Petitioner to Propose Property as Security in Tax Dispute

The court directed the petitioner to submit a detailed proposal within 7 days, offering immovable property as security to replace frozen bank accounts due to alleged fraudulent activity related to Input Tax Credit. The property must cover the disputed tax amount, be clear of charges, tax compliant, and not in legal disputes. The Revenue has 45 days to investigate and communicate its decision. The judgment aimed to resolve the freeze issue, balancing the petitioner's operational needs with the Revenue's interest in securing taxes, with the next hearing scheduled for April 15, 2021.

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Issues:
Petition seeking quashing of letters directing bank account freeze, offer of immovable property as security, consideration of proposal by GST Authorities.

Analysis:
The petition sought to quash letters directing freezing of the petitioner company's bank accounts due to serious allegations of fraudulent activity related to Input Tax Credit (ITC). An interim order allowed the petitioner to use overdraft facilities. The petitioner offered immovable property as security to replace the bank accounts' freeze, emphasizing the property's value and marketability. The freezing of accounts severely impacted the petitioner's operations. The GST Department had not entertained the offer, leading to a request for court intervention.

The Senior Standing Counsel for the respondents stated that no proposal had been received from the petitioner. He mentioned that any proposal received would be examined as per the law. The court considered either disposing of the petition with time-bound directions to GST Authorities or hearing arguments if the proposal was rejected. The court directed the petitioner to submit a detailed proposal within 7 days, including all property documents, ensuring the property's value covers the disputed tax amount. The property should be clear of any charges, fully tax compliant, and not in legal disputes. The Revenue was given 45 days to investigate, verify, and communicate its decision on the proposal.

The judgment scheduled the next hearing for April 15, 2021, indicating a timeline for the petitioner to submit the proposal and for the Revenue to assess the offered property. The court's directive aimed to resolve the issue of bank account freeze by replacing it with a secure immovable property, subject to thorough validation by the GST Authorities within a specified timeframe. The judgment balanced the petitioner's need to continue operations with the Revenue's interest in securing the disputed tax amount.

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