TaxTMI 
TaxTMI 
2022 (2) TMI 997
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.... (iii) Form GST DRC 22 for attachment of stock lying at factory premises Dated 25/11/2021; (iv) Form GST DRC 22 for attachment of Bank Current Accounts and FDs Dated 25/11/20 21; (v) Form GST DRC 22 for attachment of Sundry Debtors (Utkarsh Bars Pvt. Ltd.) Dated 26/11/2021; (vi) Form GST DRC 22 for attachment of immovable property of Mr. Niraj Jaydev Arya dated 27.11.2021; (b) To issue a writ of mandamus or any other appropriate writ, order or direction, directing the Respondent No.4 to allow the petitioner to utilize its drawing power and allow the petitioner to conduct business operations on the ground that the risk of respondent no.4 is sufficiently covered and secured; c) To issue a writ of mandamus or any other appropriate writ, order or direction, as an ad-interim relief, to release the provisionally attached stock and the debtors so as to enable the petitioner to run his business smoothly and other ad-interim relief as the Court deems fit; d) To issue order(s), direction(s), writ(s) or any other relief(s)) as this Hon'ble Court deems fit and proper in the facts and circumstances of the case and in the interest of just....
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....nt 23,92,073 Scrap Handling 10,45,000 Scrap Processing Equipment 37,11,000 Slag Crusher Machine 45,07,229 Water Circular Circuit 75,10,845 Water Treatment Plant 17,33,850 Weigh Bridge 7,14,327 3. 66KVA Substation (Mortgaged with Bank authorities) 66KVA Substation including Transformer & Capacition Bank 4,88,06,680 4. Stock Lying At Factory Premises Plot No.718 & 719, GIDC, Bamanbore, Village : Bamanbore (Mortgaged with Bank authorities) Raw Material of Waste and Scrap including Remelting Scrap, SilicoMngenize, Sponze, Store & Consumable 1,91,41,848 5. Bank Current A/C Bank Current A/C with SBI No.39683832171 1,92,617 Bank Current A/C with Kalupur Commercial Bank - 5720100141 1,18,374 Bank Current A/C with Axis Bank No.- 91700077787324 58,017 6. FD with Kalupur Commercial Bank (Mortgaged with Bank authorities) 5795100000142 (Mortgaged) 12,85,760 12,70,15,036 5795100000143 (Mortgaged) 25,70,000 5795100000144 1,15,71,840 5795100000145 58,59,546 5795100000164 (Mortgaged) 58,59,546 5795100000589 (Mortgaged) 36,05,838 5795100000760 25,48,813 5795400....
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....d to receive fake purchase invoices in the books of accounts of the firm violation of the provisions of the Gujarat Goods and Services Tax Act, 2017 and the rules made thereunder and thereby evaded tax to defrauding the Government of tax revenue. It is also to state that Niraj Jaidev Arya is the person who is responsible to execute this huge scam of showing fake purchase transactions in the books accounts of Utkarsh Ispat LLP and thereby availing ineligible input tax credit and all retained the benefits arising out of such offence. Total liabilities of the M/s. Utkam Ispat LLP till the date of search completed is amounting to Rs. 68,91,70,54 Whereas total property attached of firm is 55,30,22,566/- which is not sufficient cover government revenue. Assessee's contention that Firm is LLP and property partner cannot be provisionally attached is not tenable as attachment made is in t with provisions of the law. CHAPTER XVI contains provision Liability to pay in certain cases. Section and 137 of the CGST Act, 2017 are the sections that discuss liabilities of Partner case of recovery of taxes, interests and penalties for offences. It is to be noted these sections have overri....
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....firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust, the partner or karta or managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2) shall, mutatis mutandis apply such persons. (4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. Explanation.- For the purposes of this section,-(i) "company" means a body corporate and includes a firm or other association of individuals; and (ii) "director", in relation to a firm, means a partner in the firm. Provisional attachment of Immovable Property of partner is made in tune with provision and is inevitable to secure government revenue." 12 Thus, from the aforesaid, what we have been able to understand is that the respondent No.3 took the aid of Sections 90 and 137 resply of the Act. 13 It appears that there is a reason why the respondent No.3 took the aid of Section....
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....gate turnover in a financial year exceeds twenty lakh rupees: Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees. (2) Every person who, on the day immediately preceding the appointed day, is registered or holds a licence under an existing law, shall be liable to be registered under this Act with effect from the appointed day. (3) Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. (4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from....
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....d under Section 2(84) of the Act. It reads thus: "2. In this Act, unless the context otherwise requires,-- (84) "person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of persons or a body of individuals, whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013; (h) any body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to cooperative societies; (j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act, 1860; (m) trust; and (n) every artificial juridical person, not falling within any of the above;" 22 The respondent No.3, having realized that it is only the property belonging to a taxable person that can be provis....
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....would be joint and several liability of all its partners. In the case on hand, the respondent No.3 committed a serious error in invoking Section 90 of the Act for the purpose of provisionally attaching a property owned by a person of the LLP under Section 83 of the Act. There are two reasons why we say so. First, a partner of an LLP is not a taxable person. It is the LLP i.e. the partnership firm who is a "taxable person". The liability of the firm is yet to be determined. There has been no assessment so far as the liability of the firm is concerned. The day such liability is determined and fixed, it is open for the department to proceed not only against the firm as a taxable person, but also against individual partner of the firm. 28 Section 137 of the Act has absolutely no application. Section 137 is a provision which fixes the vicarious liability of the partners in the event any offence is committed by a firm. 29 Sub-section (84) of Section 2 of the Act, 2017 defines the term "person" to include an individual, a Hindu Undivided Family, a company, a firm, a limited liability partnership, etc. Therefore, the Act recognizes a firm as a dealer and as a person. The legislature ....
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....ing against the manager of the Hindu undivided family for his arrest and detention. It is true that if properties of the family, movable and immovable, are to be attached proceedings may be started against the Hindu undivided family and the manager represents the family in proceedings before the Tax Recovery Officer. But by the clearest implication of the statute the assessee alone may be deemed to be in default for non-payment of tax, and liability to arrest and detention on failure to pay the tax due is also incurred by the assessee alone. The manager by virtue of his status is competent to represent the Hindu undivided family, but on that account he cannot for the purpose of Section 222 of the Act of 1961 be deemed to be the assessee when the assessment is made against the Hindu undivided family and certificate for recovery is issued against the family." 31 Having regard to the principle enunciated in the above decision as well as in the light of the above discussion, this Court is of the view that the respondent No.3 was wholly unjustified in provisionally attaching a personal property owned by a partner of the firm under Section 83 of the Act, 2017. 32 In the aforesaid c....
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....fic taxable person, an opinion has to be formed that to protect the interest of Revenue an order of provisional attachment is necessary. The format of the order, i.e. the form GST DRC-22 also specifies the particulars of a registered taxable person and which proceedings have been launched against the aforesaid taxable person indicating a nexus between the proceedings to be initiated against a taxable person and provisional attachment of bank account of such taxable person. 15. Power to provisionally attach bank accounts is a drastic power. Considering the consequences that ensue from provisional attachment of bank accounts, the Courts have repeatedly emphasized that this power is not to be routinely exercised. Under Section 83, the legislature has no doubt conferred power on the authorities to provisionally attach bank accounts to safeguard government revenue, but the same is within well-defined ambit. Only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power. 16. It is therefore not possible to accept the submission of the Respondents that even t....
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....he Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the government revenue. (vi) The expression "necessary so to do for protecting the government revenue" implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment; (vii) The formation of an opinion by the Commissioner under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government revenue;" 37 It would be apposite at this stage to also look into the guidelines issued by the Central Board of Indirect Taxes and Customs, Government of India dated 23rd February 2021 for provisional attachment of property under Section 83 of the Act, 2017. We quote the guidelines as under: "CBEC-20/16/05-2021-GST/359 Government of India ....
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....ounds must exist for resorting to provisional attachment of property under the provisions of section 83 of the Act. (i) There must be pendency of a proceeding against a taxable person under the sections mentioned in section 83 of the Act; (ii) The Commissioner must have formed the opinion that provisional attachment of the property belonging to the taxable person is necessary for the purpose of protecting the interest of the Government revenue. 3.1.3 For forming an opinion under section 83, it is important that Commissioner must exercise due diligence and duly consider as well as carefully examine all the facts of the case, including the nature of offence, amount of revenue involved, established nature of business and extent of investment in capital assets and reasons to believe that the taxable person, against whom the proceedings referred in section 83 are pending, may dispose of or remove the property, if not attached provisionally. 3.1.4 The basis, on which, Commissioner has formed such an opinion, should be duly recorded on file. 3.1.5 It is reiterated that the power of provisional attachment must not be exercised in a routine/mecha....
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....asoned order. Where the Commissioner is satisfied that the property was or is no longer liable for attachment, he may release such property by issuing an order in FORM GST DRC-23, 3.2.5 Each such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order of attachment. 3.2.6 If the provisionally attached property is of perishable/hazardous nature, then such property shall be released to the taxable person by issuing order in FORM GST DRC-23, after taxable person pays an amount equivalent to the market price of such property or the amount that is or may become payable by the taxable person, whichever is lower, and submits proof of payment. In case the taxable person fails to pay the said amount, then the said property of perishable/hazardous nature may be disposed of and the amount recovered from such disposal of property shall be adjustable against the tax, interest, penalty, fee or any other amount payable by the taxable person. Further, the sale proceeds thus obtained must be deposited in the nearest Government Treasury or branch of any nationalised bank in fixed deposit and the receipt thereof must be r....
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....ty is not sufficient to cover the estimated amount of pending revenue against such person. Further, different properties of the taxpayer can be attached at different points of time subject to the conditions specified in section 83 of the Act. 3.4.3 It may be noted that the provisional attachment can be made only of the property belonging to the taxable person, against whom the proceedings mentioned under section 83 of the Act are pending. 3.4.4 Movable property should normally be attached only if the immovable property, available for attachment, is not sufficient to protect the interests of revenue. 3.4.5 As far as possible, it should also be ensured that such attachment does not hamper normal business activities of the taxable person. This would mean that raw materials and inputs required for production or finished goods should not normally be attached by the Department. 3.4.6 In cases where the movable property, including bank account, belonging to taxable person has been attached, such movable property may be released if taxable person offers, in lieu of movable property, any other immovable property which is sufficient to protect the interesa....