2022 (5) TMI 406 - HC - GST

Restoration / Revocation of cancellation of GST registration - Recovery of GST - Attachment of Bank Accounts and finished goods - whether the department should be asked to inform all the 47 debtors of the writ applicant to start making payment towards the contract so that the amount which the debtors have to pay to the writ applicant can come to the bank accounts. - HELD THAT - Direction issued The department shall at the earliest inform/intimate all the 47 debtors that they should make the necessary payments in accordance with the contracts in favour of the writ applicant and the requisite amount shall be credited to the Current Account maintained by the writ applicant with the respondent No.3 Bank Once the amounts start getting credited in the Current Account of the writ applicant, a requisite amount may be transferred by the respondent No.3- Bank to the Cash Credit Account of the writ applicant to save the account from being declared as NPA. We make it clear that whatever is the liability of the writ applicant towards the respondent No.3- Bank with respect to the Cash Credit Account, may be discharged from the amount that may be transferred. This is a one time arrangement. We direct the department to permit the writ applicant to supply the finished goods lying at the factory premises to the public sector entities such as BHEL, Indian Railways etc.. The department shall also permit the writ applicant to supply the finished goods to the two foreign companies at Sri Lanka and United Kingdom in accordance with the contract. Regarding restoration of registration - HELD THAT - In this regard, we may only say that as the writ applicant has already filed an application for revocation of the cancellation of registration in physical form, as an exceptional case, let this application filed by the writ applicant in physical form be processed and appropriate order be passed. The department may not insist for applying online at the GST common portal as it may create some technical problems

Summary

Issues involved:
1. Arriving at consensus for an interim order.
2. Payment from debtors to the writ applicant.
3. Supply of finished goods under provisional attachment.
4. Utilization of raw materials for manufacturing.
5. Compliance with directions and undertakings.
6. Application for revocation of GST registration.
7. Decision on staff salary and operational expenses.

Analysis:
1. The court heard arguments from both parties and noted a consensus for an interim order to address various issues. The focus was on ensuring payments from debtors to the writ applicant and resolving concerns related to finished goods and raw materials under provisional attachment.

2. The court directed the department to inform all 47 debtors to make payments to the writ applicant, ensuring the amounts are credited to the Current Account maintained with the Bank. Additionally, a portion of the received amounts could be transferred to the Cash Credit Account to prevent it from being declared a Non Performing Asset (NPA).

3. Permission was granted for the supply of finished goods to public sector entities and foreign companies after following legal procedures. The amounts received from these transactions were to be credited to the Current Account with the Bank.

4. The court allowed the utilization of raw materials for manufacturing finished goods to fulfill past contractual obligations towards public sector entities. This step aimed to enable the writ applicant to meet its contractual commitments effectively.

5. Detailed directions and undertakings were issued to ensure compliance with the court's orders, safeguarding the interests of both the Bank and the department. The writ applicant was required to file an undertaking regarding the handling of funds and materials, while the Bank was directed to adhere to specific conditions.

6. Regarding the application for revocation of GST registration, the court permitted the physical form submission to be processed, emphasizing the importance of timely decision-making and allowing payments for essential expenses from the Cash Credit Account.

7. The court set timelines for decision-making on the revocation application, staff salary payments, and debtor intimation. It also addressed the larger issues in the writ application for future hearings, ensuring a comprehensive review of all aspects involved.

This detailed analysis outlines the court's comprehensive approach to resolving the issues at hand and ensuring effective interim measures to protect the interests of all parties involved.