2021 (2) TMI 109 - HC - GST

Provisional attachment of Bank Accounts of petitioner - fraudulent availing of and passing on of ineligible Input Tax Credit (ITC) - HELD THAT - We have considered disposing of the present petition, giving time bound directions to the GST Authorities for taking a decision on the proposal made by the Petitioner. Alternatively, we have called upon Mr. Sethi to argue the matter. However, he requests that first the Respondents may consider the proposal and in case the same is agreed to, he will be satisfied, and there will be no need to decide the present petition. In the event the proposal is rejected; he will address arguments on the merits of the case. It is directed that the Petitioner shall within a period of 7 days from today, submit a proposal to the Respondents, giving the complete particulars along with copies of the complete chain of title documents of the immovable property offered as a security. The immovable property should be of value not less than the tax amount in dispute. It should also be free from any subsisting charge, liens, mortgages or encumbrances, property tax fully paid up to date and not involved in any legal conflicts. As and when required, Petitioner shall produce the original title deeds, provide all necessary information relating to the property, for the satisfaction of the concerned officer. List on 15th April, 2021.

Summary

Issues:
Petition seeking quashing of letters directing bank account freeze, offer of immovable property as security, consideration of proposal by GST Authorities.

Analysis:
The petition sought to quash letters directing freezing of the petitioner company's bank accounts due to serious allegations of fraudulent activity related to Input Tax Credit (ITC). An interim order allowed the petitioner to use overdraft facilities. The petitioner offered immovable property as security to replace the bank accounts' freeze, emphasizing the property's value and marketability. The freezing of accounts severely impacted the petitioner's operations. The GST Department had not entertained the offer, leading to a request for court intervention.

The Senior Standing Counsel for the respondents stated that no proposal had been received from the petitioner. He mentioned that any proposal received would be examined as per the law. The court considered either disposing of the petition with time-bound directions to GST Authorities or hearing arguments if the proposal was rejected. The court directed the petitioner to submit a detailed proposal within 7 days, including all property documents, ensuring the property's value covers the disputed tax amount. The property should be clear of any charges, fully tax compliant, and not in legal disputes. The Revenue was given 45 days to investigate, verify, and communicate its decision on the proposal.

The judgment scheduled the next hearing for April 15, 2021, indicating a timeline for the petitioner to submit the proposal and for the Revenue to assess the offered property. The court's directive aimed to resolve the issue of bank account freeze by replacing it with a secure immovable property, subject to thorough validation by the GST Authorities within a specified timeframe. The judgment balanced the petitioner's need to continue operations with the Revenue's interest in securing the disputed tax amount.