AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 741
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.... the Constitution of India, the writ applicants have prayed for the following reliefs: "A. Your Lordships may be pleased to admit this petition. B. Your Lordships may be pleased to allow this petition. C. Your Lordships may be pleased to issue writ of mandamus or any other appropriate writ directing the respondent No.01 to immediately remove attachment of following bank accounts belonging to petitioner No.02 company: Name of Bank Branch of Bank Current Account Number Kalupur Commercial Co. Op. Bank Ltd. Xaviers Road Branch, Navrangpura, Ahmedabad 820102455 HDFC Bank Ltd. Paldi Vasna Road Branch, Ahmedabad 12292000000743 and that is how, debit may be allowed to be made from said account or any other account operated by petitioner No.02 company on PAN - AABCD4327M; D. Pending admission, hearing and final disposal of the matter, Your Lordships may be pleased to grant an exparte, ad interim order in favour of the petitioner herein in terms of prayer clause 'C' hereinabove. E. Your Lordships may be pleased to grant such other and further relief(s) that may be deemed fit and proper in the interest of justice in favor of the petitioner;' 5....
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....ase invoices and inward / outward registers were seized under various panchnamas. 5.7 It is pertinent to note that although it is mentioned in the arrest memo that in the investigation conducted so far clearly reveals the offence of unutilization of ITC credit fraudulently to the extent of more than Rs. 43.00 Crore including ITC involved in Circular trading within Desai Group entities by Desai Group of Companies, namely : a. Desai Impex Pvt. Ltd. b. Desai Metalinks Ltd. c. PHD Trading Corporation Ltd. d. PHD Ferro Alloys Ltd e. Desai Overseas Pvt. Ltd. f. Desai Enterprise g. Desai Metalinks No bifurcation of the alleged fake invoices issued or alleged transfer of illegal credits by particular companies individually is made. 5.8 Without leveling any specific allegation against petitioner No. 02 company or for that matter any particular company out of the Desai Group of Companies, arbitrarily and illegally Vide Form GST DRC22 dtd. 03/04/2019 being issued to the Branch Manager, Kalupur Commercial Co. Op. Bank Ltd. Xaviers Road Branch, Akshar Arcade, Gr. Floor, Opp. Memnagar Fire Station, Navrangpura, Ahmedabad. The respondent No.01 has provisionally attac....
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....Manager, Oriental Bank of Commerce, G2, Samedh, Nr. Associated Petrol Pump, C.G. Road, Ahmedabad 380 006, Respondent No. 02 has provisionally attached Current Account No. 10511131001097 of Desai Metalinks Ltd. 5.9 Copies of all the aforesaid form GST DRC22 all dtd. 03/04/2019 were handed over to the respective companies of Desai Group of Companies vide respective letters dtd. 04/04/2019 being addressed to the respective Desai Group of Companies. 5.10 Upon receiving the respective form GST DRC22, the accountant of the respective companies including the petitioner No. 02 company had personally visited the office of Respondent No. 01 on 05/04/2019 and had requested the officers of DGGI to kindly remove attachment from the respective bank accounts. On the other hand, the petitioner No. 01 who is director of petitioner No. 02 company was arrested since 18/03/2019 and his application praying for regular bail being CRMA No. 6623 of 2019 is allowed by this Hon'ble High Court. 5.11 As the petitioner was aggrieved and dissatisfied by attachment of bank accounts, he had preferred SCA (Special Civil Application) No. 7321 of 2019, 7323 to 7327 of 2019 before Your Lordships. Vide Order ....
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....It is undisputed fact that in the order of attachment u/s. 83 (supra) it was wrongly mentioned that proceeding u/s. 74 (supra) were pending. Only after considering submissions of the petitioners, a corrigendum was issued. It was not permissible to issue corrigendum after receipt of objection/reply/submission of the petitioner. In support of said submission, petitioner had also relied upon judgement of Hon'ble Tribunal in the case of Mahindra & Mahindra Ltd V/s. Commissioner of Central Excise, Mumbai reported at 2006 (196) E.L.T. 62 (Tri.Mumbai). 5.14 Having regard to all the submissions made before the aforesaid authority, it was expected that the order u/s. 83 (supra) wold be vacated and the bank accounts which were provisionally attached would be released. 5.15 However, petitioner herein is shocked and surprised to find Order dtd. 30/04/2019 issued from F.No.DGGI/AZU/12(4)73/201819." 6 Thus, it appears from the materials on record that the writ applicant is aggrieved by the orders of provisional attachment of his two bank accounts referred to in the prayer clause passed on 3rd April 2019 and 3rd April 2019 respectively. The two banks involved are the Kalupur Commercial Co....
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.... The Branch Manager, Kalupur Commercial Co.op Bank Ltd. Xaviers College Branch, Akshar Arcade Gr. Floor, Opp, Memnagar Fire Station, Navrangpura, Ahmedabad, Subject : Provisional attachment of property under Section 83 of CGST Act, 2017 It is to inform you that following companies / firms are having principal place of business at 407, 4th floor, SigmaCeejay Legacy, Nr. Panjrapole Char Rasta, Ambawadi, Ahmedabad380015. The details of the companies along with registration obtained by the as registered taxable person under the CGST Act, 2017 is mentioned in the table below: Sr. No. Company Name PAN GSTIN Current Account Number '01 PHD Trading Corporation Ltd. AAJCP1692F 24AACP1692F1ZE '00820102736 '02 PHD Ferro Alloys Limited AAJCP1737H 24AAJCP1737H1ZG '00820102737 '03 Desai Metalinks AIPPD5602E 24AIPPD5602E1Z0 '00820102453 '04 Desai Metalinks Ltd AAECD5863B 24AAECD5863B1ZY '00820102508 '05 Desai Overseas Pvt Ltd AADCS02980 24AADCS0298Q1Z U '00820102572 '06 Desai Impex Pvt Ltd AABCD4327M 24AABCD4327M1Z W '00820102455 '07 Desai Enterprises AAPPD7736B 24AAPPD7736B1Z W ....
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....T Act has been initiated against the petitioners till date, and hence, the action under section 83 of the CGST Act, 2017 is without authority of law. 3. In the opinion of this court, when the communications dated 4.4.2019 of the Deputy Director, DGGI, AZU itself informs the petitioners that the petitioners have a remedy against the order of attachment by way of filing objection under subrule (5) of rule 159 of the Central Goods and Services Tax Rules, 2017, this court would be reluctant to entertain these petitions under Article 226 of the Constitution of India in view of the fact that the petitioners have an efficacious alternative remedy before the competent authority before whom all the contentions raised in the present petitions can be raised. This court is, therefore, not inclined to entertain these petitions. 4. In the above view of the matter, the petitions are dismissed as not entertained in the light of the availability of the efficacious alternative remedy under subrule (5) of rule 159 of the Central Goods and Services Tax Rules, 2017. 5. In terms of the communication dated 4.4.2019 of the Deputy Director, DGGI, AZU, the petitioners are required to file objection....
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....filed and ultimately, the order came to be passed by the respondent No.2, which reads as under: "19. Further, I would like to emphasize that any action under Section 83 of the "Act is only & provisional measure to protect the interest of Revenue when during the investigations the collected evidences overwhelmingly indicate substantial evasion of tax and the assessee despite having admitted the liability refrains from making good the loss suffered by the Government exchequer on account of his/their fraudulent acts. 20. The provisions under Section 83 of CGST Act, 2017 read as under "83. (1) "Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed". 21. I would like to add that the investigation in the subject case are still going on under Section 67 of the Act and on conclusion of investigations in terms of pr....
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....under the Section 83 of the Act shall make the proceedings under Section 83 of the CGST Act, 2017, invalid. In this regard I find that it is a well settled proposition of the law that if ˙ the exercise of a power can be traced to a legitimate source, quoting of wrong provision shall n˙:0t vitiate the proceedings. In the instant case, it is a fact on record that proceedings under Section 67 of CGST Act, 2017 are going on against the applicant and evidences collected so far fairly indicate substantial liability on the part of applicant which stands admitted but remains unpaid. Therefore, action under Section 83 of the Act, when proceedings are going on under Section 67 of the Act to protect the interest of Revenue is clearly with the powers given under the said provisions of the Act. I, thus, find that powers under Section 83 of CGST Act, 2017 has been duly exercise as prescribed by law and since the power has been exercised legitimately, without exceeding the jurisdiction prescribed under Section 83 of the Act, merely quoting of wrong provision I.e. Section 74 instead of Section 67, when proceedings under Section 67 are also covered by the provisions under Section 83, s....
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....ued was held to be valid and the appeal filed by the assessee was dismissed by the Hon'ble Supreme Court as withdrawn. Moreover, the instant case is not a case where by way of corrigendum either the scope of the order dated 03.04.2019 has been altered or an attempt has been made to lend legality to an otherwise illegal order. The corrigendum has been issued merely to rectify an inadvertent error in the order dated 26.04.2019 by quoting the correct legal provisions. 26. In view of the above discussion in para 23 hereinabove, the Order dated 03.04.2019 issued under Section 83 of the CGST Act, 2017 remains valid irrespective of corrigendum issued thereto, as powers have been exercised legitimately in terms of provisions under Section 83 of the CGST Act, 2017. 27. Finally in view of the above facts that the applicant have substantial liability to pay to the Government exchequer which stands admitted by them and. In view of overwhelming evidences collected during the investigations, I find that the request of the applicants to withdraw orders issued under Section 83 is devoid of any merit and deserves to be rejected. Any such order to withdraw the action initiated under Section....
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....der Section 83 has been passed by the Additional Director General DGGI AZU, Ahmedabad. 14 Mr. Trivedi further submitted that even if the corrigendum is held to be legal and valid, no proceedings under Section 67 of the Act were pending as on the date the order of provisional attachment under Section 83 of the Act came to be passed. Mr. Trivedi tried to develop this argument further by submitting that no goods were seized from the premises of the writ applicants. The proceedings under Section 67 of the Act could be said to be pending only if the goods are seized from the premises of the writ applicants. 15 Mr. Trivedi, in the last, submitted that Section 83 of the Act can be invoked for the purpose of passing a provisional attachment provided the Commissioner is subjectively satisfied on the basis of the materials on record that it is necessary to do so to protect the interest of the government revenue. Therefore, the subjective satisfaction that the interest of the government revenue needs to be protected is of prime importance. Mr. Trivedi submitted that having regard to the materials on record, the interest of the government revenue could be said to be completely secured. Mr.....
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.... aforesaid submissions, has placed reliance on the following case laws: [i] Commissioner of Customs, Bangalore vs. Kesar Marble and Granites reported in 2012 (278) ELT 42 (Kar) [ii] Century Laminating Co Ltd vs. Commissioner of Central Excise, Meerut - II, reported in 2009 (236) ELT 182 (Tri. Del). [iii] Chawla Trading Co. vs. Commissioner of Customs (export), Nhava Sheva reported in 2015 (330) ELT 470 (Tri. Mumbai) [iv] Mahindra & Mahindra Ltd vs. Commissioner of Central Excise Mumbai V reported in 2006 (196) ELT 62 (Tri. Mumbai). ● SUBMISSIONS ON BEHALF OF THE RESPONDENTS: 18 Ms. Mehta, the learned standing counsel appearing for the Union of India has vehemently opposed all the six writ applicants. She submitted that no error, not to speak of any error of law could be said to have been committed by the respondent No.1 in passing the order of provisional attachment in exercise of its powers under Section 83 of the Act as well as the order overruling the objections raised by the writ applicants. 19 Ms. Mehta submitted that there is no merit in the submission canvassed on behalf of the writ applicant for the mistake earlier committed by the respondent No.1 co....
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....on account of his/their fraudulent acts. Therefore, contention raised by the Petitioner is devoid of any truth and does not hold any merit. Action taken under Section 83 of the Act is legal and valid to safeguard interest of the Government revenue . The orders issued under Section 83 are only a provisional measure to protect Government Revenue. Investigations under Section 67 of CGST Act, 2017 are in progress against the Petitioner. On conclusion of investigations, Demand-Cum-Show Cause Notice shall be issued under Section 74 of the CGST Act within the prescribed time limit. 25 It is to submit before Hon'ble Court, that any action under ' Section 83 of the Act is only a provisional measure to protect the interest of Government Revenue when during the investigations the collected evidences overwhelmingly indicate substantial evasion of tax and the Petitioner despite having admitted the tax liability, refrains from making good the loss suffered by the Government exchequer on account of his/ their fraudulent acts. Further it is to submit that the investigations in the subject case are still going on under Section 67 of the Act and on conclusion of investigations in terms of p....
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....nder Section 83 is only a provisional measure to protect Government Revenue. Reply to Para 6Q: The submissions made in response to Para 61 and 6J hereinabove are reiterated. Reply to Para 6R: 28. Regarding the plea of the petitioner that no weighment of goods has been done during the stock verification, it is to submit before the Hon'ble Court that Panchnama was drawn at the premises of M / s PHD Trading Corporation Ltd, M /s Desai Impex Pvt Limited and M /s Desai Metalinks Limited wherein physical stock verification was done in presence and to the satisfaction of Shri Pranit Hem Desai, Director of Desai Group of Companies/Petitioner and responsible person of the Desai Group of f1rms / companies. The weighment of stock lying there in the factory premises of M/s PHD Trading Corporation Ltd, M/s Desai Impex Pvt Ltd and M / s Desai Metalinks Ltd was ascertained under the panchnama proceedings in continuous presence of Shri Pranit Hem Desai/ responsible person of the Desai Group of firms/companies. On being satisfied of the physical verification of stock lying in these premises, Shri Pranit Hem Desai/ responsible person of the Desai Group of firms/companies put his dated Si....
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....on 16(2)(b) of CGST Act, 2017. Therefore, the doubt raised by the Petitioner about legality and Validity of orders for attachment of the bank accounts dated 30.04.2019 is without any legal basis and the same has been issued With full authority and jurisdiction in law. Reply to Para 7, 8 and 9: No Comments. However, it is to submit before Hon'ble Court that this Hon'ble Court had an occasion to consider the provision under Section 83 of CGST Act, 2017 in the case of Special Civil Application No. 1041 of 2019 filed by M/s Nandeshwari Steel Limited for release of their bank accounts and the Hon'ble High Court of Gujarat vide order dated 06.02.2019 had ordered as under: "In the light of the above, by way of interim arrangement, the respondent No. 1 is directed to release the attachment over the bank accounts of the petitioner referred to hereinabove, subject to Shri Ashwínkumar Jayantibhai Patel and Shn' Jashvantkumar Jayantibhai Patel father and uncle of Shri Mitesh Ashwínkumar Patel, one of the Directors of the company, permitting attachment of the property described hereinabove for release of the bank accounts. Shri Ashwínkumar Jayantibhai Patel and Shi....
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....e fact that against the availment of credit of Rs. 59,49,18,103/( Rupees Fifty Nine Crore Forty Nine Lakh Eighteen Thousand One Hundred Three only), an amount of Rs. 63,62,41,525/( Rupees Sixty Three Crore Sixty Two Lakh Forty One Thousand Five Hundred Twenty Five Only) came to be paid by way of tax. It appears that an amount of Rs. 4,13,23,422/( Rupees Four Crore Thirteen Lakh Twenty Three Thousand Four Hundred Twenty Two only) has been paid in excess than the amount of credit availed. In such circumstances, it cannot be said that the interest of the government revenue is at a stake. 24 We are at one with Mr. Trivedi that even if it is assumed that the allegations as levelled by the department are correct and the credits though not available were wrongly availed since the tax had been paid, though it was not payable having regard to the fact that there was no supply of goods, the availment of credits could be said to be justified on two counts: (1) it is a revenue neutral satisfaction and (2) payment of tax although not payable yet is to be treated if unavailable credits are reversed if they were wrongly paid. 25 In the aforesaid context, we may refer to and rely upon a decisi....
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....he CGST Act came to be passed, the present estimate is Rs. 16.24 crores. Thus, the petitioner, upon conclusion of any proceedings that may be taken pursuant to the proceedings under sections 67, 73 or 74 of the CGST Act, may be liable to pay such amount. Admittedly, the petitioner has already reversed input tax credit to the tune of Rs. 13,28,00,000/. In the opinion of this Court, considering the amount paid by reversing input tax credit, the interest of the Revenue is sufficiently secured. Therefore, the provisional attachment of the above referred bank accounts of the petitioner is no longer justified. 12. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The respondent is directed to forthwith release the provisional attachment over the petitioners bank accounts being current accounts bearing No.02950500013045, 02950200000772 maintained with the Bank of Baroda, Kapadwanj, accounts No.917020026366404 and 917040037200382 maintained with the Axis Bank, Nadiad and accounts No.50200024114832 and 50200033690085 maintained with HDFC Bank, Kapadwanj as well as accounts No.02950600021450, 02950600021591, 02950600021899, 02950600022187, 02950300039429 and 0....
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....be in a position to recover any amount that the petitioner may ultimately be held liable to pay. In these circumstances, without recording any such satisfaction, the respondent could not have formed the opinion that it was necessary to resort to provisional attachment to protect the interest of the Government revenue. The impugned order of attachment, therefore, cannot be sustained. It is clarified that the fact that the petitioner has deposited a sum of Rs. 17,00,000/during the course of the search proceedings shall not be construed as an admission of such dues on the part of the petitioner. 8 Before parting, the court deems it fit to caution the concerned authorities that while exercising powers under section 83 of The GGST Act, the authorities should try to balance the interest of the Government revenue as well as a dealer to ensure that while the interest of the revenue is safeguarded, the dealer is also in a position to continue with his business, because it is only if the dealer continues with the business that he would generate more revenue. The authorities should keep in mind that bringing the business of a dealer to a halt does not in any manner serve the interest of th....
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....imate collection of the demand that is likely to be raised on completion of the assessment. It should, therefore, be exercised with extreme care and caution. [4] The power under Section 83 of the Act for provisional attachment should be exercised only if there is sufficient material on record to justify the satisfaction that the assessee is about to dispose of wholly or any part of his / her property with a view to thwarting the ultimate collection of demand and in order to achieve the said objective, the attachment should be of the properties and to that extent, it is required to achieve this objective. [5] The power under Section 83 of the Act should neither be used as a tool to harass the assessee nor should it be used in a manner which may have an irreversible detrimental effect on the business of the assessee. [6] The attachment of bank account and trading assets should be resorted to only as a last resort or measure. The provisional attachment under Section 83 of the Act should not be equated with the attachment in the course of the recovery proceedings. [7] The authority before exercising power under Section 83 of the Act for provisional attachment should take in....