The Calcutta High Court in the case of ATR MALLEABLE CASTING PRIVATE LIMITED & ORS. VERSUS INSPECTOR OF CENTRAL TAXES vide M. A. T. 1285 of 2023 With I. A. No. CAN 1 of 2023 dated 25.06.2024, has held that the payment was made during the search, suggesting it was not voluntary. Cited similar case in Vallabh Textiles and Shree Ganesh Molasses Trading Co., where payments made during searches without proper documentation were deemed involuntary. Also, Validity of the search and authorization in GST INS-01 can be contested by the appellants after the issuance of the show-cause notice – Appellants are permitted to raise a claim for interest during the adjudication of the show-cause notice.
Facts of the Case: In the present case, Intra – Court appeal filed to sought refund of Rs. 30,00,000/- which the appellants allege was forcibly paid under threat of arrest, coercion, and undue influence. Further, the validity of the search itself, claiming discrepancies in the signatures on INS-01. Earlier the petitioners filed writ petition which was dismissed on the grounds that the appellants' claim regarding improper authorization in INS-01 was false, as the revenue produced a copy of the INS-01 during the argument.
The appellants argued that the payment was coerced during a search. The Appellants provided affidavits alleging forgery in the signatures. However, the respondents argued that the payment was voluntary. Also, the department is in the final stages of issuing a show-cause notice and contended that the validity of the search could be contested in response to this notice.
Held that – The court noted the discrepancy in the time recorded for the conclusion of the search and the officers leaving the premises. The payment was made during the search, suggesting it was not voluntary. There was no issuance of GST DRC-04, indicating non-compliance with Rule 142 (2) of the CGST Rules, 2017.
Cited similar case in Vallabh Textiles and Shree Ganesh Molasses Trading Co., where payments made during searches without proper documentation were deemed involuntary.
The Court directed respondent to refund the sum of Rs. 30,00,000/- to the appellants. The Validity of the search and authorization in GST INS-01 can be contested by the appellants after the issuance of the show-cause notice. The Appellants are permitted to raise a claim for interest during the adjudication of the show-cause notice. The CGST authorities are instructed to issue a show-cause notice allowing the appellants sufficient time to respond and conduct a personal hearing.
Present Appeal is allowed, and the order in the writ petition is set aside.
To read the complete judgment 2024 Taxo.online 1268
