2020 (3) TMI 1149 - HC - GST

Freezing of petitioner's Bank Accounts - It is alleged the bona fide of the petitioner can be ascertained from the very fact that even while its M.D. was in custody, the petitioner have been paying some or the other amount in the account of the respondent towards clearing its tax liability - HELD THAT - On payment of ₹ 5.5 crores within two days from the date of defreezing of its all accounts, no coercive action be taken against the petitioner till it continue abiding by the undertaking given today. An undertaking be filed in the course of the day. This order shall be without prejudice to rights and contentions of both the parties on merits. Petition disposed off.

Summary

Issues:
1. GST liability of the petitioner
2. Freezing of petitioner's accounts
3. Payment schedule for discharging liabilities
4. Coercive action against the petitioner

Analysis:

1. GST liability of the petitioner:
The judgment reveals that the petitioner's total GST liability in Delhi is approximately ?11.5 crores, and for PAN India, it amounts to around ?59.24 crores. The petitioner's counsel highlights that the company has 35,000 employees with a monthly expenditure bill of about ?60.87 crores. It is noted that even during the petitioner's Managing Director's custody, payments were made towards clearing tax liabilities, indicating the petitioner's bona fides. A significant portion of the ?11.5 crores due comprises interest.

2. Freezing of petitioner's accounts:
The freezing of the petitioner's accounts is causing substantial damage day by day, as mentioned by the petitioner's counsel. To address this, the petitioner proposes to deposit ?5.5 crores with the department within two days of unfreezing its accounts. The remaining liabilities, including for India, are to be discharged within 120 working days from the judgment date. Any default in payment within the specified period would trigger consequences under the CGST Act.

3. Payment schedule for discharging liabilities:
The court orders that upon the payment of ?5.5 crores within two days of unfreezing all accounts, no coercive action should be taken against the petitioner as long as they adhere to the undertaking provided. The petitioner is required to file an undertaking on the same day as per the court's directive. The judgment specifies that the order does not prejudice the rights and contentions of either party on the merits of the case.

4. Coercive action against the petitioner:
The judgment concludes by disposing of the petition in accordance with the terms outlined above. It instructs that a copy of the order be provided to both parties for record purposes. The decision aims to balance the interests of both parties while ensuring compliance with the payment schedule and safeguarding the petitioner from coercive actions during the specified period.