2021 (3) TMI 242 - HC - GST

Liability of GST - Calculation of the tax amount - value of property is to be taken in which value? - purchase price or circle rate? - whether the properties offered as security are unencumbered and whether the petitioner company, is possessed of the original title deeds pertaining to these properties? HELD THAT - The petitioner-company is directed to file an affidavit, in the very least, in respect of the following aspects, in the course of the day - (i) Whether or not the subject properties are unencumbered and/or free of charge. (ii) Whether the petitioner-company is willing to deposit the original title deeds with the respondents. (iii) The manner in which the petitioner-company proposes to bridge the monetary gap between the value of the properties and the liability towards GST as quantified by the respondents. (iv) The bank particulars and other identification details of the employees of the petitioner-company. List the matter on 5th March, 2021.

Summary

Issues:
1. Valuation of properties offered as security by the petitioner company.
2. Concern regarding encumbrance and possession of original title deeds for the properties.
3. GST liability of the petitioner company, including principal amount and interest.
4. Potential penalty on the petitioner company.
5. Instructions for the petitioner company to bridge the gap between property value and the claimed amount by the respondent.

Analysis:

1. The court noted that the petitioner company offered five immovable properties as security, with varying valuations provided by different sources. The cumulative purchase value as per the respondent was ?9,80,51,000, while the petitioner's valuation ranged from ?10,44,00,000 to ?11,47,30,000 based on circle rates and purchase consideration.

2. Emphasizing the importance of unencumbered properties and possession of original title deeds, the court highlighted the need for clarity on these aspects to ensure the adequacy of the security offered by the petitioner company.

3. The respondent asserted that the GST liability of the petitioner company amounted to ?20.22 crores, comprising a principal amount of ?17.26 crores and interest of ?2.96 crores. Additionally, the possibility of a penalty was mentioned, although no formal notice had been issued.

4. Considering the discrepancy between property value and the claimed GST liability, the court directed the petitioner company to provide specific instructions on bridging this monetary gap. The court required details on the unencumbered nature of the properties, willingness to deposit original title deeds, and a plan to cover the liability towards GST.

5. The petitioner company was instructed to file an affidavit addressing the specified aspects by the given deadline, with a copy to be provided to the respondent. The matter was scheduled for the next hearing on 5th March 2021, with further instructions for document submission under the Court Master's supervision.