TaxTMI 
TaxTMI 
2026 (3) TMI 1676
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....accountability for its misuse and manifestly arbitrary; or in the alternative, this Hon'ble Court may please read down the extent, scope and application of Section 83 by explaining, guiding and delineating the same in a just manner with such cautions, pre-requisites and consequences for abuse thereof, so as to save it from unconstitutionality; (b) this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioner's case and after going into the validity and legality thereof to quash and set aside the eight impugned orders all dated 27.02.2024 passed by Respondent No. 2 purporting to attach the bank accounts of the Petitioner under Section 83 of the Act (Exhibits A1 to A8); (c) this Hon'ble Court be pleased to appoint Chartered Account or Costs Accountant to conduct a Special Audit in terms of Section 66 of the CGST Act and examine and verify the correctness of the Reconciliation submitted with representations dated 25.10.2023, 29.11.2023, 20.12.2023, 15.01.2024, 23.01.2024, and 15.02:2024 of the Pe....
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....er intends to rely on to show interse transfer in these bank accounts and any other material that may be produced by the petitioner be gone into. The fees of the Chartered Accountant shall be borne by the petitioner. 2. The Chartered Accountant shall form a prima facie opinion on the material which would be placed for his consideration by the advocate for the petitioners in regard to the observation as made in the order dated 11th March 2024 passed by the Commissioner CGST and Central Excise, Navi Mumbai, Mr. Deepak Bhilegaonkar. 3. Let the Chartered Accountant submit a report to the Department, which be placed before the court on the adjourned date of hearing. 4. Accordingly, stand over to 26th March 2024, High on Board. 5. All contentions of the parties are expressly kept open. 6. Parties to act on an authenticated copy of this order." Order dated 28th March 2024 "1. In the backdrop of our order dated 14th March 2024, the independent Chartered Accountant, Mr. Sagar Shah, has furnished a report dated 24 March 2024 addressed to the Commissioner CGST and Central Excise, Navi Mumbai. The same is also placed on record as annexur....
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....he department is the amount in the hands of the petitioner on which GST was not paid-Basis our detailed comments provided in para 2.17 to para 2.23, we believe the amount to be taxed in the hands of the petitioner needs to be re-calculated after considering the additional bank accounts and such other subtractions as may be deem fit in case the source of funds can be ascertained which in the given case has not be ascertained and is in consonance with the comments of the petitioner vide para 2.21." 3. Considering such apprehension as expressed in the report, Mr. Nankani, learned Senior Counsel for the petitioner, on instructions, would fairly submit that the petitioner is willing to show its bona fides and the said Chartered Accountant, Mr. Sagar Shah, himself can undertake the exercise to check the credibility and authenticity of the inter-bank transactions, which according to the petitioner are amounts which are accounted for GST and which are the basis on which the department has apprehension that the GST has been evaded. 4. We do not intend to dwell on such issues as it is agreeable to the parties that this exercise could be undertaken by the same Chartered Acco....
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....se;" 4. This Interim Application is placed on board for hearing today. Before deciding the present Interim Application along with Writ Petition No. 3406 of 2024, it would be beneficial to set out certain relevant facts:- i. The Petitioner is challenging in the Writ Petition the legality and validity of eight purported orders, all dated 27th February 2024, passed by Respondent No. 2, (hereinafter collectively referred to as the impugned attachment orders), issued under Form DRC-22, provisionally attaching the bank accounts of the Petitioner maintained with Respondent Nos. 4 to 11, and directing Respondent Nos. 4 to 11 not to allow debit from the bank accounts mentioned therein without prior permission. ii. On 8th August 2023, various teams from the office of Respondent No. 2 carried out search at three premises of the Petitioner and a Panchanama to that effect was drawn. On 23rd August 2023, the Petitioner submitted the list of its 49 bank accounts via email. iii. On 24th August 2023, other details and documents were submitted by the Petitioner, as required by Respondent No. 3. On 29th August 2023, the Petitioner submitted bank statements of operative a....
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....ank transfers within the accounts of the Petitioner in FY 2020-21. ix. On 11th December 2023, Mr. Mahesh Patil, an officer of the Petitioner, was taken in custody and were not allowed to leave the office of Respondent No. 3. It is the Petitioner's contention that his statement was extorted under threat and coercion, and as per the dictates of Respondent No. 3. Without obtaining any authorization, arrest of Mr. Patil was made and he was detained overnight. Thereafter, bail proceedings were initiated in so far as Mr. Patil was concerned and Mr. Patil was enlarged on bail by the Magistrate on 30th December 2023. x. On 20th December 2023, the Petitioner, with supporting documents duly submitted that the case sought to be made out by Respondent No. 3 against the Petitioner was totally false. On 21st December 2023, the General Manager Finance of the Petitioner, Shri Manoj Jain, who was asked to assist Respondent No. 3 in verification of reconciliation, who had joined the Petitioner in December 2022, submitted his resignation. It is the Petitioner's contention that he was immediately summoned to appear on 22nd December 2023, and his statement was recorded. The Petitioner....
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....d before the Additional Chief Metropolitan Magistrate to release Mr. Patel and thereafter, an application opposing the remand and consequential release of Mr. Patel from illegal arrest was also filed before the Additional Chief Magistrate, and thereafter proceedings were taken out for the release of Mr. Patel before the learned Court of 6th Judicial Magistrate, First Class, Vashi, Mumbai. Mr. Patel had also filed an application seeking bail in learned Court of Judicial Magistrate, First Class, Vashi, Navi Mumbai, who extended the remand. xv. It is against the impugned attachment orders dated 27th February 2024 that the present writ petition has been filed on various grounds as mentioned in the aforesaid writ petition. By way of the impugned attachment orders issued in Form GST DRC-22, 36 bank accounts of the Petitioner were provisionally attached, which is the subject-matter of challenge in the present petition. xvi. As stated aforesaid, detailed orders dated 14th March 2024 and 28th March 2024, reproduced in paragraph 2 above, appointing a special auditor have been passed on the basis of prayers made by the Petitioner that considering the complexity of accounts i....
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....ffidavit dated 29th April 2024, within eight weeks from the date of the order of this Court. 5. We have heard learned counsel, Mr. Vikram Nankani, Senior Advocate, along with Mr. Prakash Shah, Senior Advocate, Mr. Mihir Mehta, and Mr. Vikas Poojary on behalf of the Petitioner. We have also heard Mr. Karan Adik, Ms. Megha Bujaria, Mr. Chirag Sawant and Ms. Sangeeta Yadav on behalf of the Respondents. With the assistance of learned counsel for the parties, we have perused the record of both the proceedings, accordingly, we proceed to decide the interim application and the Writ Petition. 6. It is Mr. Nankani's contention, that since the Chartered Accountant has not been able to match the entire entries, it would be in the interest of justice that another additional report from the Chartered Accountant be called for. He has also submitted that the Petitioner will cooperate and furnish all additional details as required by the learned Chartered Accountant, if this additional report is called for by this court. It is his contention that this exercise be carried out so that the entire picture insofar as the special audit is concerned will be clear and the Petitioner will be bound by....
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.... iv. He has further submitted that the Chartered Accountant's report was primarily for the purposes of the bank attachment proceedings and since now the bank attachment itself does not survive, the additional report is not called for. He has also submitted that a lot of other material has been gathered and unearthed during the investigation and the Chartered Accountant, Mr. Sagar Shah, is not a substitute for investigation, nor is he an adjudicating authority as tried to be portrayed by the Petitioner. v. The relevant paras of the affidavit in reply dated 25th February 2026 filed on behalf of the respondents by one Mr. Ranbir Bose, Joint Commissioner of CGST and Central Excise are reproduced below. "8. Hence it can be seen that the CA's appointment was by both sides, for (i) a prima face opinion, and (ii) to give a picture in cooperation by both sides i.e. revenue & tax payer, (iii) for the purposes of bank attachments, (iv) without prejudice to the investigation. I say that the petitioner is in some form of a mistaken belief, or an erroneous assumption, that he is getting a special S.I.T., or a Special Court Monitored Investigation. I say and submit that there i....
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....ices" 15. First request letter dt 01.10.2024 (Exhibit D) was written to CA Sagar Shah where-in he was requested to provide the following point wise details to this office: a. As to whether M/s Foodlink F&B (Holdings) Put Ltd have submitted all Taxable and Non-Taxable invoices in respect of the total aggregate turnover mentioned in the report at. 26.04.2024, if so, please provide the copies of such invoices submitted to you for verification. b. Hon'ble Bombay High Court has categorically asked to undertake the exercise to check the credibility and authenticity of interbank transactions from GST point of view which according to the petitioner are amounts which are accounted for GST) for such verification the amount which is claimed as inter account transfer should have origin in a taxable or non-taxable Invoice. Hence you are requested to clarify as to whether each taxable or non-taxable invoice in this regard have been verified by you or not and further submit the copies of invoices verified by you. 16. CA Sagar Shah vide letter dt 08.10.2024 (Exhibit E) have submitted his reply where-in he only confirmed that only 250 Invoices on sample basis wer....
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....his team by Food Link during the course of verification. f. He confirmed that Rs.517.22 Cr have a debit & corresponding credit effect & qualify as bank transfers and his view is restricted to transfer & movement of funds. Further he confirmed that in his view & understanding source of fund of Inter-account transactions at individual transaction level can't be determined & thus not verified. g. He confirmed that the source of funds of FD was not required nor verified by him during verification. Original documents for the investment agreement of Rs.60 Cr, were not provided to him, he had verified the scan copies of the same. Here it is pertinent to note that during the course of the investigation Shri Sanjay Vazirani, the Chairman Managing Director of the company had under taken to submit the original registered agreement copy in respect of Rs 60 Crores investment done by an individual investor. h. He confirmed and agreed that to provide a holistic & detailed GST Point of View & Ascertain the Source of Funds for all the Inter-account transactions credits at transaction level for GST transactions, all the invoices will have to be verified & positions will ha....
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....port of such audit duly signed and certified by him to the said Assistant Commissioner mentioning therein such other particulars as may be specified: Provided that the Assistant Commissioner may, on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of ninety days. (3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force. (4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed to be used in any proceedings against him under this Act or the rules made thereunder. (5) The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final. (6) Where the special a....