Shivani Bhati | Nov 21, 2021 |
Ascertainment u/s 74(5) CGST is of either self-ascertainment or an ascertainment by the proper officer: Madras HC
Writ Petition filed before Madras HC under Article 226 of the Constitution of India praying to Writ of Mandamus, direction restraining the 1st and 2nd respondent from demanding any amount from the petitioner except by following due process of law and further direct to refund of Rs. 2 crores along with statutory interest under CGST Act 2017 and also return the documents seized at the time of search on 22.10.2019.
The issue raised by the Respondent as to whether the petitioner is entitled to the refund of the amounts paid during the investigation and the revenue relies upon the provisions of Section 74(5) of the Act. It would be relevant, in this context, to understand the Scheme of assessment as set out under Section 74.
Section 74(5) provides is the first opportunity for 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.
The Statement recorded at the time of search admitting GST liability and setting the scheme of installments have been retracted by the petitioner on 05.11.2019 and the petitioner has consistently and vehemently been contested the liability to tax. Importantly, 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. In this case, inquiry and investigation are ongoing, 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.
Madras HC held that 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.
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