and stated that there is no tax liability and that the Managing Director and employees of the Petitioner were forced to accept the liability to tax and the admission was, by no means, voluntary but under the influence of coercion, threat and in a state of panic without giving an opportunity to read the content of the Mahazar and without providing the workings of the actual determination of tax liability.
This writ petition has been filed to restrain the Respondents from demanding any amount from the Petitioner except by following the due process of law and to refund a sum of INR 2 crores along with statutory interest under the provisions of the CGST Act.
Issue:
Whether the Petitioner is entitled to refund of INR 2 crores paid during investigation along with interest?
Held:
The Hon’ble Madras High Court in W.P. No. 5192 of 2020 and WMP. No. 6135 of 2020 decided on April 07, 2021 held as under:
