Case Title | Bhavesh Kiritbhai Kalani vs Union of India |
Court | Gujarat High Court |
Honorable Judges | Justices Sonia Gokani and Justice Vaibhavi D. Nanavati |
Citation | 2021 (4) GSTPanacea 32 HC Gujarat R/SPECIAL CIVIL APPLICATION NO. 16360 of 2020 |
Judgement Date | 19-April-2021 |
Council for Petitioner | Mr. Manan K Paneri |
Council for Respondent | Mr. Devang Vyas |
In favour of | Petitioner |
Section | Sections 62, 63, 64, 67, 73, and 74 of the CGST Act,2017 |
The Gujarat High Court, Ahmedabad bench of Justices Sonia Gokani and Vaibhavi D. Nanavati, has held that, there were no proceedings against the present petitioner under Sections 62, 63, 64, 67, 73 and 74 of the Act, There is no reason therefore, to invoke section 83 against the writ applicant and proceedings.
FACTS OF THE CASE
The facts of the case were that the petitioner herein is the proprietor of the Firm running in the name and style of M/s Global Corporation. The petitioner has a valid GST Registration Certificate under the CGST Act. He came to realize that the Central Bank of India on 20.08.2020 freezed his current account with the Rajkot Main Branch. Without availing any opportunity, he straightway received the attachment order and realized that from the Office of the Principal Commissioner of Central GST, Mumbai, such order of freezing had happened and since then, he has not been allowed to operate the account.
The petitioner approached the respondents through its Manager and requested to let him be provided the necessary details for the reason of defreezing his account. It is his serious grievance that despite his repeated requests, no information was disclosed by the authority concerned as to why the GST authority exercised such powers. He was orally conveyed that because of voluminous transactions with the third party, which is involved in violation of the provisions of the CGST Act, his account has been frizzed.
He moved an application under the Right to The Reply received from the respondent revealed that the information sought for could not be revealed on account of the fact that same would impede the process of investigation. This has resulted into his approaching this Court with a grievance that the action was totally arbitrary and Section 83 does not permit the freezing of the account of the third party for any steps which are needed to be taken against the assesses. The petitioner has urged that the respondents authorities have no powers to proceed against the petitioner as none of the proceedings under Sections 62, 63, 67, 73 or 74 of the Act are pending against him, whose properties are likely to be disposed of in the interest of the government.
According to the respondents, the case has been booked against Sajid Imam Shaikh (M/s. Belluxa Trading Company)(GSTIN 27EXMPS00095G1ZZ) on the ground of procuring bogus invoices and claiming refund of accumulated ITC against those bogus invoices. Upon verification, M/s. Belluxa Trading Company was found to be non-existent. For safeguarding the government revenue, the matter was taken up with the Union Bank of India, where the refund amount of Rs.3,15,52,578/( Rupees Three Crores Fifteen Lakhs Fifty Two Thousand Five Hundred Seventy Eight Only) was received by the company. It is further the say of the respondents that on getting the trail of the money sanctioned as obtained
from Union Bank of India, it was realized that sum of Rs.48,25,000/( Rupees Forty Eight Lakh Twenty Five Thousand Only) out of the total refund claim sanctioned to M/s. Belluxa Trading Company, was transferred to M/s. Global Corporation on the very next day on 28.07.2020 to the Bank Account No.3785569992. Thereafter, Rajkot Branch of Central Bank of India was asked vide communication dated 19.08.2020 to withhold the amount till the investigation reaches to the completion stage.
The show cause notice was also issued on 24.11.2020 under Section 74 of the CGST Act, 2017 and Order in Original dated 11.12.2020 is passed. The same was addressed to M/s. Belluxa Trading Company, and the Speed Post was returned with the endorsement of “insufficient address/not known”. On the email address of Sajid Imam Shaikh, the show cause notice or the order in original could not be served. The fraudulent transactions and the refund of huge sum of amount (Rs.3,15,52,578/), with diversion of substantial portion to the present petitioner of Rs.48,25,000/, the company account has been frizzed. It is further say of the respondents that the entire Bank account No.3785569992 has not been put on a hold but the same has been attached only to the tune of Rs.48,25,000/only. The respondent further stated that this is a gross case of a trading company not existing and by willfully mistaking its proceedings, the facts the huge amount of refunds being taken, out of which the substantial sum of deposit of the refund of about 3.15 crores, sum of 42.25 lakhs have been diverted to the account of the present petitioner. Therefore, as such, the proceedings initiated under Section 79 of the CGST Act, 2017 shall continue against the petitioner.
COURT HELD
The Court took the reference of the case Piyush Shamijibhai Vasoya vs. Union of India where there was also the controversy was in relation to the third party, in whose case the bank account in exercise of the powers under Section 83 of the CGST Act, 2017 had been freezed. It was a question of some actions taken by the authority concerned against few other individuals. The Court having noted that there being no proceedings under sections 62, 63, 64, 67,73 or 74, having been initiated or pending against the writ applicant, held that the powers under Section 83 of the Act could not have been invoked by the respondents for the purpose of provisional attachment. in the instant case also, there are no proceedings against the present petitioner under Sections 62, 63, 64, 67, 73 and 74 of the Act. There is no reason therefore, to invoke section 83 against the writ applicant and proceedings. Since the proceedings are initiated by the authorities in connection with the third parties, invocation of powers under Section 83 are not available with the respondents. Therefore, the order of the provisional attachment in connection with the bank account of M/s. Global Corporation be interfered with. The fact that there are already proceedings initiated under Section 79 against the present petitioner, who is the third party. Against such initiation of proceedings under Section 79 of the Act, no challenge in the present petition is made and a limited prayer is to the actions of initiating proceedings under section 83 and freezing of the account which has already been addressed. We follow the decision of the Division Bench and quash and set aside the provisional attachment, without addressing the issue concerning Section 79 of the Act which the Petitioner wishes to challenge before the appropriate forum.
The attachment is ordered to be lifted and the petitioner is permitted to operate his bank account. The proceedings which have been initiated under Section 79 of the CGST Act, 2017 against the present petitioner shall continue. There is no interference by this Court so far as those proceedings are concerned and we have also chosen not to express any opinion on merits so far as the proceedings under section 79 of the CGVT Act are concerned.
ANALYSIS OF THE JUDGEMENT
By noticing the above order we analyse that as there were no proceedings against the present petitioner under Sections 62, 63, 64, 67, 73 and 74 of the Act, there was no reason therefore, to invoke section 83 against the writ applicant and proceedings. Since the proceedings are initiated by the authorities in connection with the third parties, invocation of powers under Section 83 are not available with the respondents.
Thus, being a drastic power, the authority concerned cannot be oblivious of the serious consequences of provisional attachment of the bank account. The bank ought to have applied its mind and more so when even under the RTI Act, the bank had been requested to furnish the details.
The GST Act also provides that in case of a person to whom the notice has been issued, fails to make the payment in pursuance to thereof of the government despite of the notice, he shall be deemed to be a defaulter in respect of the amount specified in the notice and all the consequences of this Act or the rules made thereunder shall follow.
Download PDF:
For Reference Visit: