2023 (10) TMI 715 - HC - GST

Provisional attachment of the Petitioner s Bank Account - availment of ineligible input tax credit - no opinion formed on the tangible materials by the Commissioner - HELD THAT - The order dated 6th April 2023 that proceedings have been launched against the Petitioner under Section 67 and Section 74 of the CGST Act so as to determine the tax or any other amount due from the Petitioner. The order records that in the course of investigation it was revealed that the Petitioner had indulged in availment and in passing on ineligible Input Tax Credit (ITC). The order also records that as per the reports received from various CGST Commissionerate, the Petitioner had already availed ineligible ITC of a substantial amount of Rs. 3.21 crores from non-existing/non genuine persons in contravention of Section 16 of the CGST Act and further investigation in this regard is in progress. In so far as the Petitioner's reliance on the decision in M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. 2021 (4) TMI 837 - SUPREME COURT is concerned, there can be no two opinions on the position in law as laid down in the said decision. However, the question would be whether the same would become applicable in the facts and circumstances of the present case. It is also noted that the facts of the case before the Supreme Court were completely in variance to the facts in the present case, in as much as, the appellant therein, as observed by the Supreme Court in para 12 of the said decision, had made a representation and had denied the liability. The appropriate remedy for the Petitioner would be to invoke sub-rule (5) by raising an objection to the orders of attachment in question as the rule itself would permit. Thus, considering such stage of the proceedings, in the facts and circumstances of the case, the discretionary jurisdiction under Article 226 of the Constitution of India not exercised to interfere in the impugned attachment orders. Petition dismissed.

Summary

Issues Involved:
The primary issue in this case is the challenge to the provisional attachment orders passed under Section 83 of the Central Goods and Service Tax Act, 2017 (CGST Act). The Petitioner contests the lack of tangible materials forming the basis of the Commissioner's decision, citing a breach of natural justice principles.

Details of the Judgment:

Issue 1: Challenge to Provisional Attachment Orders
The Petitioner challenged the orders of provisional attachment under Section 83 of the CGST Act, contending that the Commissioner did not base the orders on tangible materials. The Petitioner relied on the decision in M/s. Radha Krishan Industries vs. State of Himachal Pradesh to support the argument that the orders breached natural justice principles.

Issue 2: Examination of Orders
Upon reviewing the orders, it was found that proceedings had been initiated against the Petitioner under Sections 67 and 74 of the CGST Act to ascertain the tax or other amounts due. The investigation revealed the Petitioner's involvement in availing and passing on ineligible Input Tax Credit (ITC) amounting to Rs. 3.21 crores. The Commissioner invoked Section 83 of the CGST Act to provisionally attach the Petitioner's bank account and immovable property.

Issue 3: Legal Provisions
Rule 159 of the CGST Rules, particularly sub-rule (5), allows the person whose property is attached to file an objection, which the Commissioner must consider after affording an opportunity to be heard. The Court emphasized the importance of following the procedural requirements outlined in the rules.

Issue 4: Applicability of Precedent
While acknowledging the legal position established in the M/s. Radha Krishan Industries case, the Court noted that the facts of that case differed significantly from the present case. The Court highlighted that the Petitioner could follow the course of action taken in the precedent case by invoking sub-rule (5) of Rule 159.

Conclusion:
The Court determined that the appropriate course of action for the Petitioner would be to raise objections under sub-rule (5) of Rule 159, as permitted by the rules. Therefore, the Court declined to interfere through its discretionary jurisdiction under Article 226 of the Constitution of India. The petition was rejected, but the Petitioner was allowed to invoke sub-rule (5) within one week from the date of the order for further consideration by the Commissioner.