9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (2) TMI 537 - HC - GSTRejection of proposal of the petitioner to replace provisionally attached movable property in the form of Fixed Deposits and Current Bank Accounts - whether in wake of the earlier order of this Court in Special CA No.188 of 2022 on 27.01.2022, the request of the petitioner to replace the properties should be permitted or not? - HELD THAT - Order of provisional attachment passed under Section 83 of the CGST Act by the respondent authorities on 25.11.2021. The CBIC issued the circular dated 23.02.2021 laying down the guidelines for provisional attachment of the property under Section 83 of the CGST Act. Guidelines No.3.4.6 provides that any movable property including bank account belonging to the taxable person when has been attached, the same can be released when the taxable person offers in lieu of it any other immovable property, if the same is sufficient to protect the interest of the revenue and such immovable property should be of the value not less than the tax amount in dispute. The same should be free from any charges, liens, mortgaged or encumbrance, the property s tax also needs to be fully paid up and the same is not to be involved in any legal dispute. The respondent No.3, having realized that it is only the property belonging to a taxable person that can be provisionally attached under Section 83 of the Act and the partner of an LLP not being a taxable person in the case on hand, thought fit to take the aid of Section 90 and Section 137 resply of the Act for the purpose of provisionally attaching a property owned by the partner of the LLP. Whether Section 90 of the Act has any application to the case on hand? - HELD THAT - What Section 90 of the Act, 2017 conveys is the very same principle as enunciated under Section 25 of the Partnership Act. In future, as and when the liability of the LLP as a taxable person is determined and fixed, such liability would be joint and several liability of all its partners. In the case on hand, the respondent No.3 committed a serious error in invoking Section 90 of the Act for the purpose of provisionally attaching a property owned by a person of the LLP under Section 83 of the Act - Sub-section (84) of Section 2 of the Act, 2017 defines the term person to include an individual, a Hindu Undivided Family, a company, a firm, a limited liability partnership, etc. Therefore, the Act recognizes a firm as a dealer and as a person. The legislature having treated an LLP as a taxable entity, distinct from the individual partners constituting it, it was not open for the respondent No.3 to provisionally attach the immovable property owned by a partner of the firm. This Court, thus, has been very clear that the respondent No.3 was unjustified in provisionally attaching the personal property owned by the partner of the firm under Section 83 of the CGST Act, as she is not a taxable person for being the partner of the firm. The property offered by the petitioner is unencumbered. The property valuation of which, as given by the State, is Rs. 10,48,84,200/- being the market value, whereas, the value of the very property offered in substitution being the plots No.7,8,9,10 and 11 of Revenue Survey No.49/1/ P3, Maruti Park, 150 Ft.Ring Rad, Village-Ronki, Taluka- Dist.Rajkot, as per the Government Approved Valuer Mr. Suresh Mistry is Rs.13,01,92,000/-. There are no reason to disregard the valuation given by the Government Approved Valuer on a higher side in absence of any other material or the reason for rejecting the same. Therefore, we direct respondents No.2 and 3 to substitute the same with the amount of fixed deposit provisionally attached, except the amount of fixed deposit of Rs.2,24,99,844/- lying in the current account. The fixed deposit of Rs.2,24,99,844/- lying in the current account shall continue to be in the provisional attachment. The remaining amount, which has been provisionally attached, shall be immediately released on receiving the copy of this order along with an undertaking on the part of the petitioner and the partner-cum-owner of the property. The provisional attachment made of the amount of Rs.2,24,99,844/- i.e. fixed deposit in the current accounts shall continue to be in the fixed deposit, remaining amount shall be released on receiving the copy of this order and the undertaking on the part of the petitioner - petition allowed in part.
Issues Involved:
1. Provisional attachment of movable and immovable properties. 2. Request to replace provisionally attached properties. 3. Validity of attachment of personal property of a partner. 4. Compliance with CBIC guidelines for property attachment. Issue-Wise Detailed Analysis: 1. Provisional Attachment of Movable and Immovable Properties: The petitioner, an LLP engaged in manufacturing M.S. Billets, faced provisional attachment of various movable and immovable properties by the GST authorities due to alleged wrongful availment of Input Tax Credit (ITC) from fictitious firms, leading to tax evasion. The properties attached included factory premises, machinery, stocks, current accounts, sundry debtors, and personal immovable properties of the partners. The attachment was executed through various Forms DRC-22 issued on 25.11.2021. 2. Request to Replace Provisionally Attached Properties: The petitioner sought to replace the attached movable properties (Fixed Deposits and bank accounts) with immovable properties, specifically land and residential plots. The petitioner argued that the attachment of these movable properties hampered their business operations and proposed the substitution of these assets with unencumbered immovable properties. The petitioner referenced CBIC guidelines dated 23.02.2021, which allow for the release of attached movable properties if an equivalent value of unencumbered immovable property is offered. 3. Validity of Attachment of Personal Property of a Partner: The court had previously quashed the provisional attachment of personal properties of the partners, ruling that only properties belonging to the taxable person (the LLP) could be attached under Section 83 of the CGST Act. The court reiterated that a partner of an LLP is not a taxable person, and therefore, personal properties of partners cannot be provisionally attached. The court emphasized that the liability of the LLP is distinct from that of its partners and that any attachment should be limited to the LLP's assets. 4. Compliance with CBIC Guidelines for Property Attachment: The court examined the compliance with CBIC guidelines, which stipulate that attached movable properties can be released if the taxable person offers unencumbered immovable property of equivalent or greater value. The petitioner offered land and residential plots with clear title and sufficient value to protect the revenue's interest. The court found that the properties offered met the criteria set by the CBIC guidelines, including being free from any subsisting charges, liens, mortgages, or encumbrances, and having fully paid property taxes. Judgment: The court allowed the petition partially, directing the respondents to substitute the attached Fixed Deposits and bank accounts with the offered immovable properties, except for a fixed deposit amount of Rs.2,24,99,844/- which would remain provisionally attached. The court mandated the immediate release of the remaining attached amounts upon receiving a copy of the order and an undertaking from the petitioner and the property owner. The court also ensured that the substituted properties would not be marketed, mortgaged, or involved in future litigation. This judgment underscores the importance of adhering to legal guidelines for property attachment and reinforces the distinct legal identities of LLPs and their partners in the context of tax liabilities.
|
