Kaushal Ltd VS Union Of India

This petition, filed under Article 226 of the Constitution of India, seeks to challenge the provisional decision made by the relevant authority. The petitioners argue that the provisional order or action taken against them is in violation of their constitutional rights or legal provisions. They request the court to review and potentially overturn the provisional decision, providing relief based on their claims that the decision was unjust or improperly made.

In this petition filed under Article 226 of the Constitution of India, the petitioners challenge provisional attachment orders issued on 18.10.2019 under Section 83 of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017, which provisionally attached their bank accounts. They request a direction for the immediate release of the provisional attachment on additional bank accounts for which copies of the orders have not been served. The petitioners have been involved in manufacturing and selling paper and paper waste since 2000 and trading various commodities, and are listed on the Bombay Stock Exchange and registered under the GST Acts. They claim to comply with GST requirements by filing returns and paying taxes. Their transactions include selling goods on an “as is where is” basis in the 2017-18 period, purchasing from registered entities with GST compliance, and using input tax credit for offsetting output tax liability, with any differential tax paid through an electronic cash ledger. On 27.9.2018, the Central Goods and Services Tax Department conducted a search at their premises, inquiring into their trading transactions and demanding evidence for purchases and sales.

Through this petition filed under Article 226 of the Indian Constitution, the petitioners have contested provisional attachment orders dated October 18, 2019, made under Section 83 of the Central Goods and Services Tax Act, 2017, and Gujarat Goods and Services Tax Act, 2017, which provisionally attached their bank accounts. The petitioners are requesting that the court direct the respondents to immediately release the provisional attachment on other bank accounts for which they have not received copies of the attachment orders.

The petitioners are engaged in the manufacturing and selling of paper and paper waste since 2000 and also trade various commodities. They are listed with the Bombay Stock Exchange and are registered under the GST Acts, filing returns and fulfilling tax liabilities as required.

The petitioners assert that in the fiscal year 2017-18, they engaged in sales transactions on an “as is where is” basis, having purchased goods from registered entities under GST, paid the applicable tax, and subsequently sold these goods to other registered entities. They claimed input tax credit on their purchases, utilized it for offsetting output tax liability, and paid any differential tax amount through their electronic cash ledger.

On September 27, 2018, the Central Goods and Services Tax Department conducted a search at the petitioners’ premises, seeking evidence regarding their trading transactions. The petitioners explained that since the sales were on an “as is where is” basis, there was no evidence of goods movement, although the goods were purchased from registered vendors. The vendors had deposited the tax amount into the Government treasury, as reflected in Form GSTR-2A online. The petitioners also deposited any differential tax amounts owed for further supply of the goods.

Following this, the second petitioner received summonses in October and November 2018, attended them, and had his statement recorded. A notice dated December 17, 2018, requested additional documents related to the investigation, which the petitioners provided in a response dated January 22, 2019, asserting no GST tax evasion on their part. The respondents visited again on April 1, 2019, for further scrutiny, and subsequently, the second petitioner was arrested under Section 69 of the GST Acts. He was later granted bail under Section 167(2) of the Code of Criminal Procedure, 1973.

This petition, filed under Article 226 of the Constitution of India, challenges provisional attachment orders dated 18.10.2019 issued under Section 83 of the Central Goods and Services Tax Act, 2017, and the Gujarat Goods and Services Tax Act, 2017, which attached the petitioners’ bank accounts. The petitioners seek an order directing the respondents to release the provisional attachment of other bank accounts for which they have not been provided copies.

The petitioners, who have been engaged in paper and paper waste manufacturing and trading since 2000 and are listed on the Bombay Stock Exchange, are duly registered under the GST Acts and claim to have complied with their tax obligations. They entered into sales transactions on an “as is where is” basis in 2017-18, purchasing goods from registered entities and selling them to other registered entities, with input tax credit claimed and used appropriately.

On 27.9.2018, the Central Goods and Services Tax Department conducted a search at the petitioners’ premises, inquiring about their trading transactions and demanding evidence. The petitioners explained that the goods were sold on an “as is where is” basis, and there was no movement of goods evidence, though the tax payments were properly recorded. The vendors had deposited taxes, and the petitioners had also paid any differential tax amounts.

Summonses were issued to the second petitioner in October and November 2018, and a notice was issued on 17.12.2018 requesting documents related to the investigation. The petitioners responded with the required documents and reiterated that there was no tax evasion. The respondents visited again on 1.4.2019 for further scrutiny, and the second petitioner was arrested that evening under Section 69 of the GST Acts. The second petitioner was later granted bail under Section 167(2) of the Code of Criminal Procedure, 1973.

The petitioners argue that no show-cause notice or proceedings under Sections 62, 63, 64, 67, 73, or 74 of the GST Acts were initiated against them, making the provisional attachment of their bank accounts illegal and without jurisdiction. They assert that under Section 83 of the GST Acts, such attachment requires pending proceedings, which were not the case here. They point out that no search was conducted after 1.4.2019, nor were proceedings under Section 67 ongoing, rendering the attachment orders unlawful.

Download PDF:

For Reference Visit:

Read Another Case Law:

GST Case Law: