W.P.No.

26187 of 2019

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 08.11.2019

CORAM

THE HON'BLE MR. JUSTICE K.RAVICHANDRABAABU

W.P.No.26187 of 2019
and
W.M.P.Nos.25551, 25552 & 25553 of 2019

M/s. V.N.Mehta & Company,

Represented by its Managing Partner,
Mr.Rajeev Mehta
No.32, Sembudoss Street,
Chennai – 600001. ...Petitioner

Vs.

1. The Assistant Commissioner,

Headquarters Preventive Unit,
Chennai North Commissionerate,
GST Bhavan, 26/1, Mahatma Gandhi Road,
Nungambakkam, Chennai – 600034.

2. The Superintendent of GST & Central Excise,

Preventive Section,
Headquarters Preventive Unit,
Chennai North Commissionerate,
GST Bhavan, 26/1, Mahatma Gandhi Road,
Nungambakkam, Chennai – 600034.

3. The State Tax Officer,

Broadway Assessment Circle,
Chennai – 600001.

4. The Manager,
Indian Overseas Bank,
108, Catholic Centre, Armenian Street,
George Town, Chennai – 600001. ...Respondents
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 W.P.No.26187 of 2019

Prayer : Writ Petition filed under Article 226 of the Constitution of India
praying to issue a Writ of Certiorari to call for the impugned proceedings of
the first respondent in Form GST DRC – 09 issued in
C.No.:IV/06/145/2019 – HPU Gr III dated 07.08.2019 addressed to the fourth
respondent and quash the same as issued without authority of law and
contrary to the provisions of the Central Goods and Services Tax Act, 2017.

For Petitioner : Mr.P.Rajkumar

For Respondents : Mr.M.Santharaman
Senior Standing Counsel [R1 & R2]
Mr.M.Hariharan [R3]
Additional Government Pleader (Taxes)
No Appearance - R4

ORDER

This writ petition is filed challenging the proceedings of the first

respondent dated 07.08.2019 addressed to the fourth respondent through

which, the fourth respondent was directed to recover a sum of Rs.53,28,645/-

from the account maintained by the petitioner on the reason that the said

sum on account of tax, cess, interest and penalty is payable by the petitioner

under the provisions of the GST Act and that the petitioner had failed to

make such payment.

2. The grievance of the petitioner against the impugned proceedings is

that the same was issued straightaway, even before making an assessment or

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 W.P.No.26187 of 2019

atleast initiating proceedings for making the assessment. It is the specific

case of the petitioner that no proceedings whatsoever, was issued against the

petitioner for determining either the tax, cess or interest or penalty totally

amounting to Rs.53,28,645/- as claimed in the impugned proceedings.

Therefore, it is contended that Section 79 of the Central Goods and Services

Tax Act, 2017, cannot be invoked by the first respondent to recover the said

sum as if, such sum is an arrear payable by the petitioner. The learned

counsel for the petitioner further pointed out that though a statement was

obtained from the petitioner on 19.06.2019, by the Superintendent of GST,

stating as if the petitioner availed input credit during the period from June -

2018 to October - 2018 on the strength of invoices of fake units, the said

statement was subsequently retracted by the petitioner through

communication dated 26.06.2019, specifically, by stating that the petitioner's

answer is to be read as that they have so far taken ITC of Rs.53,28,645/- for

goods received along with invoices.

3. The learned counsel also invited this Court's attention to the answer

made by the petitioner to question No.17 where the petitioner has

specifically stated that the petitioner received invoices along with goods

from the mentioned companies and paid the amount through Bank account.

Therefore, it is contended that based on the mere statement

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 W.P.No.26187 of 2019

which is subsequently retracted by the petitioner, the impugned

proceedings cannot be issued.

4. A counter affidavit is filed by the first and second

respondents wherein, it is stated that the petitioner has admitted his

liability through his statement and therefore, the proper officer may

deduct the amount so payable from any money owing to such person

as provided under Section 79 of CGST Act, 2017. It is further stated

in the counter that it is not necessary to issue show cause notice and mere

admitted liability is enough for invoking the provision under Section 79

of the said Act.

5. Apart from reiterating the above contentions in the counter

affidavit, the learned counsel appearing for the first and second

respondents also submitted that even otherwise as per Section 83 of

the Central Goods and Services Tax Act, 2017, the first respondent is

entitled to make provision to protect the interest of the Revenue. Even

though, he said so, to a specific question put by this Court, whether

any proceeding is pending against the petitioner, the learned counsel

appearing for the first respondent answered in negative.

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 W.P.No.26187 of 2019

6. Under the above stated facts and circumstances, this Court has

to see, as to whether the impugned proceedings can be sustained in the

eye of law.

7. It is seen that except issuing the proceedings under Section 79, no

other proceedings was ever issued against the petitioner determining their

tax etc., liability, amounting to Rs.53,28,645/- as claimed in the impugned

proceedings. Section 79 of the CGST Act, 2017 contemplates that any

amount payable by a person to the Government under any of the provisions

of the said Act or the Rules made there under is not paid, the proper officer

shall proceed to recover the amount by one or more of the modes referred to

therein. Therefore, it is evident that the term “amount payable by a person”

is to mean that such liability arises only after determination of such amount

in a manner known to law.

8. In this case, the first respondent sought to rely upon the so called

admission made by the petitioner in the statement given on 19.06.2019. It is

true that question No.13 and answer to the the said question is against the

interest of the petitioner. At the same time, question No.17 and answer to

the said question contradicts the statement said to have been given by the

petitioner to question No.13. For better clarity, both question Nos.13 and 17
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 W.P.No.26187 of 2019

as well as the answer to those questions are extracted hereunder :-

“Q 13. How much input credit you have availed during the
period from July 2018 to October 2018 on the strength of those
invoices of above fake units?
A 13. I have so far taken input tax credit of Rs.53,28,645/- based
on fake invoices of above two units.

Q 17. By wrongly availing ITC on the basis of fake invoices

issued by above fake units without receipt of goods, you are liable to
pay the amount of ITC wrongly availed as per Section 74 of the CGST
Act, 2017 along with the interest payable thereon under Section 50
and penalty as per the provision of CGST Act, 2017. Comment.
A 17. I state that I received invoice along with goods from the
above mentioned companies. I have paid them through bank account.
In respect of documentary evidence I can provide you Stock register,
packing slip, E-way bills, vehicle details, bank account details through
which we made the bank transfer.”

9. Therefore, it is apparent that the petitioner's statement given on

19.06.2019, to question Nos.13 and 17, contradicts with each other. Apart

from doing so, the petitioner has also retracted the statement made to

question No : 13 through communication dated 26.06.2019, specifically

stating that the answer to question No.13 should be read as follows:

“I have so far taken ITC of Rs.53,28,645/- for goods received along with

invoices.”
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10. Therefore, it is evident that the statement said to have been given

on 19.06.2019 claims to be so called admission by the petitioner, is not

available before the Revenue anymore and on the other hand, it is for them

to determine the tax liability by resorting to the procedures in accordance

with law, instead of issuing the impugned proceedings straightaway under

Section 79 based on the so called admission which is subsequently retracted.

11. Therefore, I find that the impugned proceedings issued under

Section 79 is not sustainable. No doubt, the first respondent sought to rely

upon Section 83 to contend that the first respondent is entitled to make the

provisional attachment.

12. Perusal of Section 83 would show that the such provisional

attachment can be resorted to only when proceedings are pending under any

of the provisions viz., Section 62, 63, 64, 67, 73 and 74.

13. In this case, as admitted by the learned counsel appearing for the

first respondent, no such proceedings are pending as on today under any of

the above provisions. Therefore, I am of the view that Section 83 also would

not come to the rescue of the respondent to sustain the impugned

proceedings.
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14. Thus, I find that the impugned proceedings are not maintainable.

Accordingly, the writ petition is allowed and the impugned proceedings is

set aside. However, it is made clear that this Court is not expressing any

view on the merits of the allegation made by the respondent against the

petitioner, as it is for them to adjudicate the matter in a manner known to

law. No costs. Connected miscellaneous petitions are closed.

08.11.2019

Speaking/Non-speaking order
Index: Yes/No
Internet: Yes/No

Note : Issue Order Copy on 15.11.2019

sni

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 W.P.No.26187 of 2019

To

1. The Assistant Commissioner,

Headquarters Preventive Unit,
Chennai North Commissionerate,
GST Bhavan, 26/1, Mahatma Gandhi Road,
Nungambakkam, Chennai – 600034.

2. The Superintendent of GST & Central Excise,

Preventive Section,
Headquarters Preventive Unit,
Chennai North Commissionerate,
GST Bhavan, 26/1, Mahatma Gandhi Road,
Nungambakkam, Chennai – 600034.

3. The State Tax Officer,

Broadway Assessment Circle,
Chennai – 600001.

4. The Manager,
Indian Overseas Bank,
108, Catholic Centre, Armenian Street,
George Town, Chennai – 600001.

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 W.P.No.26187 of 2019

K.RAVICHANDRABAABU,J.

Sni

W.P.No.26187 of 2019

08.11.2019

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