Sapphire Intrex Limited Vs Union of India (Delhi High Court)
Conclusion: Since the claim for refund could not be withheld merely because the Department, pursuant to the deposit, issued the SCN and was proposing to demand GST. Since the deposit made by assessee had been held to be involuntary and was duress and compelling circumstances and no issuance of Form GST DRC-04 accepting the payment as being voluntarily, therefore, the respondents were directed to forthwith process assessee’s claim for refund.
Held: Assessee-company was engaged in supply of services such as trading in shares & securities, renting of immovable properties, etc, A search operation was conducted at the premises of assessee by the officers of the GST Anti-Evasion department, in which assessee was allegedly made to deposit an amount of ₹2,30,00,000/-, which was coercively paid by it, and the payment details were intimated vide FORM GST DRC-03 bearing ARN AD071021006167P. Assessee claimed that the payment made was under protest and that it reserved the right to apply for refund of the amount so deposited. Respondent issued a Show Cause Notice inter alia demanding the recovery of GST amounting to ₹36,35,359/- under Section 74(1) and Section 20, and further sought to appropriate the amount of ₹2,30,00,000/-, deposited by assessee during investigation, towards the proposed demand. Assessee in terms of Section 54 read with Rule 89 filed two separate refund claims in FORM GST RFD-01 claiming refund of the amount of ₹2,30,00,000/-. Respondent issued the impugned letter intimating assessee that as the SCN dated 23.06.2022 issued to it had not been adjudicated, the refund claims filed by it could not be processed. It further recommended assessee to file fresh refund claim after adjudication of the SCN. It was held that the deposit was made by assessee under duress and compelling circumstances. The provision was clearly for the benefit of the tax payer who voluntarily pays tax prior to issuance of any Show Cause Notice and, thus, absolves himself of any liability to pay the penalty. These provisions do not empower the Department to compel the tax payer to pay any tax. It was not disputed that any voluntary deposit in Form GST DRC-03 was to be followed by an acknowledgement accepting the payment as being voluntarily made by issuance in Form GST DRC04. The respondents, admittedly, had not issued Form GST DRC-04 as required under the CGST Rules. Following the decision in case of M/s Bhumi Associate Union of India: Manu/GJ/0174/2022, it was held that there may not arise any situation where “recovery” of the tax dues has to be made by the tax officer from the taxpayer during the course of search, inspection or investigation, on account of any issue detected during such proceedings. However, the law does not bar the taxpayer from voluntarily making payment of any tax liability ascertained by him or the tax officer in respect of such issues, either during the course of such proceedings or subsequently. Accordingly, assessee’s claim for refund was allowable and the respondent was directed to forthwith process the same. Assessee had also raised the issue vis-à-vis the issuance of multiple deficiency memos and that the adjudication of the Show Cause Notice was not a pre-requisite for processing the refund for claim. It was submitted that the claim for refund could not be withheld merely because the Department, pursuant to the deposit, issued the SCN and was proposing to demand GST. Since the deposit made by assessee had been held to be involuntary and the respondents were directed to forthwith process assessee’s claim for refund.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, praying as under:
“a) Issue a writ of mandamus or any other appropriate writ or order or direction in the nature thereof, directing the Respondents to refund an amount of Rs. 2,30,00,000/-, which was coercively recovered by them from the Petitioner, along with interest from the date of payment to the date of refund; and/or
b) Alternatively, issue a writ of certiorari or any other appropriate writ or order or direction in the nature thereof, quashing the impugned deficiency memo bearing C. No. GST EAST/MCIE/R-161/Refund/Sopphire Intrex Ltd/271/2022 dated 22.08.2022 (enclosed as ANNEXURE-1 to the writ petition) issued by the Respondent No. 2; and/or
c) Issue a writ of certiorari or any other appropriate writ or order or direction in the nature thereof, quashing the impugned deficiency memo bearing No. GST EAST/MCIE/R-161/Refund/Sopphire Intrex Ltd/272/2022 dated 22.08.2022 (enclosed as ANNEXURE-2 to the writ petition) issued by the Respondent No. 2; and/or
d) Issue a writ of certiorari or any other appropriate writ or order or direction in the nature thereof, quashing the impugned letter bearing C. No. II(3)GST East/MCIE/Range 161/Refund/Sapphire Intrex /271/2022 dated 17.10.2022 (enclosed as ANNEXURE-14 to the writ petition) issued by the Respondent No. 5; and/or
e) Issue a writ of mandamus or any other appropriate writ or order or direction in the nature thereof, directing the Respondent No. 2 to process refund claims bearing ARN AA070822010019L (for an amount of Rs. 36,35,360/-) and AA070822010080W (for an amount of 1,93,64,642/) both dated 04.08.2022 filed by the Petitioner and grant refund expeditiously in a time bound manner; and/or
f) Issue such further orders and other reliefs as the nature and circumstances of the case may ”
2. The petitioner is a public company engaged in supply of services such as trading in shares & securities, renting of immovable properties, commission, and brokerage, etc, in New The petitioner is registered under the Central Goods and Services Tax Act, 2017 (hereafter ‘the Act’) with registration no. 07AAECS4651G1ZD.
3. It is the petitioner’s case that search operation was conducted at the premises of the petitioner on 20.10.2021, by the officers of GST Anti-Evasion department, under Section 67(2) of the During search, the petitioner was allegedly made to deposit an amount of ₹2,30,00,000/-, which was coercively paid by it, and the payment details were intimated vide FORM GST DRC-03 bearing ARN AD071021006167P.
4. The petitioner, thereafter, wrote a letter and an email dated 10.2021, to the Inspector, Office of Joint Commissioner (Anti- evasion), Central Tax, Delhi East claiming that the payment made by the petitioner is under protest and that it reserves the right to apply for refund of the amount so deposited.
5. Respondent no.3 issued a Show Cause Notice (hereafter ‘SCN’) dated 06.2022, inter alia, demanding the recovery of GST amounting to ₹36,35,359/- under Section 74(1) of the Act and Section 20 of the Integrated Goods and Services Tax Act, 2017, and further sought to appropriate the amount of ₹2,30,00,000/-, deposited by the petitioner during investigation, towards the proposed demand.
6. The petitioner, in terms of Section 54 of the Act read with Rule 89 of the Central Goods and Services Tax Rules, 2017 (hereafter ‘CGST Rules’) filed two separate refund claims in FORM GST RFD- 01 claiming refund of the amount of ₹2,30,00,000/-. The same is tabulated as under:
