***

GST Assessment -- Extended period of limitation -- Section 74 -- Show Cause Notice -- Mere allegation of fraud, wilful misrepresentation or suppression insufficient -- Foundational facts must be evident from notice itself -- Mechanical recital of statutory expressions cannot justify extended limitation -- SCN and consequential order set aside.

***

Central Goods and Services Tax Act, 2017 (12 of 2017), Sections 73 and 74 -- Assessment -- Extended period of limitation -- Show Cause Notice -- Mechanical invocation of Section 74 without foundational facts -- Proceedings under Sections 73 and 74 require independent, subjective satisfaction of the Proper Officer; an audit objection cannot automatically substitute such satisfaction -- To invoke the extended five-year limitation under Section 74, foundational facts evidencing fraud, wilful misstatement, or suppression must appear on the face of the notice itself -- Mere mechanical incantation or bland recitals of statutory terms cannot justify bypassing the normal three-year limitation period -- Show Cause Notice and consequential Order quashed -- Liberty granted to the Department to initiate fresh proceedings under Section 74 supported by foundational facts within the remaining extended limitation period.

(Paras 5, 7–16)

**

Interim relief -- Protection from arrest -- While dismissing a petition seeking pre-arrest bail on the ground that the same is not maintainable, the high court or the sessions court cannot extend or grant protection which is in the nature of interim relief that could be granted during the pendency of the application.

***

S. 69 CGST Act -- Communication of order -- An order under Section 69 of the CGST Act being a sine qua non to seek anticipatory bail, it would be an anomaly to hold that the order need not be communicated at all -- Without such communication, question of arrest would not arise.

***

A. Code of Criminal Procedure, 1973 (2 of 1974), Section 438 -- Bharatiya Nagarik Suraksha Sanhita, 2023 (46 of 2023), Section 482 -- Central Goods and Services Tax Act, 2017 (12 of 2017), Section 69 -- Pre-arrest bail -- Grant of interim protection upon dismissal -- The High Court rejected the application for anticipatory bail noting that in the absence of an order under Section 69 of the CGST Act, there could be no apprehension of arrest -- Nonetheless, the High Court granted protection to the respondent from arrest for a period of one week, if the order under Section 69 is passed, from the date of intimation of such order -- An interim relief can only be in the aid of and ancillary to the main relief -- While dismissing a petition seeking pre-arrest bail on the ground that the same is not maintainable, whatever be the ground therefor, the high court or the sessions court cannot extend or grant protection which is in the nature of interim relief that could be granted during the pendency of the application.

(Paras 2, 4, 8–11)

B. Central Goods and Services Tax Act, 2017 (12 of 2017), Sections 69 and 132 -- Order of arrest -- Reasons to believe -- Requirement of communication -- Once the Commissioner concludes that there are “reasons to believe” that any offence under Section 69 has been committed warranting an arrest and an order to that effect is passed, the alarm is activated and the person becomes an accused who is open to be arrested and, thus, acquiring the right to seek pre-arrest bail -- The order under Section 69 of the CGST Act being a sine qua non to seek anticipatory bail, it would be an anomaly to hold that the order need not be communicated at all -- Communication of the order reinforces the right of the accused to seek anticipatory bail -- Without such communication, question of arrest would not arise.

(Paras 16–22)

Uttar Pradesh Goods and Services Tax Act, 2017 (U.P. Act No. 1 of 2017), Section 122, 130 – GST -- Excess Stock at business premises --  Proceedings u/s 130 of the GST Act cannot be put to service if excess stock is found at the time of survey.

(Para 5, 10)

Central Goods and Services Tax Act, 2017 (12 of 2017), Section 132 -- Integrated Goods and Services Tax Act, 2017 (13 of 2017), Section 20(XV) -- Code of Criminal Procedure, 1973 (2 of 1974), Section 439 – FIR under GST laws -- Regular bail -- Criminal liability of the petitioner is yet to be decided by the trial Court during the course of trial -- Petitioner was arrested on 19.04.2023 and the maximum sentence provided under the statute is five years -- Prosecution is based on the testimonies of official witnesses and the petitioner may not be in a position to influence the witnesses -- Even otherwise, the petitioner cannot be confined in jail as an under-trial for an indefinite period – Bail allowed.

(Para 6)

Indian Penal Code, 1860 (45 of 1860), Section 406, 420, 467, 468, 471  -- Haryana Goods and Services Tax Act, 2017 (19 of 2017), Section 132(1)(B)(C) -- Code of Criminal Procedure, 1973 (2 of 1974), Section 439 – Creating false and bogus companies for extracting GST amount -- Habitual offender – Regular bail -- Bail to a petitioner cannot be denied solely on the ground that several other cases are pending against him, even though, he has been able to make out a case for grant of bail in the facts of the present case -- Petitioner has already undergone more than 01 year and 11 months of the custody and the trial is at an initial stage – Bail allowed.

(Para 6-9)

Himachal Pradesh Value Added Tax Act, 2005 (12 of 2005), Schedule-B, Entry 16, 23, Section 46(1), 48(1) -- Milk – Milk cream – VAT on milk cream -- A scientific or technical meaning of the term ‘milk cream’ should not be adopted and the popular meaning of milk cream as is commonly understood, should be taken note of, i.e. that it is a product which is different from milk -- This is because a person who wishes to buy milk cream would not go to the market and ask for milk -- He would only ask for milk cream because it is a separate product though also a milk product.

(Para 37)

Central Goods and Services Tax Act, 2017 (12 of 2017), Section 74(1), 74(4), 74(5) – Central Goods and Services Tax (CGST) Rules, 2017, Rule 142(2) – Govt. instructions dated 25.05.2022 issued by the CBIC with respect to the GST investigation -- Input Tax Credit claim – Show cause notice -- Search and penalty – Search was conducted by Central GST Commissionerate -- Amount of tax, interest and penalty was deposited by the petitioner u/s 74 (5) of CGST Act, 2017 – As per Rule 142 (2) of the CGST Rules, when a payment is made in FORM GST DRC-03, the proper officer has to issue acknowledgment, accepting the payment made by the said person in FORM GST DRC-04 -- Till date, neither they have issued FORM GST DRC-04 nor issued any notice u/s 74 (1) of the CGST Act.

-- The respondents have not followed the Govt. instruction No.01/2022-23 dated 25.05.2022 issued by the CBIC.

-- In these instructions, it is clarified that there is 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. It is the duty of the officer to inform the taxpayers regarding the provisions of voluntary tax payment through DRC-03.

Petitioner deposited Rs.35,73,147/-, but the officer has not issued DRC-03 till date -- Neither the department has followed the provisions of Rule 142 (2) of the CGST Rules nor has issued any notice u/s 74 (1) of the CGST Act -- Respondents directed to return the amount in question to the petitioner along with simple interest at the rate of 6% per annum from the date of deposit till the payment is made within a period of two weeks.

(Para 7, 8)

Central Goods and Services Tax Act, 2017 (12 of 2017), Sections 69, 132(1)(a) – Code of Criminal Procedure, 1973 (2 of 1974), Section 437 – Bail – Pre-condition to deposit Bank Guarantee of Rs.1.5 crores – Pre-condition of furnishing bank guarantee imposed by the High Court is not liable to be sustained, set aside.

(Para 5, 6, 11)

A. Central Goods and Services Tax Rules, 2017, Rule 138A – Physical form of invoice – Requirement of -- Documents and devices to be carried by a person-in-charge of the conveyance included the invoice – It is trite that the provision in a taxing statute has to be construed strictly and no benevolent interpretation is available while construing taxing statute – Held, Invoice has to be carried in physical form and if required shall be produced in its physical form.

(Para 9,10)

B. Central Goods and Services Tax Act, 2017 (12 of 2017), Section 107(2) -- Central Goods and Services Tax Rules, 2017, Rule 109, 138A – Physical form of Invoice – Appellate Authority’s Jurisdiction -- An opportunity may be given to the petitioner to produce the relevant invoice/ invoices -- Petitioner shall produce the relevant documents being the invoice/ invoices in the physical form within the scope of the existing appeal -- The entire exercise shall be carried out and completed by the relevant respondent, the statutory authority, positively within a period of four weeks -- Appellate authority to revisit the issue after giving an opportunity of hearing to the petitioner shall decide the same by passing its reasoned order.

 (Para 11-15)

Central Goods and Services Tax Act, 2017 (12 of 2017), 132(1)(a),(h),(k) (l), 132(5) – Code of Criminal Procedure, 1973 (2 of 1974), Section 439 -- Evasion of GST – Regular bail -- Transportation of unmanufactured tobacco weighing about 35,57,450 kgs. for clandestine manufacture and supply of zarda without payment of leviable duties and taxes -- Petitioner was arrested on 21.07.2022 and while in custody, the investigation completed and the charge sheet filed -- Punishment may extend to 5 years and fine – Petitioner has already undergone incarceration for more than four months and completion of trial would take some time -- Evidence to be tendered would essentially be documentary and electronic -- Ocular evidence will be through official witnesses, due to which there can be no apprehension of tampering, intimidating or influencing – Petitioner ordered to be released on bail.

(Para 6, 7)