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TMI Blog2023 (2) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urabh S Rachchh (11364) For the Respondent(s) No. 1,3 : Ms Pooja Ashar, AGP For the Respondent(s) No. 2 : Notice Served By DS ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. Petitioner is a Limited Liability Partnership (LLP) and is engaged in the business of manufacture and supply of goods like M.S. Billets (i.e. Mild Steel Billets). Petitioner No.2 is one of the partner of the petitioner. 2. Aggrieved by the communication dated 16.07.2022 received from the 3rd respondent, whereby proposal of the petitioner to replace provisionally attached movable property in the form of Fixed Deposits and Current Bank Accounts is rejected on 16.07.2022. Hence, this petition has been preferred. 3. The petitioner as a registered person is liable to pay GST on his taxable supplies by paying the tax in cash, or by utilizing Input Tax Credit (ITC). The tax paid on the input transactions is allowed as ITC under Section 16 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act ) and ITC so allowed on Input transactions can be utilized for discharging the GST liability on the transaction of the outward supplies. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying in the factory premises and attachment of the sundry debtors as also the attachment of the immovable properties of the second petition have been quashed and set aside. For other properties, which were attached, the Court declined to interfere while rendering the judgment. 3.9 The petitioner requested the 3rd respondent by a communication dated 28.03.2022 for lifting the provisional attachment of the properties, with an emphasis to allow the use of the FDs and the bank accounts with the Banks. It also referred to the guidelines issued by the Central Board of Indirect Taxes and Customs (CBIC) vide circular dated 23.02.2021 in support of the request for lifting the attachment of the properties since that hampered the normal business activities of the petitioner. No reply was given by the respondent authorities although the petitioner s representatives that consistently pursued the matter. Petitioner s financial conditions is going from bad to worse; once again requested the 3rd respondent in writing vide application dated 21.04.2022 and requested the authority concerned to lift the provisional attachment of the FDs and the current accounts of the bank. The said been also forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given on the lease to the petitioner. Again, it is mortgaged to the Kalupur Commercial Cooperative Bank, hence, it is not on the line of the guidelines issued by the CBIC and the Government of Gujarat. 3.12 The respondent s attention was drawn to the content of the letter dated 24.06.2022 especially that certain plots were under mortgaged on paper only and other plots were not mortgaged and that it offered the free hold residential vacant land ad-measuring 1942.30 Sq. Mtrs. valued at Rs.12,78,03,000/- and the GIDC land are allotted on long lease for 99 years. The same are easily transferable to the third party registered under the Transfer of Property Act, 1882 and the stamp duty is also paid. Moreover, the GIDC plots are easily transferable and are sold and bought in the market. The bank also grants loan against the mortgaged on such plots. Aggrieved by this entire rejection, the petitioner is before this Court seeking following reliefs: (A) That Your Lordships may be pleased to issue a Writ of Mandamus, or any other appropriate writ, order or direction, directing Respondent Nos. 3 and 2 herein to allow the Petitioners to make use of funds lying by way of Fixed Deposits an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Input Tax Credit through purchases made from bogus and fictitious firm and consequential sale of the same by the petitioner firm, which ultimately according to the respondent, has resulted into the evasion of the payment of tax. This evasion is to the tune of Rs.68,91,70,543/- (Rs. Sixty Eight Crores Ninety One Lacs Seventy Thousand Five Hundred Forty Three only). 4.1 The provisional attachment of this properties were subject matter of litigation before this Court in Special CA No.188 of 2022. Where the Court on 27.01.2022, quashed the provisional attachment Orders with regard to the attachment of immovable property of petitioner No.1 observing therein that the other properties of the petitioner firm shall remain under provisional attachment in accordance with law. 4.2 The petitioner firm addressed two communications on 28.03.2021 and 21.04.2022 on the Office of the respondent, where the firm had shown its inclination to have the provisional attachment of the 3 Current Accounts and 24 Fixed Deposits maintained by it in the various banks to be lifted. It approached this Court by way of Special CA No.10659 of 2022 where the Court directed the authorities to decide the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute. The taxable person must produce the original title deeds and other necessary information relating to the property, for the satisfaction of the concerned officer. In the present case, the Petitioner has proposed to offer the land which is already in the ownership of Gujarat Industrial Development Corporation and the same has been leased to the Petitioner Firm. Therefore, the proposal of the Petitioner to have the land bearing Plot No. 702+717, 718 and 719 be provisionally lifted in-lieu of its Fixed Deposits and Current Accounts would be in violation of the Guidelines No. 3.4.6 of the circular issued by the Central Board of Indirect Taxes and Customs. v. The Petitioner Firm has proposed to have its residential Plot situated at Rev. Sr. No. 49/IP/3, Plot No. 7,8,9,10 11, Maruti Park , Nr. 150 Ft. Ring Road, Opp. H.P. Petrol Pump, Ronki, Dist- Rajkot- 360003 be attached as a security in-lieu of its Fixed Deposits and Current Accounts maintained with the various other Banks. The afore-mentioned proposal cannot be accepted as the residential Plot is of the personal ownership of the Petitioner No. 1 and the same cannot be attached as per the judgment dated 27. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to 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? And this is a request on the part of the petitioner to facilitate him to use the funds lying in the Fixed Deposits and Current Accounts attached by the respondent authority on 25.11.2021. 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 leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as a going concern, the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession. (4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal. Explanation . For the purposes of this section, (i) the expression aggregate turnover shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals; (ii) the supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker; (iii) the expression speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety registered under any law relating to cooperative societies; (j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act, 1860; (m) trust; and (n) every artificial juridical person, not falling within any of the above; 22 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. 23 The moot question is whether Section 90 of the Act has any application to the case on hand. 24 Section 90 of the Act is nothing, but the very same principle of law, as enunciated under Section 25 of the Partnership Act. Section 25 of the Partnership Act reads thus: 25. Liability of a partner for acts of the firm.- Every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 137 of the Act has absolutely no application. Section 137 is a provision which fixes the vicarious liability of the partners in the event any offence is committed by a firm. 29 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. 30 In the aforesaid context, a reference is made of the decision of the Supreme Court in the case of Kapurchand Shrimal vs. Tax Recovery Officer, Hyderabad and others [AIR 1969 SC 682] wherein the Supreme Court has held as under: 5. The scheme of the Income-tax Act, 1961, is to treat the assessee failing to pay the tax due within the period prescribed a defaulter. The Income-tax Officer may, where the assessee is found to be in default, issue a certificate for recovery and forward it to the Tax Recovery Officer specifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 be deemed to be the assessee when the assessment is made against the Hindu undivided family and certificate for recovery is issued against the family. 31 Having regard to the principle enunciated in the above decision as well as in the light of the above discussion, this Court is of the view that the respondent No.3 was wholly unjustified in provisionally attaching a personal property owned by a partner of the firm under Section 83 of the Act, 2017. 8. 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. 9. We noticed from the guideline issued by the Central Board of Indirect Taxes and Customs (CBIC) dated 23.02.2021 that the movable property, when is attached, the taxable person can offer in lieu of such movable property, any other immovable property which is sufficient to protect the interest of the revenue. It is one thing for the Court to hold that there is a fetter on the powers of the officer concerned in attaching the properties which is not of the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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