2020 (1) TMI 467 - HC - GST

Attachment of Bank Accounts - time limitation - section 83 of the Gujarat Goods and Services Tax Act, 2017 - HELD THAT - The plain reading of the order passed by a Coordinate Bench of this Court dated 17th January, 2019 would indicate that the attachment of the bank accounts was ordered to be released subject to the writ applicant maintaining an amount of ₹ 4 Crore in its Account No.117013011046 with the Dena Bank, Ahmedabad. It has been almost one year since the order came to be passed by the Coordinate Bench, granting interim relief in favour of the writ applicant. Even, otherwise, the life of an order of provisional attachment under Section 83 of the Act is one year. This period of one year has already come to an end on 27th December, 2019. No fresh order of any provisional attachment of the bank accounts has been passed, more particularly, in view of the interim order passed by the Coordinate Bench dated 17th January, 2019. Keeping in mind the time period that has elapsed, the interim order passed by the Coordinate Bench and the fact that the life of the order of the provisional attachment has come to an end, it will be an exercise in futility now to adjudicate this writ application on merits. We would like to dispose of this writ application balancing the equities. In other words, while granting appropriate relief to the writ applicant, we would also ensure that the interest of the State is protected - It is not even necessary now to quash the impugned order of the provisional attachment passed under Section 83 of the Act as the validity period has come to an end. This writ application is disposed off with a direction that the writ applicant shall maintain, at all time, a stock worth minimum sum of ₹ 4 Crore till the final disposal of the adjudication proceedings arising out of the show-cause notice dated 21st December, 2018 and 26th December, 2018 respectively.

Summary

Issues Involved:
1. Provisional attachment of bank accounts.
2. Classification of waste coal under GST Tariff.
3. Non-payment of Compensation Cess.
4. Input Tax Credit (ITC) issues.
5. Adjudication of show cause notices.

Detailed Analysis:

1. Provisional Attachment of Bank Accounts:
The petitioner sought relief from the court to quash the orders for attachment of their bank accounts, arguing that the attachments were causing significant operational difficulties. The court noted that the provisional attachment under Section 83 of the Gujarat Goods and Services Tax Act, 2017, had a validity of one year, which had already expired. The court had previously ordered the release of the attachments subject to the petitioner maintaining ?4 Crore in a specific bank account. Given the elapsed time and the interim relief granted earlier, the court found it unnecessary to quash the provisional attachment order as it had already expired.

2. Classification of Waste Coal under GST Tariff:
The petitioner argued that waste coal, described as Dolachar/Char Coal, should be classified under Heading 2621 of the GST Tariff, which covers slag, ash, and similar residues. They contended that due to an inadvertent error, waste coal was incorrectly classified under Heading 2701, which pertains to coal. This misclassification led to the incorrect application of GST rates.

3. Non-payment of Compensation Cess:
The petitioner did not pay the Compensation Cess on waste coal, arguing that it did not fall under the classification requiring such cess. The authorities issued show cause notices demanding the cess, which the petitioner contested, asserting that waste coal should not attract Compensation Cess under the correct classification.

4. Input Tax Credit (ITC) Issues:
A show cause notice also raised issues regarding the availing of ITC for certain supplies. The petitioner calculated and paid the differential GST amount and reversed the ITC as per Rule 42 of the CGST Rules, addressing the concerns raised in the show cause notice.

5. Adjudication of Show Cause Notices:
The court acknowledged that the show cause notices were pending adjudication. The petitioner had not yet filed replies to these notices due to the subsequent actions taken by the respondents, including the attachment of bank accounts. The court directed the petitioner to maintain a minimum stock worth ?4 Crore until the final disposal of the adjudication proceedings arising from the show cause notices. All defenses available to the petitioner in response to the show cause notices were kept open.

Conclusion:
The court balanced the equities by ensuring that the petitioner could continue their business operations while protecting the state's interest. The provisional attachment of the bank accounts was deemed unnecessary to quash as it had expired, and the petitioner was directed to maintain a minimum stock worth ?4 Crore until the final adjudication. The court's decision provided a temporary resolution, allowing the petitioner to operate their bank accounts and continue business activities while the adjudication of the show cause notices proceeded.