Kaish Impex Private Limited VS Union Of India

In a legal proceeding, the rule was made returnable forthwith, and the respondents waived service, allowing the matter to be taken up for final disposal. The petitioner, Kaish Impex Private Limited, a company incorporated under the Companies Act of 1956 and engaged in exporting perfumes and compound fragrance oil, has challenged the action taken by the authorities under the Central Goods and Services Tax (CGST) in Mumbai. The petitioner is registered under the Goods and Services Tax Act of 2017 and, in the course of its export activities, conducted various transactions with different entities. The issue at hand involves the attachment of the petitioner’s bank account in the State Bank of India by the CGST authorities. The petitioner disputes this action, leading to the current legal challenge.

The case involves a legal challenge by the Petitioner, Kaish Impex Private Limited, against the Central Goods and Service Tax (CGST) authorities in Mumbai. The Petitioner, a company registered under the Goods and Service Tax Act, 2017, and engaged in the export of perfumes and fragrance oils, is contesting the attachment of its bank account at State Bank of India by the authorities.

The issue arose when the CGST authorities conducted an inquiry into M/s. Maps Global, an export firm in Delhi. The authorities suspected that Maps Global was involved in fraudulent activities related to Input Tax Credit (ITC). Specifically, they believed that Maps Global had wrongly utilized ITC for exporting goods and then sought refunds. During their investigation, the authorities discovered transactions involving significant sums of money, including an amount of Rs. 28,50,000/- transferred to M/s. Balajee Enterprises and an additional Rs. 1,63,00,000/- transferred from Balajee Enterprises to the Petitioner.

On October 22, 2019, the Directorate General of GST Intelligence issued a summons to the Petitioner, instructing it to provide evidence and documents related to the inquiry against Maps Global. Simultaneously, the Directorate General communicated with the State Bank of India, informing them about the proceedings and the need for a provisional attachment of the Petitioner’s bank account under section 83 of the CGST Act.

The legal proceedings have been expedited, with the case taken up for final disposal. The Petitioner challenges the legality and appropriateness of the bank account attachment, asserting that it is unjustified based on the allegations against Maps Global.

In this case, the Petitioner, Kaish Impex Private Limited, has challenged the action of the authorities under the Central Goods and Service Tax (CGST) Act, Mumbai, which led to the attachment of the Petitioner’s bank account with the State Bank of India. The Petitioner is a company engaged in the export of perfumes and fragrance oils and is registered under the Goods and Service Tax Act, 2017.

The dispute arose after the authorities began an inquiry into M/s. Maps Global, an export firm in Delhi, suspected of fraudulent activities related to Input Tax Credit (ITC). The authorities scrutinized the bank accounts of M/s. Maps Global and noticed significant transactions involving M/s. Balajee Enterprises and subsequently an amount transferred to the Petitioner’s account. The authorities suspected these transactions to be fictitious and potentially related to fraudulent ITC claims.

On October 22, 2019, the Directorate General of GST Intelligence issued a summons to the Petitioner to provide evidence and documents related to the inquiry. Concurrently, they informed the State Bank of India of the proceedings and ordered a provisional attachment of the Petitioner’s bank account under section 83 of the CGST Act. The bank was directed to prevent any debits from the account.

The Petitioner received notification of this attachment on November 5, 2019, and has since challenged this action in court. The Petitioner argues that the provisional attachment was beyond the authority of section 83 of the CGST Act, as it should only be used in specified circumstances like the pendency of proceedings under various sections of the Act. They assert that no such proceedings were initiated against them and that only a summons under section 70, which is not mentioned in section 83, was issued. Furthermore, they argue that the procedural requirements for provisional attachment under Rule 159(1) of the CGST Rules were not properly followed.

The court has taken the matter up for final disposal, with both sides presenting their arguments.

The petitioner, Kaish Impex Private Limited, challenges the attachment of its bank account by the Central Goods and Services Tax (CGST) authorities in Mumbai. The company, engaged in exporting perfumes and fragrance oils, is registered under the Goods and Services Tax Act, 2017.

The dispute arises from an investigation by the authorities into alleged fraudulent activities by another export firm, M/s. Maps Global, which reportedly involved improper use of Input Tax Credit. During the scrutiny of M/s. Maps Global’s bank transactions, authorities discovered that significant amounts were transferred to M/s. Balajee Enterprises, and subsequently to the petitioner’s bank account. This led the Directorate General of GST Intelligence to issue a summons to the petitioner for evidence and documents related to the inquiry.

On the same day, the Directorate General informed the State Bank of India about the provisional attachment of the petitioner’s account under section 83 of the CGST Act, instructing the bank to freeze the account. The petitioner received notice of this attachment on November 5, 2019, prompting them to file the current petition challenging the legality of the attachment.

In the hearing, the petitioner’s counsel, Ms. Anjali Jha Manish, argued that the attachment was beyond the powers specified under section 83 of the Act, which requires specific conditions to be met, such as ongoing proceedings under certain sections of the Act (62, 63, 64, 67, 73, and 74). Since only a summons under section 70 was issued and no proceedings under the mentioned sections were initiated, the provisional attachment was unjustified. The counsel contended that the attachment should only apply to M/s. Maps Global’s accounts if proceedings were indeed pending against them, and not against the petitioner.

In response, Mr. Pradeep Jetly, representing the respondents, argued that provisional attachment is a tool to safeguard the revenue during ongoing investigations. He claimed that the provisional attachment of the petitioner’s account was justified as the investigation involved tracing funds from M/s. Maps Global to the petitioner. According to him, section 83 allows provisional attachment during the pendency of investigations under section 67 of the Act, which includes summoning other entities related to the inquiry. Hence, he requested that the petition be dismissed.

The court’s consideration will focus on whether the provisional attachment of the petitioner’s bank account was valid under the applicable legal provisions and whether the actions of the authorities were consistent with the procedural requirements.

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