Vijay Steelcon Private Limited Vs Principal Commissioner of Central Tax (Delhi High Court)
Conclusion: Where assessee availed the benefit of restriction of penalty to only 15% of tax and the seizure of cash was setting off against the outstanding balance amount of GST, interest and penalty, assessee had no right to challenge the concluded search proceedings.
Held: Assessee inter alia filed a petition challenging the seizure of cash amounting to Rs.65 lakhs (Rupees Sixty Five Lakhs only) from the residential premises of the Director of assessee on 04.03.2021. Assessee further challenged the letter issued by the respondent whereby the bank was directed to release the said amount of Rs.65 lakhs to assessee, however, only for payment of Government dues. Assessee further claimed that a sum of Rs.94,65,316/- (Rupees Ninety Four Lakhs Sixty Five Thousand Three Hundred Sixteen Only) deposited by it with the respondents had been erroneously recovered by the respondents from assessee without proper adjudication. Respondents carried out a search at the premises of assessee company. The respondents further carried out a search at the registered office premises of assessee company and sealed the said premises on the basis that the said address had not been disclosed in the Form GST Reg.-06. Stock lying in the said premises was also seized by the respondents. It was held that assessee can by making voluntary deposit of tax, interest and penalty avail the benefit of restriction of penalty to only 15% of such tax. In the present case, assessee availed of this remedy and based thereon, proceedings against assessee arising out of the search and seizure activities carried out were closed. This was also informed to the assessee vide impugned letter of the respondents. Assessee having availed of the relief, could not now turn around and challenge the said proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
The hearing has been conducted through video conferencing.
CM 41094/2021(exemption)
Allowed, subject to all just exceptions.
W.P.(C) 13034/2021
1. This petition has been filed by the petitioner inter alia challenging the seizure of cash amounting to Rs.65 lakhs (Rupees Sixty Five Lakhs only) from the residential premises of the Director of the petitioner on 04.03.2021. The petitioner further challenges the letter dated 24.03.2021 issued by the respondent no.1 whereby the bank was directed to release the said amount of Rs.65 lakhs to the petitioner, however, only for payment of Government dues. The petitioner further claims that a sum of Rs.94,65,316/- (Rupees Ninety Four Lakhs Sixty Five Thousand Three Hundred Sixteen Only) deposited by it with the respondents has been erroneously recovered by the respondents from the petitioner without proper adjudication.
The petitioner further prays for a direction to the respondent to determine the tax, interest or penalty due from the petitioner and appropriate the said amount of Rs.94,65,316/- paid by the petitioner against the amount so found due.
2. It is the case of the petitioner that on 04.03.2021, the respondents carried out a search at the premises of the petitioner company located at D-5A/1, Ground Floor, Shiv Puri Extension, Chander Nagar, East Delhi, Delhi 110051. The respondents further carried out a search at the registered office premises of the petitioner company and sealed the said premises on the basis that the said address had not been disclosed in the Form GST Reg.-06. Stock lying in the said premises was also seized by the respondents
3. The petitioner further claims that the respondent no.2 also carried out a search at the residential premises of the Director of the petitioner company situated at Jasola, New Delhi and during the search, seized an amount of Rs.65 lakh in cash.
4. The learned counsel for the petitioner vehemently argued that the Panchnama for the said search and seizure at the residential premises of the Director of the petitioner company was not supplied to either the petitioner or its Director. She further submits that under the Central Goods Service Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’), the respondent no.3 had no authority to seize cash.
5. The learned counsel for the petitioner further submitted that on 03.2021, the respondents directed Mr.Puneet Bhudhiraja, the Director of the petitioner company to accompany the search party to respondent’s office at CR Building, IP Estate, New Delhi without issuing any summons under Section 70 of the CGST Act. Mr. Budhiraja was illegally detained overnight in the office without any lawful justification and was released from unlawful custody only in the afternoon of 05.03.2021. She submits that due to coercive action of the respondents, an amount of Rs.33,99,236/- (Rupees Thirty Three Lakhs Ninety Nine Thousand Two Hundred Thirty Six Only) was deposited by the petitioner with the respondents on 09.03.2021.
6. The petitioner thereafter sought release of the cash amount illegally seized from the petitioner, however, the respondent no.1 vide impugned letter dated 24.03.2021 directed the release of the amount only for payment of Government dues. She submits that the said condition is extraneous to the provisions of the CGST Act and cannot be sustained.
7. The learned counsel for the petitioner further submits that the petitioner deposited a further sum of Rs.60,66,082/- (Rupees Sixty Lakhs Sixty Six Thousand Eighty Two Only) with the respondents on 25.03.2021 and in spite of such deposit, stock seized from the premises of the petitioner was released by the respondents only on 07.05.2021.
8. She submits that by a letter dated 17.09.2021, the petitioner filed a detailed representation with the respondent no.1 to demonstrate that excess taxes had been recovered from the petitioner without following due process of law, however, till date neither any notice has been issued to the petitioner nor the tax liability determined by the respondents against the petitioner.
9. She submits that by an application dated 12.10.2021 filed under Section 67(10) of the CGST Act, the petitioner has also sought copies of the search proceedings, however, till date the same have not been provided to the petitioner.
10. She submits that as the deposit of tax was made under coercion, in absence of any proper adjudication and determination of tax liability against the petitioner , the same is liable to be refunded. She submits that instead of determining the tax liability, the respondents have issued the impugned letter dated 24.09.2021 claiming that the amount was voluntarily deposited by the petitioner under Section 74(5) of the CGST Act and the proceedings have been concluded against the petitioner. She reiterates that the amount had not been deposited voluntarily and in any case was without determination of tax and therefore, is liable to be refunded/adjusted.
11. On the other hand, the learned counsel for the respondent who appears on an advance notice, submits that the present petition is liable to be dismissed on the ground of concealment of facts. He submits that the Panchnama for affecting the seizure of Rs.65 lakhs from the premises of the Director of the petitioner was duly served on the said Director and the receipt of the same has been acknowledged by the signing of the said Panchnama not only by the Director but also his wife. He has produced before us a copy of Panchnama. He further submits that the petitioner by a letter dated 24.03.2021 sought release of the fixed deposit of Rs.65 lakhs created out of the amount seized in the search of 04.03.2021. In the said request letter itself, the petitioner had undertaken to pay all tax liabilities along with applicable interest and penalty ‘voluntarily’. It was pursuant to this request that the impugned letter dated 24.03.2021 was issued to the bank directing release of the fixed deposit of Rs.65 lakhs to the petitioner, albeit for payment of Government dues only. The petitioner never challenged the said condition and in fact voluntarily deposited the balance tax, interest and penalty amount of Rs.60,66,082/- with the respondents on 25.03.2021. It was on this deposit that the proceedings against the petitioner were closed under Section 74(5) of the CGST Act. He submits that the above documents have been intentionally concealed from this Court to set up a false case of coercion and the present petition, therefore, is liable to be dismissed on this short ground itself.
12. We have considered the submissions made by the learned counsels for the parties.
13. At the outset, we note that the petitioner has not disclosed in the petition the letter dated 24.03.2021 by which it had sought the release of the amount of Rs.65 lakhs seized from the residential premises of its director Mr.Puneet Budhiraja on 04.03.2021. The said letter is reproduced as under:
“With due respect, I Puneet Bhudhiraja, Director of M/s VIJAY STEELCON PVT. LTD. D-5A/1, GROUND FLOOR, SHIV PURI EXTN., CHANDER NAGAR, East Delhi, Delhi, 110051 do hereby undertake that the Fixed Deposited amount of Rs.65,00,000/-, seized during search operation on 04.03.2021 from my residential premise will be utilized only for payment of Govt. tax dues w.r.t. ongoing investigation in the case of M/s VIJAY STEELCON PVT. LTD. Therefore, I request to release the Fixed Deposited amount of Rs.65,00,000/- to my Bank account details as mentioned below so that I can do the needful.
