2018 (10) TMI 1454 - HC - GST

Validity of provisional orders of attachment - attachment of petitioner s factory premises, stock and bank accounts - alleged large scale bogus billing activities - Held that - At the prima facie stage, the department contends strongly that the petitioner has indulged into revenue defalcation. Possible tax and penalty liabilities are substantial. At the same time, it is not disputed that the petitioner is also involved in legitimate business activities. By freezing the petitioner s bank accounts and attaching the properties, the petitioner is temporarily rendered penalized. The petitioner cannot operate the business, cannot move the stock and cannot make payments. Provisional attachments suspended subject to fulfillment of certain conditions - petition disposed off.

Summary

Issues:
Challenging provisional orders of attachment passed by revenue authorities.

Analysis:
The petitioner, a Private Limited Company engaged in manufacturing and trading caster oil and related products, challenged provisional orders of attachment passed by revenue authorities. The department alleged that the petitioner was involved in large-scale bogus billing activities, defrauding the Revenue. The respondents assessed the petitioner's possible tax and penalty liabilities under the Gujarat Goods & Service Tax Act and Central Goods & Service Tax Act at close to ?45 crores based on collected documents and recorded statements during a raid on the petitioner's premises and other entities in the same business.

Analysis:
The petitioner's counsel argued that the petitioner had been in business for several years without any previous allegations. They claimed that statements of the director and other individuals were taken under duress and denied any involvement in bogus billing activities. The department's attachment of bank accounts, premises, and stock hindered the petitioner's business operations, especially since the goods were perishable. The petitioner requested a suspension of the attachment under reasonable conditions.

Analysis:
The learned AGP detailed the alleged modes operandi used by the petitioner to defraud the Government revenue, asserting the existence of reliable material supporting the allegations. The competent authority issued the provisional attachment order to safeguard the Revenue's interests pending assessment.

Analysis:
The court acknowledged the need to balance the interests of both parties. While the department strongly contended the petitioner's involvement in revenue defalcation with substantial tax and penalty liabilities, it also recognized the petitioner's legitimate business activities. The court noted that the attachment penalized the petitioner, impeding business operations, stock movement, and payments. Consequently, the court proposed suspending the attachments on reasonable terms.

Analysis:
Considering the facts presented, including the substantial tax and penalty liabilities, pending assessments, seized perishable stock, and deposited amount under the Gujarat Goods & Service Tax Act, the court decided to permit the petitioner to continue legitimate business operations under specific conditions, such as maintaining a minimum stock value, providing a bank guarantee, and ensuring payments were used as directed.

Analysis:
Upon the petitioner fulfilling the specified conditions, the court ordered the automatic suspension of attachment orders and directed the petitioner's dealers to resume payments. The petitions were disposed of accordingly.