2023 (6) TMI 405 - HC - GST

Provisional Attachment of Bank Accounts of petitioner - availment of wrongful input tax credit - violation of principles of natural justice - HELD THAT - The authority has come to a particular conclusion after satisfied itself on the basis of material which has already been produced by the petitioner and found that action is necessitated in the interest of revenue and as such when the decision is taken on 17.06.2022 on the basis of material on record and the information which has been received, the action cannot be said to be either perverse or impermissible in law more particular when the proceedings are already set into motion. The proceedings in the form of show-cause notice of tax ascertained being payable by the petitioner under Section 74 of the Act has already been initiated and for that purpose, on 15.03.2023, a specific notice in form GST DRC-01 is already issued against the petitioner under Rule 142(1) of the Rules and from the summary of the said show-cause notice, it is quite clear that when the statutory function is being undertaken by respondent authority and when there are no allegation of specific mala fides the function of the authority, in view of settled position of law, cannot be usurped by the High Court in exercise of extraordinary equitable jurisdiction when a satisfaction is arrived at by an authority that interest of revenue deserves to be protected hence we are of the clear opinion that in the absence of any material or patent illegality such satisfaction cannot be disturbed or substituted for the sake of substitution and we have satisfied ourselves that background of fact is such where the process cannot be intercepted when it has already commenced. That be so, no case is made out to call for any interference under Article 226 of the Constitution of India. There are few judgements by Hon'ble Apex Court on the issue of exercise of extraordinary jurisdiction as to whether High Court can usurp the discretion of an authority or not - In case of D.N.Jeevaraj versus Chief Secretary, Government of Karnataka and others 2015 (11) TMI 1798 - SUPREME COURT , the Hon'ble Apex Court has propounded on the issue that By taking over the functions of the BDA in this regard, the High Court has given a complete go-bye to the procedural requirements and has mandated a particular course of action to be taken by the BDA. It is quite possible that if the BDA is allowed to exercise its discretion it may not necessarily direct forfeiture of the lease but that was sought to be pre- empted by the direction given by the High Court which, in our opinion, acted beyond its jurisdiction in this regard. When the substantial justice is pitted against technical consideration, the Court would like to give predominance to the substantial justice. Hence, when the authority is out to take a step in the interest of revenue and to protect the same, this Court would not like to exercise its extraordinary jurisdiction in this peculiar background of facts and one additional circumstance which has been brought to the notice by virtue of further affidavit in which the show-cause notice dated 15.03.2023 is already issued along with 16.03.2023 steps which are attached along with further affidavit, there are no reason to entertain the petition in any form and as such the attachment which has been ordered by an authority does not deserve to be interfered with. Yet another decision which has been tried to be relief upon is the decision in the case of Vinodkumar Murlidhar Chechani Proprietor of M/s Chechani Trading Co. 2021 (1) TMI 795 - GUJARAT HIGH COURT in which no doubt the Hon'ble Co-ordinate Bench has propounded the proposition on the issue of exercise of jurisdiction under Section 83 of the Act by the authority but as said earlier that facts on hand are peculiar in nature and it is settled position of law that whenever there is a change of facts even one additional fact may make a world of difference in applying the principles laid down by in any decision. Now coming to the decision which is in the case of Vinodkumar Murlidhar Chechani Proprietor of M/s Chechani Trading Co. 2021 (1) TMI 795 - GUJARAT HIGH COURT it is observed that it is clearly mentioned in middle of paragraph 43 that in the case on hand, we do not propose to interfere with the investigation already undertaken by the department. Ultimately, if sufficient material surfaces indicating the involvement of the writ-applicant in some bogus transaction, the next step in the process can always be a show-cause notice under Section 73 or Section 74 the Act and while taking steps of attachment the grey area which has been indicated by the petitioner the Revenue or the authority concerned needs to apply its mind before the power is sought to be exercised . Now if these observations are taken note of including paragraphs 44 and 47 of the said decision, it is opined that the background of present facts on hand is such where this decision is of no assistance to the petitioner and, in view of the fact that a detailed circumstance which are pointed out by an respondent authority in its affidavit-in-reply as mentioned hereinbefore including the detail show-cause notice and the steps which are taken under Section 74 of the Act, as indicated above, i.e. on 15.03.2023 as well as 16.03.2023, exercising extraordinary equitable jurisdiction is refrained. On being conscious about the well defined proposition on exercise of extraordinary jurisdiction propounded by catena of decisions hence keeping the same in mind, the satisfaction which has been arrived at while initiating step against the petitioner, is not diluted/substituted. This is not a fit case in which we may exercise our extraordinary jurisdiction. Accordingly, petition being meritless deserves to be dismissed. Petition dismissed.

Summary

Issues Involved:
1. Legality of provisional attachment under Section 83 of the CGST Act, 2017.
2. Compliance with principles of natural justice.
3. Jurisdiction and authority to initiate proceedings under Section 83.
4. Exercise of extraordinary jurisdiction by the High Court.

Summary:

1. Legality of Provisional Attachment:
The petitioner challenged the provisional attachment of multiple bank accounts under Section 83 of the Gujarat Goods and Services Tax Act, 2017, arguing that the attachment was made without proper application of mind and without any pending proceedings under the Act. The petitioner contended that the attachment was cryptic, based on assumptions, and that no assessment or demand notice was issued as required under the Act.

2. Compliance with Principles of Natural Justice:
The petitioner argued that the attachment was made in conflict with the principles of natural justice, as it was done without providing an opportunity to be heard. The petitioner claimed that the attachment of the Cash Credit Account adversely affected its business activities.

3. Jurisdiction and Authority:
The respondents contended that the attachment was necessary to safeguard the interest of revenue and was done after the petitioner was found to have claimed wrongful input tax credit (ITC). They argued that the amendment to Section 83 of the CGST Act allows for such attachments even during pending proceedings under Section 70. The respondents maintained that the attachment was based on a satisfactory note prepared from the material provided by the petitioner.

4. Exercise of Extraordinary Jurisdiction:
The Court emphasized that it should not usurp the discretion of the statutory authority unless there is a clear case of mala fides or bias. The Court noted that the authority had initiated steps to protect the interest of revenue and that the petitioner had not provided any material evidence to counter the authority's findings. The Court also highlighted that the petitioner had already received partial relief when the attachment over one of the accounts was lifted.

Conclusion:
The Court found no merit in the petitioner's arguments and held that the provisional attachment was lawful and necessary to protect the interest of revenue. The Court dismissed the petition, stating that there was no case for interference under Article 226 of the Constitution of India, especially in the absence of any allegations of mala fides or bias against the authority. The Court also noted that the petitioner had not filed any affidavit-in-rejoinder to counter the respondents' claims.