MM TAX CLUB

The Directorate of Investigations of the income tax (I-T) department in Surat, in searches carried out on the premises of two real estate firms, has unearthed unaccounted business transactions worth Rs 700 crore.

Taking help of the CCTV camera network of the police, the Surat Municipal Corporation (SMC) as well as private properties, I-T officers went through the footage of around 250 surveillance cameras to track documents allegedly shifted by the employees of one of the companies from one place to another, officers said.

The matter came to light when the DI was investigating a real estate firm’s alleged involvement in selling buildings but not entering them in its account books to evade taxes. During a search of the firm’s premises, the DI found that the group has made business dealings with another real estate company.

Between December 8 and 13, DI Additional Director Vibhor Badoni and Assistant Director Devn Keshwala, along with their teams of over 60 staffers, searched the premises of the two companies in 25 areas of Surat.

The DI said that during the searches, the officers found that one of the firms had “hidden several business-related documents” — which were not reflected in its accounts — in the houses of their lower-rung employees.

The DI said that during the searches, the officers found that one of the firms had “hidden several business-related documents” — which were not reflected in its accounts — in the houses of their lower-rung employees.

By the time the searches ended on Wednesday night, the DI had found both companies not disclosing business transactions worth Rs 700 crore. The officers also seized cash and jewellery worth Rs 10 crore from the companies. Over 15 bank lockers belonging to these firms have been sealed, they said.

An officer involved in the search operations said, “We found the statements of an employees of one of the companies unsatisfactory and checked the CCTV camera footage of his apartment… we found him leaving with bags full of documents on his bike. We took help from the police and SMC to track the employee and found that he had hidden the documents in the house of another person.”

“When our teams reached the house, it was too late and the documents had been shifted to some other place… We again checked CCTV camera footage to track the movement of documents… We found the employee shifted the documents to five flats at five locations… before finally managing to trace the documents,”

The Hon’ble Patna High Court in M/s. Friends Mobile v. State of Bihar and Others [CWJC No. 6457 of 2023 dated December 6, 2023] allowed the Writ Petition and held that the Revenue Department cannot direct the Appellant to pay the entire amount of pre-deposit for filing appeal from Electronic Cash Ledger under the Amnesty Scheme.

Facts:

M/s. Friends Mobile (“the Petitioner”) made a payment of ten percent from the Electronic Credit Ledger as required under the amnesty scheme introduced by the Revenue Department (“the Respondent”) for filing appeal. However, the Respondent Appellate Authority, vide order dated January 10, 2023 (“the Impugned Order”)  rejected the appeal, asserting that the ten percent must be paid from the Electronic Cash Ledger.

Aggrieved by the Impugned Order, the Petitioner filed Civil Writ Petition before the Hon’ble Patna High Court.

Issue:

Whether Entire amount of pre-deposit has to be paid from Electronic Cash Ledger for filing appeal under Amnesty Scheme?

Held:

The Hon’ble Patna High Court in CWJC No. 6457 of 2023 held as under:

• Observed that Notification No. 53/2023 dated November 2, 2023 (“the Notification”) issued by the Respondent, allowed the filing of delayed appeals beyond the period specified in Section 107 of the Central Goods and Service Tax Act, 2017 (“the CGST Act”). The Notification mandates the payment of 12.5 percent of the pending amounts to the Department, as opposed to the 10 percent prescribed under the CGST Act. The notification further states that at least 20 percent of the remaining 12.5 percent should be paid from the Electronic Cash Ledger.
• Further Observed that, the Division Bench of the Court in the case of M/s. Flipkart Internet Pvt. Ltd. v. The State of Bihar & Ors [CWJC No. 1848 of 2023 dated September 19, 2023] wherein it was held that pre-deposit amount of remaining 10 percent under Amnesty scheme as per Notification has to be paid from Electronic Cash Ledger. However, certain observations made in para 77 and 78 of that judgment pertaining to aforementioned points were stayed by the Hon’ble Supreme Court in the case of M/s. Flipkart Internet Pvt. Ltd. v. The State of Bihar & Ors. [Special Leave Petition No. 25437/2023 dated December 4, 2023].
• Noted that, the Notification clearly implies a recognition by the GST Council that the ten percent could be paid through the Electronic Credit Ledger.
• Opined that, during the pendency of the aforementioned appeal pending before the Hon’ble Supreme Court the appeal should be decided on merits.
• Held that , the Impugned Order is set aside and as the amount of 10 percent is already deposited by the Petitioner from Electronic Credit Ledger, therefore, the Appeal filed is maintainable. Hence, the Writ Petition is allowed.
• Directed that, the Appeal should be considered on merits and no insistence should be made by the Respondent Commissioner (Appeals) for payment of 10 percent amount as pre-deposit from Electronic Cash Ledger.
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