M/S.ARUNA MILLS vs THE STATE TAX OFFICER
- Court
- Madras High Court
WP Nos.30908, 31022, 31026 & 31597 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 16-09-2026
Pronounced on : 28-10-2026
CORAM
THE HON'BLE MR.JUSTICE N.SENTHILKUMAR
WP Nos.30908, 31022, 31026 & 31597 of 2024 and
WMP Nos. 33490, 33645, 33635 & 34347 of 2024
CNR:{HCMA011899812024}
M/s.Aruna Mills
Represented by its Managing Partner
Mr.E.Rubesh Kumar
46B, Kovai Road Velagoundapalayam,
Vellakovil, Kangayam (T.K)
Tiruppur- 638 111.
..Petitioners in all cases
Vs
1.The State Tax Officer
Inspection Group-1,
Office of the Joint Commissioner (ST)
Tirupur Intelligence Division,
5/147, AEPC Building,
Kaikattipudur, Tirupur Main Road, Avinashi-641
654.
2.The State Tax Officer (Intelligence)
Inspection Group-V
Office of the Joint Commissioner (ST)
Tirupur Intelligence Division
5/147, AEPC Building, KaikattiPudur
Tiruppur Main Road Avinashi- 641 654
..Respondents in all cases
Prayer in W.P.No.30908 of 2024: Writ Petition filed under Section 226 of the
Constitution of India, seeking to issue a Writ of Certiorarified Mandamus,
calling for the records leading to the issuance of order of acceptance bearing
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reference No.33ABSFA3372JIZ7/ 2022-23 dated 27.03.2024 passed by the
First Respondent herein and quash the same, and direct the Respondents herein
to refund an amount of Rs.3,84,871/- (IGST-Rs.4,301/- Plus CGST - 1,90,285 +
SGST - 1,90,285) recovered during surprise inspection.
Prayer in W.P.No.31022 of 2024: Writ Petition filed under Section 226 of the
Constitution of India, seeking to issue a Writ of Certiorarified Mandamus,
calling for the records leading to the issuance of order of acceptance bearing
reference no.33ABSFA3372JLZ7 l/2020-21 dated 27.03.2024 passed by the
First Respondent herein and quash the same, and direct the Respondents herein
to refund an amount of Rs.2,20,09,106/- (IGST - Rs.9,90,000 + CGST -
Rs.1,05,09,553 + SGST Rs.1,05,09,553) recovered during surprise inspection.
Prayer in W.P.No.31026 of 2024: Writ Petition filed under Section 226 of the
Constitution of India, seeking to issue a Writ of Certiorarified Mandamus,
calling for the records leading to the issuance of order of acceptance bearing
reference no.33ABSFA3372JlZ7 l/2021-22 dated 27.03.2024 passed by the
First Respondent herein and quash the same, and direct the Respondents herein
to refund an amount of Rs.2,59,151/- (IGST - Rs.42,323 + CGST - 1,08,414 +
SGST- 1,08,414) recovered during surprise inspection.
Prayer in W.P.No.31597 of 2024: Writ Petition filed under Section 226 of the
Constitution of India, seeking to issue a Writ of Certiorarified Mandamus,
calling for the records leading to the issuance of order of acceptance bearing
reference no.33ABSFA3372J1Z7 /2023-24 dated 27.03.2024 passed by the First
Respondent herein and quash the same, and direct the Respondents herein to
refund an amount of Rs.1,40,687 /- (IGST .Rs.36,001 + CGST - 52,343 + SGST
- 52,343) recovered during surprise inspection.
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In all W.Ps.
For Petitioner: Ms.S.P.Sri Harini
For Respondents: Mr.R.Sethu Prabakaran,
Government Advocate (Taxes)
COMMON ORDER
These Writ Petitions have been filed to quash the orders dated 27.03.2024
in reference No.33ABSFA3372JIZ7/2020-21, 33ABSFA3372JIZ7/2021-22 ,
33ABSFA3372JI Z7 2022-23 and 33ABSFA3372JIZ7/2023-24 passed by the
first Respondent and seeking a direction to the Respondents to refund the
amounts remitted under IGST, CGST and SGST during surprise inspection.
2. The case of the petitioner is as follows:
The petitioner is a proprietary concern represented by its Managing
Partner engaged in the manufacture and supply of Cotton yarn and Poly-cotton
yarn and synthetic fibres and is registered under GSTIN:33ABSFA3372J1Z7.
The petitioner was originally constituted as a proprietorship concern and
thereafter it was reconstituted as a partnership firm comprising the Managing
partner and his grand father, one Sadhasivam, by way of a partnership deed,
dated 28.08.2020. On the retirement of the said Sadhasivam from the
partnership firm, Mrs.E.Aruna, the mother of the Managing Partner was
included as a partner vide Partnership Deed dated 08.11.2021. Thereafter, the
petitioner firm continued its business under the name and style “Aruna Mills” at
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the same address of which it had originally been registered. The assets and
liabilities in the propitiatory ship concern were transferred to the petitioner Firm
through book adjustments and the loans obtained in the name of proprietorship
concern were also transferred to the petitioner firm. The transfer of assets and
liabilities was carried out in accordance with law. Pursuant to the transfer, the
petitioner has been duly filing GST and Income Tax returns under the newly
registered numbers. The sole proprietor transferred the assets to the petitioner
firm by duly raising a tax invoice in accordance with the GST enactments and
the same was also declared in the GSTR-3B returns filed for the months of
February and march 2021 and taxes were paid. The entire assets were reflected
in GSTR-2A and the returns were also filed by the petitioner.
3. In this circumstance, the respondents on 19.10.2023 and 20.10.2023
had conducted a surprise inspection at the petitioner’s premises. It is the
grievance of the petitioner that on the date of inspection, the marriage of the
petitioner’s sister Ms.E.Rubika, daughter of Mr.Elangovan and Mrs.Aruna and
grand daughter and sister-in-law of other partners was taking place at Karur
approximately 50 Km away from the business premises. The family members,
including the Managing partner of the petitioner firm were engaged in the
Wedding ceremony from the morning of 19.10.2023. Hence, the petitioner
requested the respondents to conduct the inspection on 21.10.2023 and also
nd
informed them of the marriage. However, the 2 respondent without accepting
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the same, directed the petitioner to send one of its accounting staff members to
be present at the business premises to assist the officials during inspection.
Though most of the staff members were unavailable due to the marriage
function, one accounting staff member was sent who also cooperated with the
respondents during inspection. However, no documents or materials were seized
by the officials on the said dates. The very next day i.e., 20.10.2023, the
petitioner came to the business premises in the late evening and was coerced
into signing Form GST INS – 01. The petitioner was also directed to appear
before the respondents on 23.10.2023 and sign a statement accepting the tax
demands made by the respondents, while objecting to the demand for interest.
No opportunity was given to dispute the contents of the statement. The
accounting staff member who was present during the inspection was coerced by
the Second respondent to log into the petitioner’s GST Portal and making
payments amounting to Rs.8,99,419/- from the credit balance available in the
petitioner’s electronic credit ledger, vide Form GST DRC-03 dated 19.10.2023
and 20.10.2023 in respect of four alleged defects for the year 2022-23. The
accounting staff member was not even permitted to inform or obtain permission
from the petitioner for the same.
4. The said fact was brought to the knowledge of the petitioner only on
nd
21.10.2023. The 2 respondent collected the amounts towards the alleged tax
demands on the spot for the tax periods 2020-21 to 2023 – 24. The petitioner
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made a representation dated 06.11.2023, raising objections with regard to the
payments made under protest and seeking a refund of the payments remitted
through Form GST DRC-03. Pursuant to the said representation, on 07.11.2023,
the respondents issued an intimation in Form GST DRC-01A on the following
grounds:
i. Alleged payment of tax under reverse charge mechanism for
freight expenses;
ii.Alleged ineligible ITC as per Section 17(5);
iii.Difference in tax value for sale of machinery;
iv.Reversal of ITC on alleged discount received.
nd
5. According to the petitioner, the 2 respondent had not considered the
representation dated 06.11.2023, however had dropped the demand for interest,
stating that the proposal of levy interest was dropped as per the submission of
the petitioner that the alleged ineligible ITC had not been utilised and therefore
no interest was payable under Rule 88 B.
6. The petitioner submits that a reply was submitted to the intimation vide
letter dated 22.11.2023 stating that the payments made during inspection was
not voluntary and that the alleged tax demand was unsustainable in the eye of
law. A show cause notice in Form GST DRC-01 dated 15.12.2023 was issued
nd
by the 2 respondent. Though the respondent referred to the petitioner’s reply
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dated 22.11.2023, the respondent arbitrarily stated that the petitioner had fully
discharged the tax liabilities proposed in the intimation and accordingly, issued
the show cause notice with Nil proposals.
7. According to the petitioner, though the respondents considered certain
claims made by the petitioner, they dropped the proposals to levy interest under
Section 50(3) of the GST enactments r/w. Rule 88 B of the GST Rules. In the
show cause notice issued by the respondent, the petitioner was given an
opportunity of personal hearing on 11.03.2024. In its reply given in respect of
the defects which were pointed out by the respondents, the petitioner has most
specifically accepted the tax proposal in respect of defects 1, 3 and 4 relating to
the payment of tax under the reverse charge mechanism in respect of ‘freight
expenses’, the difference in the taxable value relating to the sale of machinery
and ITC reversal in respect of discounts received. However, the first respondent
passed an order in Form GST DRC-05 dated 27.03.2024 without considering
the submissions made by the petitioner and the protest expressed in respect of
spot-collection of the alleged tax demand at the time of inspection. Aggrieved
by the said order, the present writ petition has been filed.
8. The learned counsel for the petitioner would submit that the impugned
order is appealable under Section 107 of the CGST Act, 2017. Accordingly, the
petitioner attempted to file a statutory appeal through the GST Portal and
produced the evidence i.e., screenshot to that effect. According to the petitioner
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they were unable to file the appeal online due to the some technical glitch and
therefore, manual appeal was filed and the same was not considered by the
respondents.
9. It is the specific case of the petitioner that, if the entire demand had
already been accepted and discharged by the petitioner, the coercive collection
of the amount on the date of inspection even before the issuance of the
intimation as contemplated under Form GST DRC – 01A followed by the
issuance of an order in Form GST DRC-05 which is nothing but a denial of the
petitioner’s opportunity to prefer a statutory appeal before the competent
authority.
10. The learned counsel for the petitioner would further submit that the
respondent failed to issue Form GST DRC 04 as contemplated under Rule 142
of the GST Rules. If no Form GST DRC -04 is issued, the impugned order is
legally unsustainable.
11. With regard to the legal submission, The learned counsel relied upon
the Judgment of the Hon’ble Supreme court in Vallabh Textiles V. Senior
Intelligence Officer reported in (2022) 145 taxmann.com 596 wherein the
Hon’ble Supreme Court held that Form GST DRC-04 was not voluntary and
directed the department to refund the amount along with interest.
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12. He also relied upon the Judgment of the Division Bench of Calcutta
High Court in ATR Malleable Casting (P.) Ltd. Vs. Inspector of Central Taxes
reported in (2024) 164 taxmann.com 78 (Calcutta) wherein the Division Bench
had considered the scope of non issuance of Form GST DRC-04 and the impact
of non issuance of show cause notice by relying upon the Judgment in Shree
Ganesh Molosses Trading Co. Vs. Superintendent, Office of the Commissioner
reported in (2023) 148 taxmann.com 36/97GST 41/72 G.S.T.L. 190/4 Centax 37
(Guj). The relevant paragraph is extracted hereunder:
14. This submission is contrary to the statutory rule,
which was considered in the case of Shree Ganesh Molasses
Trading Co. v. Superintendent, Office of the Commissioner
[2023] 148 taxmann.com 36/97 GST 41/72 G.S.T.L.. 190/4
Centax 37 (Guj.), wherein the Hon'ble Court referred to Rule
142(2) of the CGST Rules, 2017, which stipulates that where any
person makes any payment of tax, interest, penalty, whether on
his own ascertainment or as communicated by the proper officer
under sub-rule (1A), he shall inform the proper officer of such
payment in Form GST DRC-03 and the proper officer shall issue
an acknowledgement, accepting the payment made by the said
person in Form GST DRC-04. Admittedly, in the instant case,
Form GST DRC-04 was not issued.
13. The learned counsel for the petitioner submits that in the above cases,
the Courts have held that where the authority fails to issue an acknowledgement
in Form GST DRC-04, the assessee is entitled for refund of the amount paid.
14. The learned counsel for the petitioner also relied upon the Judgment
of this Court in W.P.No.5192 of 2020 dated 26.02.2021 wherein the learned
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single Judge of this Court had considered the scope of Section 74(5) and
necessary paragraphs are extracted hereunder:
24. The basis of this argument is flawed as I am not in
agreement with the submission that Section 74(5) is a statutory
sanction for advance tax payment, pending final determination
in assessment. In my view, this is contrary to the scheme of
assessment under Section 74, as I have noticed in paragraphs
12 to 16 above.
25. The ratio of the decisions relied by the petitioner and
several more besides, are to the effect that no collection can be
insisted upon prior to a final determination of liability being
made. These decisions, in my view, still hold the field. What
Section 74(5) provides is the first opportunity to an assessee to
pay tax, interest and penalty liability even prior to the issuance
of a show cause notice and such acceptance will have to be in
the form of either self-ascertainment or an ascertainment by
the proper officer.
26. Records were summoned to examine whether there
was an ascertainment in this case. The records revealed the
tabulation of instalments furnished by the assessee at the time
of recording of statement and out of which the first two
instalments have been paid. These, according to
Mr.Sundareswaran constitute self-ascertainment and trigger
the provisions of Section 74(5) and (7). Had this been the
position, the records must contain material to show that (i) the
assessee accepts the ascertainment made by it, (ii) the revenue
has applied its mind and arrived at the position that the self-
ascertainment by the assessee is inadequate and (iii) An
ascertainment by the officer, as in the tabulation of payments
(see para 3 of this order), the balance tax liability, after taking
note of the amount of Rupees Seven Crores to be paid by the
petitioner, is to be made by the officer. However, statement
recorded at the time of search admitting GST liability and
setting the scheme of instalments have been retracted by the
petitioner on 05.11.2019 and the petitioner has consistently
and vehemently been contested the liability to tax. Importantly,
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the records also do not contain any ascertainment by the
officer. The tabulation of payments in this case is joint, the
petitioner offering a sum of Rupees Seven Crores (since
retracted) and the Officer to ascertain the balance. This
exercise has not been carried out and, with this, the
requirement of ‘ascertainment’ under Section 74(5), fails.
27. Merely because an assessee has, under the stress of
investigation, signed a statement admitting tax liability and
has also made a few payments as per the statement, cannot
lead to self-assessment or self-ascertainment. The
ascertainment contemplated under Section 74(5) is of the
nature of self-assessment and amounts to a determination
which is unconditional, and not one that is retracted as in the
present case. Had such ascertainment/self-assessment had
been made, there would be no further proceedings
contemplated, as Section 74(6) states that with ascertainment
of demand in Section 74(5), no proceedings for show cause
under Section 74(1) shall be issued. In this case, enquiry and
investigation are on-going, personal hearings have been
afforded and both the parties are fully geared towards
issuing/receiving a show cause notice and taking matters
forward. Thus, the understanding and application of Section
74(5) in this case, is, in my view, wholly misconceived.
28. In this context I may usefully extract from a decision
in the case of Clear trip Private Ltd. and Ors. (supra), wherein
a Bench of the Bombay High Court at paragraph 16 holds as
follows:
16. We are clear in our minds and from the scheme of
the Act and the Law as a whole that coercive
measures, including effecting any arrest, would arise
only when investigation has been completed and on
launching the prosecution. If the prosecution is a
criminal prosecution, then, there is no question of
deviating or defeating from the Criminal Law. The
Criminal Law contains several provisions including
protective measures, which would enable the
Petitioners to resist any arrest, as apprehended. In the
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scheme of the Criminal Law and particularly the
Finance Act, 1994 as well, if it contains any penal
provisions, it is not as merely because the
investigations are underway that the arrest would be
effected. Eventually, all that the Respondents are
presently contemplating is to investigate the matter.
The Petitioners do not dispute the right to investigate
and in accordance with law. That they have already
attended the offices of the concerned Respondents and
once the statement of the Petitioners was recorded
goes without saying that on further summons being
issued and on called upon to attend the Officers of the
Respondents, they will attend and co-operate in these
investigations by producing all the documents and
answering the requisite queries, subject, of-course, to
their rights in law. It is only when these investigations
conclude that the authorities would be in a position to
take a decision whether to launch any prosecution. In
such a prosecution as well, if the provisions of the
Criminal Law, which enable arrest in cases of
cognizable offences and non-bailable, that the
Petitioners can have an apprehension and which also
can be taken care of by approaching a competent
Criminal Court. Secondly, there is no question of any
recovery of tax by coercive means, unless the
investigation results into issuance of a show cause
notice, an opportunity to the Petitioner to resist the
demand, a adjudication thereof by a reasoned order
and protective remedies such as appeals. We do not
think that any recovery by coercive measures is
straightway permissible and particularly in the given
facts and circumstances of the case.
29. In SCA.No.3196 of 2021 (M/s.Bhumi Associate vs.
Union of India through the Secretary) the Gujarat High Court
is also concerned with a similar prayer as in this matter and
the Bench has formulated the following guidelines for
resolution of the above issues. The matter is pending decision.
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“The Central Board of Indirect Taxes and
Customs as well as the Chief Commissioner of
Central/ State Tax of the State of Gujarat are hereby
directed to issue the following guidelines by way of
suitable circular/instructions: (1) No recovery in any
mode by cheque, cash, epayment or adjustment of
input tax credit should be made at the time of
search/inspection proceedings under Section 67 of the
Central/Gujarat Goods and Services Tax Act, 2017
under any circumstances. (2) Even if the assessee
comes forward to make voluntary payment by filing
Form DRC03, the assessee should be asked/ advised
to file such Form DRC03 on the next day after the end
of search proceedings and after the officers of the
visiting team have left the premises of the assessee.
(3) Facility of filing complaint/ grievance after the
end of search proceedings should be made available
to the assessee if the assessee was forced to make
payment in any mode during the pendency of the
search proceedings. (4) If complaint/ grievance is
filed by assessee and officer is found to have acted in
defiance of the aforestated directions, then strict
disciplinary action should be initiated against the
concerned officer.”
Sadly, the winds of change brought about by the era of
GST do not appear to have made any impact on this position.
30. In the light of the discussion as above, the
mandamus as sought for by the petitioner is issued. The
amount collected, of Rupees Two Crores shall be refunded to
the petitioner within a period of four (4) weeks from today.
15. Per contra, the learned Government Advocate (Tax) appearing for the
respondents would submit that the payment was made by the petitioner through
Form GST DRC-03 on 19.10.2023 and 20.10.2023. Even in the show cause
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notice issued in Form GST DRC-01 on 15.12.2023, the entire details were
furnished to the petitioner and the petitioner has given a reply to the show cause
notice on 08.01.2024 and thereafter an opportunity of personal hearing was
afforded on 11.03.2023. The petitioner also submitted documentary evidence to
establish his case and thereafter the final order was passed in Form GST
DRC-05 on 27.03.2024.
16. The learned Government Advocate (Tax) would further submit that
the application filed by the petitioner seeking a refund of the tax allegedly paid
under coercion was withdrawn on 24.06.2024. Thereafter, the petitioner filed a
manual appeal on 23.07.2024, which was rejected on 22.10.2024. He would
further submit that by the communication issued vide
GST/INV/Instructions/2022-23, dated 25.06.2022, specific direction was issued
under Instruction No:01/2022-2023 (GST- Investigation) regarding the deposit
of tax during the course of search, inspection or investigation and more
specifically in Paragraph 3 and 4 which are extracted hereunder:
3. It is further observed that recovery of taxes not paid or
short paid, can be made under the provisions of Section 79 of
CGST Act, 2017 only after following due legal process of issuance
of notice and subsequent confirmation of demand by issuance of
adjudication order. No recovery can be made unless the amount
becomes payable in pursuance of an order passed by the
adjudicating authority or otherwise becomes payable under the
provisions of CGST Act and rules made therein. Therefore, 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
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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.
4. Therefore, it is clarified that there may not be any
circumstance necessitating recovery' of tax dues during the course
of search or inspection or investigation proceedings. However,
there is also no bar on the taxpayers for voluntarily making the
payments on the basis of ascertainment of their liability on non-
payment/ short payment of taxes before or at any stage of such
proceedings. The tax officer should however, inform the taxpayers
regarding the provisions of voluntary tax payments through
DRC-03.
17. However, It is claimed by the petitioner that the respondents collected
the tax amount though Form GST DRC 03 under coercion, whereas such
payment ought to have been made voluntarily and the said coercion was brought
to their notice through the representation dated 06.11.2023.
18. The learned Government Advocate (Tax) would submit that Form
GST DRC-03 is a mechanism for voluntary payment made against the show
cause notice / statement which is an intimation of tax ascertained though Form
GST DRC -01(A). When GST DRC – 01 (A) is an intimation of tax ascertained
as being payable under Sections 73(5) / 74(5) r/w. Rule 142(1A). However, the
petitioner claimed that the payment which was made under Form GST DRC –03
should be voluntarily.
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19. The respondents have filed a detailed counter affidavit stating that
they are entitled to conduct an inspection as contemplated under Section 67 of
the Act and that the presence of the partners is not a statutory prerequisite for
conducting such Inspection. When it is the specific case of the respondents that
GST portal mandates an authentication process involving a one time password
(OTP) which is sent to the exclusive mobile number and e-mail address of the
partners of the firm. According to the respondents, the payment could have
been made only after the OTP was entered and therefore, the petitioner cannot
now plead that the amount was remitted under coercion. In the counter
specifically in paragraph 9, the respondent has stated the above details which
are extracted hereunder:
“9. With respect to Paragraphs 7 to 9, the Petitioner's
narrative regarding an "intrusive" inspection due to a family
wedding and alleged "coercion" is strongly denied. I state that
there is absolutely no documentary evidence on record to show
that the Petitioner ever requested a postponement of the
inspection. The inspection was lawfully conducted on
21.10.2023 based on the order of the Principal Commissioner of
Commercial Taxes in GST INS-01 Sl.No. 22/TPR/2023-24 dated
19.10.2023. The physical presence of the Partners is not a
statutory mandate; the Petitioner's authorized representative
was present, assisted the officials, perused the INS-01
authorization, and duly affixed signatures on the inspection
findings. Crucially, the allegation of coercion to log into the
GST portal and pay Rs. 2,24,09,652/- is a fabricated
afterthought. Form GST DRC-03 is a mechanism for voluntary
payment. It is highly pertinent to note that a payment via the
GST portal cannot be executed without the Username,
Password, and a One-Time Password (OTP). This OTP is sent
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exclusively to the registered mobile number and email ID of the
Partners. The inspecting officers have no access to this OTP.
The Petitioner's side consciously retrieved the OTP and
voluntarily paid the tax to avoid the levy of severe penalties
under Section 73(5)/74(5) of the Act. Furthermore, the claim of
'coercion' is a highly disputed question of fact, allegations that
DRC-03 payments were extracted under coercion require fact-
finding and the leading of evidence, which is strictly outside the
scope of the extraordinary writ jurisdiction under Article 226.
Therefore, these averments are liable to be rejected outright.”
20. It is the specific case of the respondents that the request was made by
the petitioner regarding the payments of tax made on 19.10.2023 and
20.10.2023 is after a delay of 17 days and the petitioner has not given any
explanation for the delay of 17 days. According to the respondents, due to non
utilisation of ITC, the levy of interest under Section 50(3) r/w. Rule 88 (b), was
dropped and therefore taking into consideration the fact that the petitioner has
voluntarily discharged the tax liability as contemplated under Section 73(5),
74(5), there was no outstanding demand and therefore the respondents had
complied with Rule 142(3) by accepting the payment and concluding the
proceedings via Form GST DRC – 05 and submitted that there is no infirmity in
the order passed by the authority.
21. Heard the learned counsel for the petitioner and the learned
Government Advocate (Tax) appearing for the respondent and perused the
materials available on record.
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22. It is to be seen that the date of surprise inspection coincided with the
th th
dates of wedding in the petitioner’s family, namely, on 19 and 20 of October
2023. Generally, a family wedding is not merely an occasion or celebration
comparable to a festival observed over a day or two. The organisation of
wedding involves several months of preparation. Although the scale and
complexity of the arrangements may differ depending on whether the wedding
is a small and intimate or a grand, the underlying remains significant. However,
every wedding involves essential traditions and arrangements including inviting
families, choosing a venue, purchasing clothes and organising rituals. The
moment a wedding is fixed, it brings great happiness to both families. This joy
is backed by careful and detailed planning to ensure that the wedding and
reception proceed smoothly for the couple, their relatives, and all the invited
th
guests. In such circumstances, the inspection having been conducted on 19 and
th
20 of October 2023 the very dates on which, the wedding was taking place, the
presence of the petitioner and the other partners at the business premises could
not be possible.
23. As regards the representation dated 06.11.2023, it is true that the same
was submitted 17 days after the payments were made, and no specific
explanation was initially furnished for the delay. However, the said delay
cannot, by itself, be a ground to reject the petitioner’s claim. Although the
wedding ceremony may be solemnized on the scheduled date, there are certain
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customary procedures and formalities associated with a marriage may continue
thereafter and it takes minimum of weeks time for the family to settle down all
the formalities after the marriage and return to its normal routine.
24. Similarly, when a death occurs, the bereaved family must perform
specific cultural and religious ceremonies. Different religions and communities
follow distinct customs that are not empty formalities, rather, assist family
members in accepting the physical absence of their loved one. Religious rituals
performed on the 3rd, 7th, 10th, and 15th days allow the family to gradually
process that the departed soul is no longer physically present. This 15-day
period helps them accept the inevitable reality of death and adjust their minds to
the loss. These procedures are far more than mere customs. They carry a
profound psychological impact, providing a structured way for a family to
navigate the profound transition from joy to sorrow.
25. As the customs and procedure which happens in a wedding and in
death cannot be brushed aside mechanically and the delay as raised by the
respondents with regard to unexplained delay of 17 days cannot be taken into
consideration and therefore, such plea is rejected at the outset.
26. It is pertinent to consider the counter in paragraph 11 where the
counter has been specifically stated that the following:
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11. With respect to Paragraphs 13 to 18, the Petitioner's
allegation that the 1st Respondent passed the Impugned Order
"without applying his mind" is stoutly denied. I state that
following the voluntary payment of tax via Form DRC-03, the
Proper Officer initiated steps to issue an acknowledgment in
Form GST DRC-04. However, at this juncture, the Petitioner
suddenly demanded a refund. To comply with the principles of
natural justice, the Proper Officer formally issued a Show Cause
Notice in Form DRC-01 and afforded a personal hearing to the
Petitioner on 22.03.2024. A perusal of the Impugned Order
reveals that the Proper Officer did not blindly confirm all
proposals, for instance, the proposal to levy interest under
Section 50(3) read with Rule 88B was dropped. Since there was
no new tax demand and the full tax amount had already been
paid voluntarily via Form DRC-03, the Proper Officer, acting
strictly in accordance with Rule 142(3), rejected the Petitioner's
baseless objections and rightfully concluded the proceedings by
issuing the order in Form DRC-05. There was no statutory
requirement to issue a demand order in Form DRC-07 when the
tax was already paid in full.
27. It is to be noted that following the voluntary payment of tax via Form
GST DRC-03, the respondent authority initiated steps to issue an
acknowledgment in Form GST DRC-04. At this juncture, the petitioner has
demanded refund. To comply with the principles of natural justice, the
respondent issued a show cause notice in Form DRC – 01 and afforded the
petitioner an opportunity of personal hearing on 22.03.2024.
28. It is clear from the above said counter that the respondents had not
issued GST DRC – 04 and based on the recent notice only they have issued
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Form DRC– 01. The representation made by the petitioner on 06.11.2023 was
not considered, which only shows the respondent failed to consider the stand
raised by the petitioner and the non issuance of Form GST DRC – 04 is fatal to
the respondent, in view of the Judgment of the Division Bench of Calcutta High
Court in ATR Malleable Casting (P.) Ltd. Vs. Inspector of Central Taxes
reported in (2024) 164 taxmann.com 78 (Calcutta) which squarely applies to
the present case. Hence, the impugned order is liable to be set aiside.
29. Accordingly, the orders dated 27.03.2024 in reference
No.33ABSFA3372JIZ7/2020-21, 33ABSFA3372JIZ7/2021-22 , 33ABSFA3372
JI Z72022-23 and 33ABSFA3372JIZ7/2023-24 passed by the first Respondent
are hereby set aside. The respondents are directed to refund the amounts
remitted under IGST, CGST and SGST during surprise inspection for the
assessment years 2020-21, 2021-22, 2022-23 and 2023-24 as prayed for by the
petitioner, within a period of eight weeks from the date of receipt of a copy of
this order.
30. It is needless to mention that if the petitioner intends to file an appeal,
the appeal can be filed manually within a period of twelve weeks from the date
of receipt of a copy of this order.
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31. With the above direction, these writ petitions are allowed. No costs.
Consequently, connected miscellaneous petitions are closed.
28-10-2026
vum
Index : Yes / No
Speaking order / Non speaking order
Neutral Citation : Yes / No
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To
1.The State Tax Officer
Inspection Group-1, Office Of The Joint
Commissioner (st) Tirupur Intelligence Division,
5/147, Aepc Building, Kaikattipudur, Tirupur Main
Road, Avinashi-641 654.
2.The State Tax Officer Intelligence
Inspection Group-V Office of the Joint
Commissioner (ST) Tirupur Intelligence Division
5/147, AEPC Building, KaikattiPudur Tiruppur
Main Road Avinashi- 641 654
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N.SENTHILKUMAR J.
vum
Pre delivery order in
WP Nos.30908, 31022, 31026 & 31597 of 2024 and
WMP Nos. 33490, 33645, 33635 & 34347 of 2024
28-10-2026
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