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Bindal smelting Pvt Ltd VS Additional Director General

Case title

Bindal smelting Pvt Ltd VS Additional Director General

Court

Punjab and Haryana high court

Honorable Judges

Justice Jaswant Singh

Justice Girish Agnihotri

Citation

2019 (12) GSTPanacea 130 HC Punjab And Haryana

CWP No.31382 of 2019(O&M)

Judgment Date

20-December-2019

The Petitioner, a limited company, has filed an instant petition under Article 226 of the Constitution of India. In this petition, the Petitioner seeks to quash two orders: one dated 10.07.2019 (Annexure P-8) and the other dated 12.09.2019 (Annexure P-10). These orders were issued by the Additional Director General in Gurugram, who is the Respondent in this case. The Respondent exercised the power conferred under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) to provisionally attach the Petitioner’s bank account.

The Petitioner argues that these orders are unjust and seeks their annulment. Additionally, the Petitioner requests that the Respondent be restrained from taking any coercive measures against the Petitioner, its directors, or its employees. The primary contention is that the provisional attachment of the bank account is causing significant hardship and hindering the normal operations of the Petitioner’s business, thus necessitating immediate judicial intervention to ensure relief and protection of their rights under the law.

In this petition under Article 226 of the Constitution of India, the Petitioner, a limited company, seeks the quashing of two orders dated 10.07.2019 (Annexure P-8) and 12.09.2019 (Annexure P-10) issued by the Additional Director General in Gurugram. These orders, made under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), provisionally attach the Petitioner’s bank account. The Petitioner also requests that the Respondent be restrained from taking any coercive actions against the Petitioner, its directors, and employees.

The case background reveals that the Petitioner manufactures lead ingots, red oxide, and grey oxide. On 27.03.2018, officials from the Respondent’s GST Directorate searched the Petitioner’s premises and seized records. The Respondent repeatedly requested various documents from the Petitioner, which the Petitioner provided, except for transporter bilty and weighment slips. The Respondent recorded statements from the Petitioner’s officials and conducted further investigations.

During the investigation, the Respondent found that the Petitioner had purchased scrap batteries from various suppliers, including 16 suppliers who could not be traced. Between July 2017 and March 2018, the Petitioner availed Input Tax Credit (ITC) amounting to Rs. 13.38 Crore based on invoices from these 16 untraceable suppliers.

The Petitioner, a limited company, has filed a petition under Article 226 of the Constitution of India, seeking to quash the orders dated 10.07.2019 (Annexure P-8) and 12.09.2019 (Annexure P-10) issued by the Additional Director General, Gurugram (Respondent). These orders were made under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) and resulted in the provisional attachment of the Petitioner’s bank account. Additionally, the Petitioner requests that the Respondent be restrained from taking any coercive measures against the Petitioner and its directors/employees.

The Petitioner is involved in the manufacture of lead ingots, red oxide, and grey oxide. On 27.03.2018, officials from the Respondent/GST Directorate searched the Petitioner’s premises and seized records. Throughout the investigation, the Petitioner was instructed to provide various documents, which it did, except for transporter bills and weighment slips. The Respondent recorded statements from the Petitioner’s officials and continued the investigation, discovering that the Petitioner had purchased scrap batteries from various suppliers, including 16 who were untraceable. From July 2017 to March 2018, the Petitioner availed Input Tax Credit (ITC) totaling Rs. 13.38 Crore based on invoices from these 16 untraceable suppliers.

Subsequently, on 10.07.2019, the Respondent issued an order (Annexure P-8) provisionally attaching the Petitioner’s Over Cash Credit (OCC) Account with Lakshmi Vilas Bank, Karol Bagh, New Delhi. The Petitioner, invoking Rule 159 of the CGST Rules, 2017, made a representation to the Respondent to lift the attachment. However, the Respondent, via communication dated 23.10.2019, declined this request. Consequently, the Petitioner has filed the current petition to challenge these actions

The Petitioner, a limited company, has filed a petition under Article 226 of the Constitution of India, seeking the quashing of two orders (dated 10.07.2019 and 12.09.2019) issued by the Additional Director General in Gurugram. These orders, passed under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017), provisionally attached the Petitioner’s bank account. The Petitioner also seeks to restrain the Respondent from taking coercive actions against it and its directors/employees.

The Petitioner is engaged in manufacturing lead ingots, red oxide, and grey oxide. On 27.03.2018, officials from the GST Directorate searched the Petitioner’s premises and seized records. Subsequently, the Respondent repeatedly directed the Petitioner to supply various documents, which were provided, except for transporter bilty and weighment slips. The Respondent recorded statements from the Petitioner’s officials and continued its investigation, finding that the Petitioner had purchased scrap batteries from several suppliers, including 16 who were untraceable. Between July 2017 and March 2018, the Petitioner had claimed Input Tax Credit (ITC) amounting to Rs. 13.38 Crore based on invoices from these untraceable suppliers.

On 10.07.2019, the Respondent issued an order provisionally attaching the Petitioner’s Over Cash Credit (OCC) Account with Lakshmi Vilas Bank in Karol Bagh, New Delhi. The Petitioner, invoking Rule 159 of the CGST Rules, 2017, made a representation to the Respondent to lift the bank account attachment. However, the Respondent declined this request on 23.10.2019, leading to the filing of the current petition.

Mr. Bansal, the counsel for the Petitioner, argued that the attached account is an OCC Account with a utilized credit limit of Rs. 6.42 Crore, resulting in a debit balance. He contended that the attachment effectively shuts down the Petitioner’s business, as modern business operations require active bank accounts. He emphasized that Section 83 of the CGST Act, read with Rule 159 of the CGST Rules, 2017, is intended to protect the revenue’s interest and not to force the closure of a business.

The Petitioner, a limited company, has filed a petition under Article 226 of the Constitution of India seeking to quash orders dated 10.07.2019 and 12.09.2019 passed by the Additional Director General in Gurugram. These orders provisionally attached the Petitioner’s bank account under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017). The Petitioner also seeks to restrain the Respondent from taking coercive actions against the Petitioner and its directors/employees.

The Petitioner manufactures lead ingots, red oxide, and grey oxide. On 27.03.2018, GST Directorate officials searched the Petitioner’s premises and seized records. The Petitioner was directed to provide various documents, which they did, but failed to supply transporter bilty and weighment slips. During the investigation, it was found that the Petitioner had purchased scrap batteries from 16 suppliers who were untraceable. Between July 2017 and March 2018, the Petitioner availed Input Tax Credit (ITC) amounting to Rs. 13.38 crore based on invoices from these untraceable suppliers.

The Respondent issued an order on 10.07.2019 provisionally attaching the Petitioner’s Over Cash Credit (OCC) Account with Lakshmi Vilas Bank in Karol Bagh, New Delhi. The Petitioner made a representation under Rule 159 of CGST Rules, 2017, requesting the lifting of the bank account attachment. However, the Respondent declined this request on 23.10.2019, leading to the filing of the instant petition.

Counsel for the Petitioner, Mr. Bansal, argued that the attached account is an OCC Account with a utilized credit limit of Rs. 6.42 crore, resulting in a debit balance. The attachment, therefore, amounts to a business closure, as it is not feasible to operate without a bank account. Section 83 of the CGST Act, read with Rule 159 of CGST Rules, 2017, permits attachment to protect revenue interests, not to close a business. Given the debit balance, there is no question of protecting revenue interests. The Petitioner has availed ITC amounting to Rs. 60.89 crore and paid GST amounting to Rs. 62.45 crore during the GST regime. The company is operational, supporting over 100 families whose livelihoods depend on it. Additionally, no show cause notice has been issued under Section 73 or 74 of the CGST Act, making any demand prior to such notice and its adjudication invalid and beyond the Respondent’s jurisdiction.

 

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