The Madras High Court has quashed the suspension of a commercial tax officer allegedly involved in processing Goods and Service Tax (GST) refund to a fake firm.
The court remarked that It must be borne in mind that the threshold while dealing with a suspension order passed against an authority exercising a Quasi-Judicial power or a Judicial power, must be slightly at a higher level than the test applied for the authorities who are performing administrative functions.
The court observed that the act of passing orders on the application filed for refund of the Input Tax, is clearly a Quasi-Judicial function. The relevant provision contemplates that the refund claim must be proceeded within a period of seven days from the date of filing of he application for refund. If it is not complied with, it will attract interest and in which case it will also amount to a misconduct for violation of the provisions of the GST Act.
Therefore, the court opined that the authority has to balance the interest of the exchequer and at the same time must process the refund claim within the time stipulated by the Act. That is the reason why the circular itself provides the documents / certificates that are to be verified online. It is quite apparent that whatever documents / certificates / declarations / statements that have been provided under annexure – A was verified by the petitioner while passing orders for refund of the Input Tax Credit. A portal is specifically created only for this purpose and the officer is expected to go into the ICEGATE site and check the details of the EGM and shipping bill by keying in port name, shipping bill number and date.
“No where under the Act or under the circular, the petitioner was expected to verify the E- way bills physically. If the petitioner has to involve in this exercise, obviously he will not be able to process the application and pass orders within a period of seven (7) days,” the court said.
The court held that as a Quasi-Judicial authority, if the petitioner has fulfilled all the requirements that are provided under the relevant Act and the circular, that by itself is sufficient compliance before passing the order of refund of the tax. If for any reasons, it ultimately turns out to be a fake export by a fraudster, the order passed by the petitioner by itself cannot result in the suspension of the petitioner. In other words, when the petitioner was exercising his Quasi-Judicial function, unless there was a strong prima facie material against the petitioner involving moral turpitude, grave misconduct, etc., suspension must be the last resort.
The court directed that there shall be a direction to the respondents to post the petitioner in some insensitive post in a different station. The departmental proceedings shall be proceeded with after affording sufficient opportunity to the petitioner. It will be desirable to complete the proceedings within a period of three months.
Facts
The petitioner is working in the post of Commercial Tax Officer which has now been re-designated as the State Tax Officer. He is assigned with the statutory duties under the Goods and Service Tax Act (GST) with effect from 01.07.2017. Among many other statutory functions, the petitioner has also been assigned the duty of passing orders of refund claims under the statutory forms. The further case of the petitioner is that this task is in the nature of a Quasi-Judicial function. As per the prevailing regulations, the petitioner has to pass orders within a week from the date of filing of a refund claim by the tax payer under Form RFD-01, where 90% of the claim to be refunded is decided. Thereafter, under RFD-04, the petitioner has to decide the refund of the balance 10%.
In so far as the scrutiny of the application for refund is concerned, it is governed by the circular issued which specifically states as to what are all the documents / sites, the officer should check before processing the refund claim.
The case of the petitioner was that one of the refund claim made by Khan Traders was allotted to the petitioner during March, 2023. The said Khan Traders filed an online applicable under statutory form RFD-01 on 19.04.2023, claiming a refund of Rs.69,01,127/-. Along with the claim, he also submitted various other documents. The petitioner on verifying the documents and after checking the ICEGATE site, granted refund under RFD-02 upo 90% of the total claim. Thereafter, under RFD-05, the balance 10% was also refunded.
The specific case of the petitioner is that he has passed the refund order in strict compliance with Rule 54 of the CGST Rules and the circular dated 23.03.2020. After nearly six months, it came to light that the goods never crossed beyond the boundaries of India and some fraud had been committed by the trader. It is under these circumstances, the suspension order came to be issued by the respondent department.
The respondents have taken a stand that the petitioner failed to verify the e-way bills which will specifically show the movement of the vehicle when it is crossing various tolls. The trader namely Khan Traders was also attempting to claim refund of the accumulated Input Tax Credit by playing fraud and the Directorate of Revenue Intelligence had forewarned to withhold any such application after the claim is made.
The department have therefore justified placing the petitioner under suspension pending disciplinary proceedings, considering the public interest involved and the money that has been lost by the exchequer and the respondents have sought for the continuation of the suspension of the petitioner and for the dismissal of this writ petition.
Conclusion
The court found that there were no strong prima facie materials against the petitioner to come to a conclusion that the petitioner was involved in an act of moral turpitude or grave misconduct.
The court while keeping in mind the public interest involved stated it will not be desirable to continue the petitioner in the same station. Therefore, it will be left open to the respondents to post the petitioner in some insensitive post in a different place till the completion of the departmental proceedings.
Case Details
Case Name: S. Doctor Viswanathan v/s The State of Tamil Nadu
Citation: W.P.No.33639 of 2023 and W.M.P.No.33480 of 2023
Court: Madras High Court
Judges: Mr. Justice N .Anand Venkatesh