Yasho Industries Limited vs. Union Of INDIA

Held

The Court held that the Board, not the Commissioner, assigned officers to perform functions as proper officers through the impugned Circular dated July 5, 2017. Therefore, the question of issuing a Notification for delegation of powers by the Commissioner under Section 167 of the CGST Act did not arise. The Court found no substance in the submission that respondent No. 3 was not a 'proper officer' with the power to issue summons under Section 70. Regarding parallel proceedings, the Court noted that the DRI inquiry concerned incorrect availment of double benefits (IGST exemption on inputs and IGST refund on exports), while the respondent No. 3's summons related to refund of ITC under the CGST Act, indicating distinct inquiries. The Court stated that proceedings under Section 70 are judicial in nature and petitioners must cooperate. Concerning the INR 3 Crore payment, the Court observed that the Form GST DRC-03 indicated 'voluntary' payment under Section 74(5) with an endorsement 'under protest'. However, the Court noted the absence of search and seizure proceedings under Section 67 and no complaint made by the petitioner about duress. The Court found the payment was made under Section 74(5) and would be dealt with accordingly. The petition was dismissed.

Facts

The petitioners, Yasho Industries Limited and its Factory Manager, challenged a summons issued under Section 70 of the CGST Act and sought directions for the refund/recredit of INR 3 Crore paid on February 9, 2021. They also challenged a circular dated July 5, 2017, concerning the assignment of functions to 'proper officers'. The petitioners were under inquiry by the Directorate of Revenue Intelligence (DRI) for allegedly availing benefits under the EOU Scheme and simultaneously claiming IGST refunds. During an inquiry by respondent No. 3 (DGGI), INR 3 Crore was recovered, which the petitioners claim was paid under duress. The summons required the petitioners to provide evidence and documents related to their advance authorization licenses and IGST refund claims. The petitioners argued they were facing parallel investigations and that the respondent No. 3 lacked jurisdiction.

Key Issues

1. Whether respondent No. 3, an officer of DGGI, had the jurisdiction to issue a summons under Section 70 of the CGST Act, given that the delegation of powers must be through a Notification as per Section 167 of the CGST Act? 2. Whether the Circular dated July 5, 2017, could validly assign functions to 'proper officers' without adhering to the notification requirement under Section 167 of the CGST Act? 3. Whether the petitioners were facing unsustainable parallel proceedings? 4. Whether the payment of INR 3 Crore made by the petitioners was voluntary or made under duress, and if it should be refunded or recredited? Petitioner's arguments: The petitioner contended that Section 70 powers vest exclusively with a 'Proper Officer' as defined in Section 2(91), and delegation must be via Notification under Section 167. They argued that the respondent No. 3, an officer of DGGI, was not properly empowered by a Notification. They relied on Canon India Pvt. Ltd. vs. Commissioner of Customs for the principle that statutory powers must be exercised as prescribed. They also argued that the impugned circular was invalid as it did not follow the statutory procedure for delegation. The petitioner argued that two parallel inquiries were unsustainable and that the payment of INR 3 Crore was made under duress, as indicated by the "under protest" endorsement.