Introduction
The Hon’ble High Court of Delhi, in the case of Aimlay (P.) Ltd. v. Commissioner of Central Tax, Delhi West[i], addressed the issue pertaining to the return of seized material and refund of the amount deposited during the search under the Central Goods and Services Tax Act, 2017 (‘CGST’).
Brief Facts
Three petitioners filed a petition against the order passed by the Commissioner of Central Tax, Delhi West, on 20.11.2023. The petitioners prayed for issuing any appropriate writ, order or directions for quashing the orders of the Commissioner, Central Tax, Delhi West [‘Respondent No.1’] in which the bank account and fixed deposit of one of the petitioners had been provisionally attached.
The second relief was claimed regarding the return of the seized assets, such as laptops, CPUs, mobile phones, etc.
The third and last relief sought was in respect of the refund of the amount of Rs. 22,00,000 along with interest to the petitioners that were deposited during the search conducted by Respondent No. 1, which the petitioners claimed they were coerced to deposit. Further, it was prayed on behalf of the petitioners that the petitioners or their group company should not be required to deposit any amount before the final determination of GST liability.
Held
The High Court, while disposing of the present petition, observed the following:
Regarding the first issue, it was held that since this court had previously passed an order directing the petitioners to appear before Respondent No.1 and make submissions before him to allow limited operations from their bank accounts, the first relief is not pressed upon under this petition by the counsel of the petitioners at this stage.
With respect to the second relief sought by the petitioners regarding the return of the seized assets, the High Court, while observing s.67(2), s. 67(3) and s. 67(5) of the CGST stated that seized items should be returned to the petitioners within 30 days after issuance of notice as required under s. 67(3) of the CGST and directed Respondent No.1 to ensure that the data and copies were made available to petitioners during the period of seizure.
On the third issue regarding the refund of Rs. 22,00,000/- that the petitioners claimed they were coerced to deposit, it was contended on behalf of the Respondents, and the challan also indicated that the above deposit was made voluntarily and after the statement of the director was recorded.
In light of contentious submissions, the Court found it appropriate not to issue any directions for the refund of the deposit at the moment. However, the Court clarified that the petitioners are entitled to apply for a refund of the deposit in accordance with the law without waiting for the adjudication of the show cause notice.
Our Analysis
In this case, the High Court's decision focused on the importance of following the statutory timeline and ensuring the rights of individuals and companies during tax investigations. Relying on the provision of the CGST, the Court ruled that the seized items should be returned within 30 days from the issue of notice; the Court reinforced the need for a fair and expedient process. Further, allowing data access to the petitioner during the seized period ensures that the individuals and companies can continue their operations without disruption.
Additionally, the Court clarified that the petitioners have the right to seek deposit refunds in accordance with the law without waiting for the adjudication of show cause notice. This judgment highlights the importance of protecting and enforcing individual rights enriched by the CGST.
End Note
[i] 2024 SCC OnLine Del 5986 [20-08-2024].
Authored by Ritik Kumar Jha, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.
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