2021 (1) TMI 847 - HC - GST

Validity of notice (DRC-3) for reversal of Input Tax Credit - attachment of Bank accounts of petitioner - seeking return of the original documents seized under Section 67(2) of CGST Act - HELD THAT - This writ petition is dismissed as withdrawn, (i) granting liberty to the petitioner to, on or before 22nd January, 2021 prefer objections under Rule 159(5) supra and directing the Commissioner to dispose of the said objections by an order in writing, on or before 22nd February, 2021; and, (ii) by directing the petitioner to, in response to the summons already issued to the petitioner and mentioned in the short affidavits (two in number) filed by the respondent no.2, along with its objections under Rule 159(5), submit the requisite information/documents, and binding the Managing Director of the petitioner to, appear before the Commissioner in Rule 159(5) proceedings on whatever date is given along with all further information, if any, sought and by clarifying that if the petitioner and/or its Managing Director default, the Commissioner in the order to be passed under Rule 159(5) supra to give particulars thereof along with the dates and directions issued for production of further records/information and communication thereof to the petitioner/its Managing Director. The respondents cannot have any claim to further overdraft, if any, availed of by the petitioner in the overdraft account with the SBI. We thus deem it apposite to, while disposing of this petition as aforesaid, direct that while the ICICI Bank account and the SBI account with monies therein as on the date of attachment shall continue to be attached till further orders in pursuance to the objections to be filed under Rule 159(5) supra, the petitioner shall be entitled to avail of further overdraft in the SBI account and to withdraw and/or disburse by cheques or otherwise the further overdraft amount so availed of by the petitioner.

Summary

Issues:
1. Direction to cancel DRC-03 for reversal of Input Tax Credit
2. Quashing of proceedings under Section 67 of the CGST Act
3. Quashing of attachment order of bank accounts
4. Return of seized documents under Section 67(2)

Analysis:
1. The writ petition sought various reliefs, including the cancellation of DRC-03 for the reversal of Input Tax Credit, quashing of proceedings under Section 67 of the CGST Act, and return of seized documents. The matter was adjourned multiple times to allow for the filing of additional documents and affidavits by both parties.

2. The respondents argued that the petition was not maintainable as an alternate remedy under Rule 159(5) of the CGST Rules was available to the petitioner. The petitioner cited judgments from the High Courts of Gujarat and Bombay to support their case, emphasizing discrepancies in tax payments and Input Tax Credit availed.

3. The Court noted the requirement under Rule 159(5) for objections to be filed within seven days but held that the time limit was directory, not mandatory, based on a previous ruling. The petitioner then sought to withdraw the writ petition without prejudice to their rights, opting to pursue the remedy under Rule 159(5) with a time-bound disposal request.

4. The respondents agreed to dispose of any objections filed by the petitioner within four weeks, subject to the petitioner's cooperation in providing necessary information. The Court dismissed the writ petition as withdrawn, granting liberty to file objections under Rule 159(5) by a specified date and directing the Commissioner to dispose of them promptly.

5. The Court also addressed the attachment of the petitioner's bank accounts, allowing the petitioner to avail further overdraft in one account for day-to-day functioning. It clarified that all contentions remained open to the parties, with remedies available in case of dissatisfaction with the order passed under Rule 159(5).

6. Lastly, the petitioner informed the Court about the reversal of a tax value before the concerned authority, which would be considered in the objections to be filed. The Court ensured that the petitioner's rights were protected throughout the proceedings, with provisions for further actions based on the outcome of the objections filed under Rule 159(5).