Case Law Details
Innovators Facade Systems Ltd. Vs Assistant Additional Director General of GST Investigation (Bombay High Court)
In the case of Innovators Facade Systems Ltd. Vs Assistant Additional Director General of GST Investigation, the Bombay High Court was petitioned under Article 226 of the Constitution of India for various reliefs, including the refund of a substantial tax amount allegedly coerced by the GST department.
The petitioner argued that they were forced to deposit Rs. 2,50,00,000/- with the GST department, claiming coercion and seeking a refund. However, the court found several discrepancies in the petitioner’s claims. Firstly, as a legal entity, the petitioner could not be physically coerced; hence, the question arose regarding which representatives or officers of the petitioner were coerced. The petitioner’s own letter indicated voluntary deposit and cooperation with the tax authorities.
Furthermore, the court observed that the petitioner failed to raise any objections or complaints at the time of deposit or in subsequent communications with the authorities, which would be expected if coercion had indeed occurred. Additionally, the court highlighted that voluntary tax deposits are not uncommon, especially when significant tax liabilities are evident, as in this case. Such actions are often taken by entities to mitigate legal consequences.
Addressing legal precedents, the court distinguished the present case from similar judgments, emphasizing the unique factual circumstances. While acknowledging the possibility of judicial discretion in exceptional cases, the court asserted that Article 226 proceedings cannot delve into disputed factual matters akin to a civil suit.
The Bombay High Court concluded that the petitioner’s claims of coercion by the GST department lacked merit and evidence. Without conclusive proof of coercion, the court rejected the petition, highlighting the inadequacy of using writ jurisdiction for refund claims based on disputed facts. In summary, the court’s decision sets a precedent for the limitations of writ jurisdiction in tax-related grievances, emphasizing the need for concrete evidence and adherence to legal principles in seeking redressal from the courts.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
This petition under Article 226 of the Constitution of India prays for the following reliefs:
“a) That this Hon’ble Court may be pleased to issue a Writ of Certiorari or a writ in the nature of Quo Warranto or any other appropriate writ, order or direction under Article 226 and 227 of the Constitution of India directing Respondent Nos. 1 and 2 to refund the amount of Rs. 2,50,00,000/- to the Petitioner Company along with interest;
b) That this Hon’ble Court may be pleased to issue a Writ of Certiorari or Mandamus or a writ in the nature of Que Warranto or any other appropriate writ, order or direction under Article 226 and 227 of the Constitution of India declaring that the summons dated 12.10.2022 and 25.10.2022 issued to the MD of the Petitioner Company as a routine basis as illegal and arbitrary:
c) For cost of this petition and;
d) For such further and other reliefs as the nature and circumstances of the case may require.”
2. The case of the petitioner is that the petitioner was forced to deposit an amount of Rs.2,50,00,000/- (Rupees Two Crores Fifty lakhs only) on 13 October 2022 that too at 3.30 a.m. It is petitioner’s contention that the said amount was recovered by the respondents from the petitioner by coercion, hence, the petitioner is entitled to refund of the said amount, on the ground that this would amount to collection/retention of the petitioner’s amounts without any authority in law.
3. We are quite convinced that in the facts of the present case, such relief cannot be granted to the petitioner for more than one reason, which we discuss hereunder.
4. At the outset, it needs to be noted that the petitioner is a legal person, it is described to be a company registered under the Companies Act, 1956. As a legal person, the petitioner certainly cannot be physically coerced. The question is which of the representatives of the petitioner or its officers who were in charge of the day to day affairs of the petitioner, whether were coerced into such act. This is certainly a question of fact.
5. The petitioner has averred in the petition that search and seizure action was resorted by the respondents at the petitioner’s premises on 12 October
6. It commenced at 12.50 p.m. According to the petitioner, it continued upto mid-night i.e. upto 3.30 a.m. when the petitioner was forced to deposit the said amount. It is difficult to accept the case of the petitioner that there was a coercion of the nature as alleged by the petitioner, as in our opinion, such stance of the petitioner is also belied by the petitioner’s own letter dated 13 October 2022 which reads thus:
“Date: 13.10.2022
To DGGI
Zonal Unit Mumbai.
Mumbai-400 021
GSTIN 27AAAC173260172
Subject: Submission of DRC-3 of Rs 2.50,00,000/-
Respected Sir,
Please find attached herewith DRC-03 of Rs 2,50,00,000/- vide ARN AD2710220080370 Dt 13/10/2022. Balance Tax payment scheduled will give after 10 days.
Thanking You
For, Innovators Façade Systems Limited
sd/-
(Authorised Signatory)
Encl:
DRC-03 of Rs 2,50,00,000/- vide ARN AD2710220080370 D1 13/10/2022”
(emphasis added)
6. It thus appears that not only the petitioner decided to voluntarily deposit an amount of Rs.2,50,00,000/-, but also, agreed that the “balance tax payment scheduled” would be made within 10 days. It also appears that the search and seizure operations revealed that an amount of more than Rs.5 crores was due and payable towards the outstanding tax which was very well realized by the petitioner. Thus, the case of the petitioner in the present facts, in regard to any coercion or allegation of any criminal act against the respondent cannot be accepted, not only on account of the petitioner’s letter dated 13 October 2022, addressed by the petitioner to respondent No.1, but also on the petitioner’s own conduct which does not inspire any confidence for the writ Court to accept such contention.
7. In our opinion, in reality or genuinely if the petitioner was to be coerced, as a prudent legal person would resort, the petitioner could have made complaints and/or representation on such actions of the officers, which in law can certainly be regarded as highhanded and illegal. However, the petitioner did not even whisper anything of such kind, in the several letters addressed to the authorities including in answering the summons, to say that such amount was recovered by the department under coercion, much less to raise the same before the appropriate police authorities. Hence, a case of such nature being directly made out in the writ petition de hors any material to that effect would not give any impetus to the petitioner’s case of any coercion by the department. In this view of the matter, such factual dispute as to whether any coercive methods were adopted by the respondents and that such amounts were deposited under duress and coercion certainly cannot be conclusively ascertained and/or gone into in the proceedings of a writ petition under Article 226 of the Constitution.
8. The Court cannot be oblivious that there are several cases where the assessee is conscious and is aware that there are substantial taxes due and payable by the assessee and/or there is substantial recovery from the assessee, in such circumstances, like in the present case after search and seizure action was initiated, to buy peace, the assessee may voluntarily deposit the amounts. It is hence not unlikely that the assessee, to mitigate the circumstances and/or avoid legal proceedings being initiated against it, voluntarily deposited the tax amounts. Such position being taken by the assessee is not unknown to the tax jurisprudence. Thus, any such amount voluntarily deposited, in such circumstances, cannot be categorized as a deposit under coercion. In this regard, there cannot be a straight jacket and/or a blanket opinion which could, at all, be rendered by the Court as any action taken by the department is required to be tested on its own facts.
9. In the present case, it appears that several summonses were issued to the petitioner and that the investigation is in progress, it therefore, appears that the show cause notice, is yet not issued. It is in these circumstances, the petitioner by approaching this Court, for the first time, has made a grievance of a coercive recovery, which in our opinion, cannot be accepted.
10. Mishra, learned Counsel for the respondents would submit that a show cause notice would be issued to the petitioner within four weeks from today. We accept such statement. If that be so, we are of the opinion that, keeping open all contentions of the parties, the prayers of the petitioner for making claim of such amount should be left to be considered by the appropriate Officer of the respondent as per law.
11. At this stage, nonetheless, learned Counsel for the petitioner submits that similar issue was raised before the Madras High Court in the case Nandhi Dhall Mills India (P) Ltd. Vs. Senior Intelligence Officer, Director General of Goods & Service Tax, Trichy1. We find that the Court in such decision was not confronted with the facts as in the present proceedings and more particularly, the assessee taking a position of addressing such letter (dated 13 October 2022 (supra)), as addressed by the petitioner to the respondents, which was never withdrawn. Our observations in regard to non-applicability of the decision are fortified from reading of paragraph 27 of the said decision. We thus find that such judgment is certainly not applicable in the facts of the present proceedings.
12. Also the decision in “Shree Ganesh Molasses Trading Co. Vs. Superintendent, Office of the Commissioner”2 would not be applicable in the present facts. This was a case where the petitioner had clearly contended that he had not voluntarily reversed the credit, but it was coercively reversed by respondent at 1.00 a.m. It is considering such facts the Court exercised its discretion and going deep into the factual matrix and by extensively appreciating the materials on record, including of statements of the concerned persons as recorded during investigation, (as seen from paragraph 20 of the judgment) the Court in the facts of the case, felt it appropriate to grant reliefs. However, in the facts of the present case it is not possible for us to undertake such exercise to appreciate the evidentiary value of any materials which may form part of investigation, much less of any documentary and oral evidence so as to record any finding of facts, more particularly, for the reasons which are set out hereinabove.
13. We may also observe that when an assessee comes before the Court invoking jurisdiction under Article 226 of the Constitution and that too making a serious grievance that the department had coerced the assessee to deposit the tax amounts, certainly as to whether it is genuinely a coercion or whether it was a voluntary deposit, as seen in the present case, is purely a disputed question of fact. Such question cannot be gone into and appreciated in the proceedings under Article 226 of the Constitution. In fact, in such circumstances, a tax already being deposited and a relief of refund thereof being sought in considering grant of such relief in the proceedings under Article 226 of the Constitution and that too for refund of money, would amount to the Court converting proceedings of a writ petition into proceedings akin to a proceeding of a civil suit, as necessarily it would require appreciation of evidence. Considering the settled principles of law as laid down in catena of decisions, such exercise is not possible to be undertaken in the summary, discretionary proceedings under Article 226 of the Constitution, albeit in a given case, the Court may chose to exercise its discretion, in the event, facts are absolutely glaring and gross that a reasonable body of persons cannot resort to a highhanded and illegal action.
14. As a result of the above discussion, in our opinion, the petition is thoroughly misconceived. It is accordingly, rejected. No costs.
Notes
1 (2021)127 taxmann.com 31 (Madras)
2 (2023)148 taxmann.com 36 (Gujarat)
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