Now in a new ruling, the Telangana High court has said that no GST Demand should be raised if the case is still going on.
The petitioner, M/S Deem Distributors Private is a partnership firm and is registered under the Telangana GST Act, 2017, CGST Act, 2017, and IGST Act, 2017 and is involved in the business of dealing in goods and services concerning Ferrous waste and scrap, re-melting scrap ingots of iron or steel, flat-rolled products of iron or non-alloy steel of a width of 600 mm or hot-rolled, not clad, plated or coated, etc.
The respondent authority issued a letter to the petitioner saying that the petitioner had availed input decrease on the idea of invoices issued by certain suppliers/firms. It is stated in the said letter that the investigations conducted by the departmental officials reveal that the said suppliers/firms are fictitious and are issuing fake invoices with an intent to expire the input decrease, and it appears that the said credit was availed by the petitioner during a fraudulent manner without receiving any material, and the petitioner was requested to reverse the input decrease of Rs.1,52,35,820/- availed on such invoices immediately.
No doubt summons are issued to the Director of the petitioner firm under Section 70 of the Act to offer evidence / depose statement and to supply certain purchase orders and to appear to vide summons but admittedly investigation against the petitioner is not complete and no notice under Sub-section (1) of Section 74 of the Act has been issued to it.
Petitioner contended that to buy peace with the respondent and to avoid coercion, petitioner had paid Rs.10.00 lakhs on 30.04.2019 and Rs.25.00 lakhs, and the respondents are not entitled to make such a demand. The division bench of Justice Rama Chandra Rao and Justice T.Vinod Kumar ruled that no tax demand can be issued or raised when the investigation is still in progress.
The respondents can’t be allowed to place the cart before the horse and collect any tax, interest, or penalty before they determine, in a search, after putting the petitioner/assessee of notice, and their action is wholly arbitrary and without jurisdiction.
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