Madras HC Cancels the Suspension of CTO as He is Not Bound to Physically Verify GST E-Way Bills

The Madras High Court has quashed the suspension order of a commercial tax officer who issued refunds to bogus exporters without verification.

The bench of Justice N. Anand Venkatesh remarked that as a quasi-judicial authority if the applicant has satisfied all the needs that are furnished under the pertinent act and the circular that by itself is enough compliance before passing the tax refund order, for any cause it lastly turns out to be a bogus export by a fraudster, the order passed via the applicant by itself could not consequence in the suspension of the applicant.

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When the applicant was practising his quasi-judicial function, unless there was a robust presumption material against the applicant that has moral turpitude, grave misconduct, etc., the suspension must be the last alternative.

The applicant is working in the post of commercial tax officer which has been now re-designated as State Tax Officer. He designated the legal obligations under the Goods and Service Tax Act (GST), w.e.f July 1, 2017. Among many other legal functions, the applicant has been designated the obligation of passing the orders for the refund claims under the legal forms.

Under the norms, the applicant is needed to pass the orders within 1 week from the filing date of a refund claim by the assessee under Form RFD-01, where 90% of the claim to be refunded is determined. Under RFD-04, the applicant must decide the refund of the balance of 10%.

One of the refund claims made by Khan Traders was assigned to the applicant in March 2023. Khan Traders filed an online application under statutory form RFD-01 on April 19, 2023, claiming a refund. Including the claim, he furnished other documents. The applicant, after verifying the documents and checking the ICEGATE site, was allotted a refund under RFD-02 for up to 90% of the total claim. Subsequently, under RFD-05, the balance of 10% was also refunded.

It was remarked by the department that the applicant is not able to verify the e-way bills which would show the vehicle movement during passing from various tolls. It was attempted by the Khan traders to claim a refund of the collected GST input tax credit (ITC) by playing fraud, and the Directorate of Revenue Intelligence had been cautioned to withhold any such application after making the claim.

Under suspension, the applicant was contested on the foundation that there are no major presumption materials against the applicant. The absence of application of mind was there on the part of the department in explaining the suspension on the foundation that the applicant did not validate the GST e-way bills, which was not a provision under the circular on March 23, 2020.

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It was remarked by the court that while acknowledging the public interest engaged, mentioned that it shall not be wished to maintain the applicant at the identical station. Hence the same would be stayed open to the department to post the applicant in a certain incentive post in a distinct place till the finish of the proceedings of the department.