Rishi Bansal Proprietor Of Bansal Sales Corporation vs. Union Of INDIA Through Secretary Ministry Of Finance & Ors.

Held

The Court accepted the statement made by the counsel for respondents No. 2 and 3, holding them bound by it. The Court clarified that since the demand was disputed by the petitioner, no coercive steps would be taken for its recovery without following the adjudication process. The Court directed the petitioner to appear before respondents No. 2 and 3 and cooperate with the investigation. In light of this clarification and assurance from the revenue, the petitioner's counsel stated that they did not wish to press the writ petition further. The Court accordingly disposed of the writ petition and the related application.

Facts

The petitioner, Rishi Bansal, proprietor of Bansal Sales Corporation, filed a writ petition challenging a letter dated June 11, 2020, and a summon dated July 6, 2020, issued by respondent No. 3. These documents demanded the deposit of Rs. 2,69,21,228/-, alleged to be inadmissible input tax credit, without initiating any adjudication process under Section 73 or Section 74 of the CGST Act. The petitioner argued that the demand was made without a show cause notice or specifying any tax period. The summon under Section 70 of the CGST Act was issued to compel the petitioner to appear and submit the payment via DRC-03.

Key Issues

1. Whether the demand for deposit of Rs. 2,69,21,228/- as inadmissible input tax credit, and the issuance of a summon under Section 70 of the CGST Act, are valid without initiating an adjudication process under Section 73 or Section 74 of the CGST Act? Petitioner's Contention: The petitioner argued that the demand for deposit and the summon were issued without following the mandatory adjudication process, specifically without a show cause notice or specifying the tax period, thereby pressurizing him to deposit the amount. The petitioner relied on the principles of natural justice and due process. Revenue's Contention: The respondents (Revenue) clarified that the impugned letter was intended to provide the petitioner an opportunity to explain the transactions or deposit the tax voluntarily with minimal interest and penalty under Section 74(5) of the CGST Act, thereby avoiding a lengthy adjudication procedure. They stated that if the petitioner's response was unsatisfactory, the adjudication process would be initiated for recovery.