2018 (12) TMI 1578 - HC - GST

Validity of attachment order - petitioner could not discharge its GST liabilities for the past several months - According to the petitioner, since it was unable to pay the tax, the Returns could not be filed. - Held that - The petitioner can restart its manufacturing activities and start repaying the Government dues. In this context, few things become relevant. Firstly, according to the petitioner, the outstanding dues are in the vicinity of ₹ 64.00 Lacs. This does not account for possible interest or penalty or late payment charges. The petitioner must clear the dues as soon as possible. The petitioner, having collected such taxes, would not get any sympathy from us, if the unpaid taxes are not deposited in the Government revenue - The petitioner shall place before the respondent authorities material regarding its purchases and clearances in order to enable the authority to form the best judgment assessment, if so found necessary. All these procedures can continue. Attachment to bank accounts suspended with conditions. While maintaining the attachment on the plant and machinery, we permit the petitioner to carry out its manufacturing activities and clear the manufactured goods. Upon breach of any of the above condition nos.(I), (II) or (III), including failure to deposit any of the installments, such restrictions shall stand restored. - petition disposed off.

Summary

Issues:
Challenge to order of attachment of plant, machinery, and stock due to unpaid GST liabilities.

Analysis:
The petitioner challenged an order of attachment by GST authorities due to unpaid GST liabilities amounting to ?97.00 Lacs. The petitioner admitted the inability to discharge the tax liabilities, stating that a portion has been paid, leaving a residue of about ?64.00 Lacs. The petitioner cited severe financial crisis for non-payment, leading to the inability to file Returns. The authorities invoked powers under Section 83 of the Gujarat Goods and Service Tax Act, 2017 to attach the petitioner's assets.

The petitioner argued that the financial crisis prevented tax payment, risking a halt in manufacturing activities and inability to pay creditors and workers. The petitioner proposed clearing dues in installments. The authorities contended that the self-assessed tax, collected from purchasers, should have been paid, and financial hardship cannot justify non-payment. They defended the attachment to safeguard government revenue.

The court acknowledged the outstanding dues and emphasized the need for the petitioner to clear them promptly, without sympathy for non-depositing of collected taxes. The court recognized the authority's power to conduct best judgment assessment if Returns are not filed, requiring the petitioner to provide necessary material for assessment. Despite this, the court allowed the petitioner to operate the factory under strict conditions.

The conditions imposed included depositing ?5.00 Lacs by specific dates and clearing the remaining amount in three equal monthly installments, starting from December 2018. The petitioner's Director was required to file an Undertaking ensuring compliance. The attachment on stock was suspended, allowing manufacturing activities to continue, while failure to meet conditions would result in restoration of restrictions.

The court directed the petitioner to cooperate with assessment proceedings and other GST-related processes. The petition was disposed of accordingly, with direct service permitted.