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TMI Blog2025 (2) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... and interest comes to Rs.12,33,58,313/-. Considering the record which is available for perusal before us, it is prima facie apparent that the petitioner has indulged into fraudulent activity which requires the exercise of powers conferred under section 83 of the Act for provisional attachment which was made by the respondent on the date of search on 17.10.2023. Therefore, the question now paused before this Court is whether on completion of one year from the date of the provisional attachment on 17.10.2023 of the bank account of the petitioner, the respondent could have renewed the provisional attachment by the impugned order dated 13.11.2024 so far as the bank account of ICICI Bank is concerned and other three bank accounts on 18.12.2024 or not. In the facts of the case, therefore, reliance placed by the petitioner in the case of RHC Global Exports Private Limited [2024 (9) TMI 1544 - SC ORDER] would be no avail as the respondent has applied its mind for the provisional attachment of the bank accounts after recording the satisfaction and after issuance of the intimation in Form DRC 01A. Therefore, only on that ground that the orders are for renewal of provisional attachment, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D HONOURABLE MR. JUSTICE D.N.RAY Appearance: For the Petitioner(s) No. 1: Mr Ashutosh S Dave (8865). For the Respondent(s) No. 1: Ms Shrunjal Shah, Assistant Government Pleader. ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) 1. Learned advocates for the parties were heard exhaustively on 24.01.2025. As the Court was not inclined to interfere with the matter, time was sought by the learned advocate for the petitioner to take instructions and therefore, the matter was adjourned to today. 2. When the matter was taken up for hearing, learned advocate for the petitioner submitted that he has instruction to invite an order on merits. Thereafter, the petition was re-argued and both parties were heard exhaustively. 3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs: "8A. Direct the Respondent to issue revocation orders concerning all the attachment orders passed on 17.10.2023 and 26.10.2023 respectively under section 83 of the Act in form GST DRC 22 and communicate the same forthwith to the bankers of the Petitioner i.e. ICICI Bank (Ashram Road Branch), Kotak Mahindra Bank (Relief Road Branch), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orcement, Division-5, Vadodara, who initiated the search proceedings. The petitioner, by reply dated 02.11.2023, requested for release of the bank accounts which were provisionally attached by the respondent authority by attachment orders dated 17.10.2023 and 26.10.2023 along with other immovable properties of the petitioner, after recording the grounds for subjective satisfaction on the basis of the investigation and the modus operandi of the petitioner which is described in detail as under: "Background: * The dealer mentioned above is a registered taxpayer (herein after referred as "the taxpayer" for the sake of brevity) with GSTIN mentioned above under Gujarat Goods & Service Tax Act, 2017 (herein after referred as "the act" for the sake of brevity). The taxpayer is mainly associated with the mobile phones market. In the mobile phone sector, there are limited well-known brands like Apple, Samsung, Oppo, One-Plus, Vivo, Xiaomi, Poco, etc. These are global giants whose mobile products reach to its ultimate consumers by routing through authorized dealers, wholesalers, retailers, etc. So ideally, there has to be a seamless flow of transactions along with leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks from government treasury in the form of refund by converting bogus Input Tax Credit accumulated majorly from Stage-C dealers and also in some cases from Stage-A & B dealers, by showing exports of high-end mobile products like i-Phone. The Input Tax Credit claimed by these dealers is in the contravention of the provisions of Section-16 of the act. * Based on the above facts, the search & seizure activity under section 67 (2) of the GGST Act, 2017 were conducted on 17.10.2023 at many premises of the taxpayer including principal place of business. The scam is so complex and huge. The investigation is still ongoing at multiple places across the whole state. Based on the current status, more than 200 places are being under scrutiny for search and seizure activity. This figure is bound to observe an upsurge as the investigation progresses. Many digital devices are being checked and forensic procedures thereof are in motion. As per the primary investigation, the quantum of the suspicious bogus GST refund scam let alone in state of Gujarat is approximately Rs. 360 Crores. * During the initial investigation, at the principal place of business and at the stage of pre-investigation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia vide Form DRC-22 dated 17.10.2023." 4.5 The petitioner also raised objection with regard to the attachment of the residential property situated at B/10, Neminathkrupa Society, Memnagar, Subhash Chowk, Ahmedabad. 4.6 It appears that on completion of one year from 17.10.2023 the date of provisional attachment made by the respondent authority, the petitioner made an application dated 28.10.2024 to pass an appropriate order intimating the bank that the provisional attachment order has ceased to operate as per section 83 (2) of the GST Act as the period of one year was completed on 17.10.2024 and therefore, the provisional attachment order has to be lifted on the said date in absence of any further renewal. 4.7 The petitioner also preferred Special Civil Application No. 15725 of 2024 before this Court challenging the orders of provisional attachment dated 17.10.2023 and 26.10.2023 which was disposed of by order dated 18.11.2024, which reads as under: "1. Learned advocate Mr. Ashutosh Dave submitted that he has instructions to appear on behalf of the petitioner and seeks permission to file his appearance. Permission is granted. 2. By this petition, the petitioner has prayed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k accounts on the same date, i.e. on 18.12.2024. The petitioner has sought amendment of this petition by placing on record first amendment application filed being Civil Application (For Amendment) No.1 of 2024 to place on record the provisional attachment order dated 13.11.2024 which was communicated to the banker of the petitioner on 04.12.2024 and thereafter Civil Application (For Amendment) No.2 of 2024 to place on record the provisional attachment order and the subjective satisfaction note dated 18.12.2024. Both amendments were allowed by orders dated 12.12.2024 and 03.01.2025 respectively. 4.11 Learned advocate Mr. Ashutosh S. Dave has filed today written submissions on behalf of the petitioner, which read as under: "1. The Petitioner in essence has impugned the renewal of the attachment orders passed by the Respondent under section 83 of the Gujarat Goods and Services Tax Act, 2017 (for short "the Act") without putting any justification on the satisfaction note which was issued on 18.11.2024. 2. As against the satisfaction note which was issued on 17.10.2023, the Petitioner had filed its objections under rule 159 of the Gujarat Goods and Services Tax Rules, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparison of two satisfaction notes dated 17.10.2023 Re: Page no. 89-93] and 18.12.2024 [Re: Page no. 62D-62G] it becomes apparently clear that the later satisfaction note does not refer to any steps having being taken from 17.10.2023 to 16.10.2024. The later satisfaction note will reveal that it is nothing but a reproduction of the earlier satisfaction note with some cosmetic changes incorporated therein. Besides, this Hon'ble Court in the case of Mahakali Enterprises v. Union of India [Re: Page no. 61-62] has held that after expiry of one year from the date of attachment, the Commissioner must order releasing of the bank account. Here is the case that the attachment order ceased to have effect on 16.10.2024 and the attachment remained in force till 13.11.2024 i.e. post the expiry of the statutory period as contemplated under section 83 (2) of the Act. 7. In the case of Radha Krishan Industries (supra), the Hon'ble Supreme Court has inter alia held that that the formation of the opinion must be based on tangible material which indicates a live link to the necessity to order a provisional attachment to protect the interest of the government revenue. Under sub-rule (5) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no territorial jurisdiction to issue the provisional attachment order or renewal thereof, under section 83 of the GST Act. Reliance was placed on the order dated 15.01.2018, as corrected by corrigendum dated 17.08.2018, whereby specification of the proper officer under the GST Act was issued. It was submitted that the function of provisional attachment to protect the revenue in certain cases under section 83 of the GST Act can be exercised by the Deputy Commissioner, Assistant Commissioner or State Sales Tax Officer only within their jurisdiction unless specific jurisdiction mentioned there against. It was, therefore, submitted that as the petitioner is situated at Ahmedabad, the respondent could not have assumed the jurisdiction as the petitioner is not within the jurisdiction of the respondent. 4.13 It was submitted that the entire exercise of the provisional attachment, right from day one, is without jurisdiction, as the challenge made by the petitioner to the first provisional attachment order dated 17.10.2023 could not be decided within one year. The petitioner has raised this contention as the same authority has passed the order of renewal of provisional attachment. 4.14 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change of circumstances or no progress is being done by the respondent between 17.10.2023 and 13.11.2024 / 18.12.2024 so as to renew the provisional attachment upon the bank accounts of the petitioner, as held by the Hon'ble Apex Court, the renewal of provisional attachment is without jurisdiction liable to be quashed and set aside contrary to the provisions of section 83 of the GST Act. 5.3 Learned advocate Mr. Dave referred to and relied upon the decision of the Hon'ble Apex Court in the case of RHC Global Exports (P) Ltd. (supra), wherein in the facts of the said case, the Hon'ble Apex Court ordered to lift the attachment of the third bank account which was found to be without authority of law as there cannot be a renewal of the provisional attachment after the period of one year from the date of the first provisional attachment of the order was passed. 5.4 It was submitted that the attachment of the bank account with YES Bank of the petitioner was attached under section 45 of the Gujarat Value Added Tax Act by order dated 17.10.2023 and the same could not have been renewed by the respondent by passing order under section 83 of the GST Act on 18.12.2024. It was submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hones in cash to customer without raising relevant or required invoices which shows unaccounted sales and from this cash, petitioner purchases mobile phones of the companies such as Apple, Samsung, etc. from the agents/broker who purchase from various market offers and URD's which in turn shows unaccounted purchase by the Petitioner. Petitioner again sale these unaccounted purchased phone to authorized dealer and issues B2b invoices in outward supply side. Petitioner pays the liability in outward supply by utilizing ITC accumulated in inward side by way of purchase of aforementioned cheaper phones such as vivo oppo etc.(hereinafter cheaper phones). Here, petitioner is involved in business of trading in mobile phones, but after verifying invoices of purchase and sales, it is found that there is huge purchase of cheaper phones but same number of mobile phones do not show on the sell side by matching of stocks and invoices rather there were sale record of mobile phones of companies such as apple, Samsung etc. (hereinafter high-end phones). However, the cheaper phones which has been found on the inward side but the same has not been found on the outward side and neither stock nor c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the financial year 2021-22. It was submitted that the petitioner is having no means to meet with such estimated tax liability which was found out after investigation. It was submitted that as per satisfaction note dated 18.12.2024, the total estimated liability for the period from 2021 to 2023-24 works out to Rs.18,97,59,041/-. It was submitted that in the facts of the case, the provisional attachment of the bank account was justified so as to protect the interest of revenue. 6.2 It was submitted that the respondent on the basis of the authorization from the Additional Commissioner of State Tax (2), Enforcement, State of Gujarat at Ahmedabad issued the attachment order on 16.10.2023 under section 39 (1) of the GST Act assumed the jurisdiction to carry out search and thereafter on conduct of the search, satisfaction note was recorded for provisional attachment of the bank accounts of the petitioner on 17.10.2023. 6.3 It was submitted that the respondent is having the jurisdiction to conduct the search and further assessment proceedings as per the circular dated 05.10.2018 providing clarification on ambiguity regarding initiation of enforcement action by the Central tax office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s entitled to use the bank account as the order of provisional attachment passed by the department could not be said to be in force or operation as it outlived its statutory life of one year, it was submitted that the respondent has recorded the fresh satisfaction after 17.10.2024 for renewal of the provisional attachment which was already made on 17.10.2023, however, such satisfaction note, so far the ICICI Bank is concerned, was recorded on 13.11.2024 which was shown to the Court from the original file and for the remaining bank accounts on 18.12.2024. It was submitted that though the orders of provisional attachment dated 13.11.2024 and 18.12.2024 state that the same are renewal of provisional attachment, but in fact they are fresh provisional attachment orders passed in view of the intimation issued in Form GST DRC 01A dated 04.12.2024. It was submitted that the decision relied upon by learned advocate for the petitioner would not be applicable in the facts of the case when it is prima facie found by the respondent that the petitioner is being engaged in the modus operandi to defraud the revenue and there is a bogus GST refund scam in the State of Gujarat alone, to the tune of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which prima facie reveals that the petitioner was involved in the scam which was complex and huge and investigation was going on at multiple places across the whole State and more than 200 places were being under scrutiny for search and seizure activity and many digital devices were being checked and forensic procedure were placed into motion and quantum of suspicious bogus GST refund claim of which the place of the petitioner was one of the 200 places where search was conducted, was estimated to the tune of Rs.360 crore. From the satisfaction note dated 18.12.2024 which was recorded after one year from the date of initiation of investigation, it is also found that the petitioner has been found to be liable to pay tax, penalty and interest for the period from 2021 to 2023-24 for Rs.18.97 crore. On perusal of the statement of the petitioner recorded on 21.10.2023 which is recorded pursuant to the summons issued under section 70 of the GST Act and placed on record, it clearly shows the admission on the part of the petitioner that the petitioner has indulged into the fraudulent activity of issuance of the bogus bills as well as availing the input tax credit which shows the prima faci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he satisfaction note dated 18.12.2024 for provisional attachment of the bank accounts of the petitioner. 11. So far as the contention of the petitioner that only one day time was given for the petitioner to comply with the notice dated 18.12.2024 to raise the objections before 19.12.2024, is concerned, the petitioner had already raised an objection as per Rule 159 to the provisional attachment dated 17.10.2023. It is true that the respondent has not even disposed of the objection raised by the petitioner till the expiry of one year from the date of provisional attachment nor the respondent has dealt with the objections and as the order was passed by the respondent, the petitioner did not raise any objection as such order was passed during the pendency of this petition. 12. In the facts of the case, therefore, reliance placed by the petitioner in the case of RHC Global Exports Private Limited (supra) would be no avail as the respondent has applied its mind for the provisional attachment of the bank accounts after recording the satisfaction and after issuance of the intimation in Form DRC 01A. Therefore, only on that ground that the orders are for renewal of provisional attachment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bogus bills and availing ITC on the basis of such bills, whereas in the facts of the case in M/s. Radha Krishan Industries, the appellant before the Hon'ble Apex Court was the person who has received the bogus invoice along with the goods, whreas it is found in the present case that the petitioner has sold the goods of higher value without invoice and has availed ITC on the goods which were of lower value as stated in the modus operandi. 14. In view of the foregoing reasons and considering the facts of the present case, it cannot be said that the respondent has committed breach of provision of section 83 of the GST Act which is intended to safeguard the interest of the revenue which cannot be said to any harassment to the petitioner as tried to be demonstrated. In the facts of the case, therefore, the issuance of the impugned orders for provisional attachment over the bank accounts are not required to be interfered with as the petitioner appears to have indulged in the transaction of the fraudulent invoices resulting into loss of revenue by utilizing the ITC of more than Rs. 18.97 crore. 15. In such circumstances, no interference is called for in the impugned orders of provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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