No tax demand can be issued or raised when investigation is still in progress. The respondents cannot be allowed to put the cart before the horse and collect any tax, interest or penalty before they determine, in an enquiry, after putting the petitioner of notice, and this court is of the opinion that their action is wholly arbitrary and without jurisdiction.
Section 74(5) of the CGST Act, 2017—Voluntary deposit-- Deposit prior to issue of SCN – The petitioner assailed the conduct of respondents in directing it to remit the amount availed as ITC at the stage of summons itself without following due procedure under Section 74 of the Act, 2017. The Petitioner submitted that to buy peace with the respondent and to avoid coercion, petitioner had paid Rs. 10.00 lakhs on 30.04.2019 and Rs. 25.00 lakhs on 13.09.2019 and the respondents are not entitled to make such a demand. The counsel for the petitioner submitted that liability cannot be determined by respondents before conducting enquiry when even the investigation is incomplete and the petitioner cannot be compelled coercively to pay amounts to the respondents and this violates Art.14 and 300-A of the Constitution of India. The respondent counsel submitted that pending investigation, petitioner was advised, before issue of SCN, based on the intelligence received from the other Commissionerates to pay the amount of tax along with applicable interest and penalty under Section 74(5) of the Act. The court observed that the respondents have concluded, on the basis of the incomplete investigation, that petitioner had availed ITC on invoices by certain fictitious suppliers without actual receipt of goods. Sub-Section (5) of Section 74 of the Act gives a choice to the tax payer to make any payment, if he is so chooses, but it does not confer any power on the respondents to make a demand as if there has been a determination of liability of the Assessee and demand tax along with interest and penalty. Also no advisory jurisdiction is conferred on the respondents to issue any ‘advises’ of the nature issued to the petitioner.
Held that:- The Hon’ble High Court allowed the writ Petition and restrained the respondents from coercing the petitioner to make any payment without issuing notice under Section 74(1) of the Act and directed to refund Rs. 35,00,000/- already paid by petitioner with interest @ 7% p.a from the date of payment till date of refund within four weeks.
No tax demand can be issued or raised when investigation is still in progress. The respondents cannot be allowed to put the cart before the horse and collect any tax, interest or penalty before they determine, in an enquiry, after putting the petitioner of notice, and this court is of the opinion that their action is wholly arbitrary and without jurisdiction.
Section 74(5) of the CGST Act, 2017—Voluntary deposit-- Deposit prior to issue of SCN – The petitioner assailed the conduct of respondents in directing it to remit the amount availed as ITC at the stage of summons itself without following due procedure under Section 74 of the Act, 2017. The Petitioner submitted that to buy peace with the respondent and to avoid coercion, petitioner had paid Rs. 10.00 lakhs on 30.04.2019 and Rs. 25.00 lakhs on 13.09.2019 and the respondents are not entitled to make such a demand. The counsel for the petitioner submitted that liability cannot be determined by respondents before conducting enquiry when even the investigation is incomplete and the petitioner cannot be compelled coercively to pay amounts to the respondents and this violates Art.14 and 300-A of the Constitution of India. The respondent counsel submitted that pending investigation, petitioner was advised, before issue of SCN, based on the intelligence received from the other Commissionerates to pay the amount of tax along with applicable interest and penalty under Section 74(5) of the Act. The court observed that the respondents have concluded, on the basis of the incomplete investigation, that petitioner had availed ITC on invoices by certain fictitious suppliers without actual receipt of goods. Sub-Section (5) of Section 74 of the Act gives a choice to the tax payer to make any payment, if he is so chooses, but it does not confer any power on the respondents to make a demand as if there has been a determination of liability of the Assessee and demand tax along with interest and penalty. Also no advisory jurisdiction is conferred on the respondents to issue any ‘advises’ of the nature issued to the petitioner.
Held that:- The Hon’ble High Court allowed the writ Petition and restrained the respondents from coercing the petitioner to make any payment without issuing notice under Section 74(1) of the Act and directed to refund Rs. 35,00,000/- already paid by petitioner with interest @ 7% p.a from the date of payment till date of refund within four weeks.