Case Title | Kushal Ltd VS Union Of India |
Court | Gujarat High Court |
Honorable Judges | .Justice Harsha Devani Justice Sangeeta K. Vishen |
Citation | 2019 (12) GSTPanacea 132 HC Gujarat R/SPECIAL CIVIL APPLICATION NO. 19533 of 2019 |
Judgment Date | 17-December-2019 |
In the petition under Article 226 of the Indian Constitution, the petitioners are contesting the provisional attachment orders issued on October 18, 2019, under Section 83 of both the Central Goods and Services Tax Act, 2017 (CGST Act) and the Gujarat Goods and Services Tax Act, 2017 (GGST Act). These orders, which are collectively referred to as the “GST Acts,” were used to provisionally attach the petitioners’ bank accounts.
The petitioners argue that these provisional attachment orders were made improperly and seek judicial intervention to overturn them. Specifically, they request a court order directing the respondents to release the provisional attachment on their bank accounts. Furthermore, the petitioners claim that they have not been provided with copies of the provisional attachment orders affecting certain other bank accounts of theirs. They are asking for a directive that ensures the release of these attachments and the provision of relevant copies of the orders, which they assert are necessary to address and rectify the situation.
The petitioners, involved in the manufacture and sale of paper and paper waste since 2000, as well as in trading various commodities, are listed on the Bombay Stock Exchange and are duly registered under the GST Acts. They claim to consistently file their returns and meet their tax obligations under these Acts.
In 2017-18, the petitioners engaged in transactions involving the sale of goods on an “as is where is” basis. These goods were purchased from registered suppliers under the GST Acts, with the applicable taxes paid. Subsequently, the goods were sold to other registered buyers. The petitioners claimed input tax credit for the taxes paid on these purchases, which they then used to offset their output tax liability. The remaining tax balance was paid through their electronic cash ledger.
The petitioners, engaged in the manufacture and sale of paper and paper waste since 2000 and also involved in trading various commodities, are registered under the GST Acts and listed with the Bombay Stock Exchange. They claim to have consistently filed returns and discharged their tax liabilities under these Acts.
In the financial year 2017-18, the petitioners engaged in transactions involving the sale of goods on an “as is where is” basis. The goods were purchased from registered persons under the GST Acts with the appropriate tax paid. These goods were subsequently sold to other registered persons. The petitioners claimed input tax credit for the tax paid on purchases, which was used to offset their output tax liability. The remaining tax was paid through the electronic cash ledger.
On September 27, 2018, the Central Goods and Services Tax Department conducted a search at the petitioners’ premises, initiating an inquiry into their trading transactions. The authorities requested evidence for the purchase and sale transactions. The petitioners explained that since the goods were sold on an “as is where is” basis, there was no physical movement of goods, and hence no evidence of such movement. However, they emphasized that the goods were indeed purchased from registered vendors, who had deposited the tax with the Government, as reflected in Form GSTR-2A on the online portal. Furthermore, the petitioners argued that it was undisputed that they had also deposited the differential tax amount into the Government treasury on the further sale of these goods.
The petitioners, who have been involved in the manufacture and sale of paper and paper waste since 2000 and in trading various commodities, are listed on the Bombay Stock Exchange and are registered under the GST Acts. They assert that they have consistently filed returns and paid taxes as required by the GST laws. In the fiscal year 2017-18, the petitioners engaged in transactions involving the sale of goods on an “as is where is” basis, purchasing these goods from GST-registered suppliers, paying the necessary taxes, and selling them to other registered buyers. They claimed input tax credit for the taxes paid on these purchases, using this credit to offset their output tax liability and paying the remaining tax through their electronic cash ledger.
On September 27, 2018, the Central Goods and Services Tax Department conducted a search at the petitioners’ premises, focusing on their trading activities and demanding evidence for the purchase and sale transactions. The petitioners explained that because the goods were sold on an “as is where is” basis, there was no physical movement of goods to document. However, they emphasized that the goods were acquired from registered vendors who had paid the required taxes, which was reflected in the government records (Form GSTR-2A). The petitioners also noted that they had paid the differential tax amount when reselling these goods.
Despite this, the authorities issued summonses to the second petitioner in October and November 2018, which he complied with, providing statements. On December 17, 2018, the petitioners were asked to submit documents related to the investigation. They responded on January 22, 2019, providing the requested documents and reiterating that there had been no tax evasion. Nonetheless, on April 1, 2019, officials revisited the petitioners’ premises to scrutinize the same transactions. Later that evening, the second petitioner was summoned to the Commissionerate, where he was issued an arrest memo under section 69 of the GST Acts and subsequently arrested.
The petitioners, engaged in the manufacture and sale of paper and paper waste since 2000, also trade in various commodities and are listed on the Bombay Stock Exchange. They are registered under the GST Acts, regularly file returns, and discharge tax liabilities. In 2017-18, they engaged in transactions where goods were sold on an “as is where is” basis. These goods were purchased from registered GST vendors, taxes were paid, and input tax credit was claimed, which was then used to offset output tax liabilities. The differential tax amount was paid through their electronic cash ledger.
On September 27, 2018, the Central Goods and Services Tax Department conducted a search at the petitioners’ premises, inquiring about their trading transactions and demanding evidence for the purchase and sale of goods. The petitioners explained that, since the goods were sold on an “as is where is” basis, there was no movement of goods, but confirmed that they were purchased from registered vendors who had paid the tax, as reflected in Form GSTR-2A. They also confirmed that they had deposited the differential tax amount into the government treasury.
In October and November 2018, the second petitioner received summonses and complied by providing statements. On December 17, 2018, the petitioners were asked to submit documents for investigation, which they provided in January 2019, reiterating that they had not evaded any taxes. However, on April 1, 2019, after further scrutiny by the authorities, the second petitioner was arrested under Section 69 of the GST Acts without prior notice or show-cause notice under Sections 73 or 74 of the GST Acts.
The second petitioner was eventually granted bail under Section 167(2) of the Code of Criminal Procedure, 1973. The petitioners argue that despite no pending proceedings under relevant sections of the GST Acts, their bank accounts were provisionally attached under Section 83 of the GST Acts. They contend that this provisional attachment was without jurisdiction and illegal, prompting them to file the present petition seeking relief.
The petitioners, who have been manufacturing and selling paper and paper waste since 2000 and are involved in trading various commodities, are listed on the Bombay Stock Exchange and are registered under the GST Acts. They claim to have consistently filed returns and fulfilled their tax liabilities as per the GST regulations.
In 2017-18, the petitioners engaged in transactions where they sold goods on an “as is where is” basis, purchasing these goods from registered GST vendors and subsequently selling them to other registered entities. They claimed input tax credit (ITC) on the taxes paid for these purchases, which was then used to offset their output tax liability. The remaining tax was paid through the electronic cash ledger.
On September 27, 2018, the Central Goods and Services Tax Department conducted a search at the petitioners’ premises, investigating their trading activities and requesting evidence of the purchase and sale transactions. The petitioners explained that since the goods were sold “as is where is,” there was no physical movement of goods to document, but they maintained that the goods were bought from registered vendors who had paid the requisite taxes, as reflected in the GST portal’s Form GSTR-2A. They also claimed that they had paid the differential tax when these goods were resold.
Following this, the second petitioner received summonses in October and November 2018, which he attended, and his statements were recorded. On December 17, 2018, a notice was issued demanding documents related to the investigation. The petitioners complied, submitting the required documents and reaffirming that they had not evaded any taxes.
On April 1, 2019, the respondents revisited the petitioners’ premises for further scrutiny of the same transactions. Later that day, the second petitioner was summoned to the Commissionerate, where he was unexpectedly issued an arrest memo under Section 69 of the GST Acts and subsequently arrested. He later secured bail under Section 167(2) of the Code of Criminal Procedure, 1973.
The petitioners contend that following the second petitioner’s arrest, no further notices or show-cause notices under Sections 73 or 74 of the GST Acts were issued. Despite no proceedings being active under Sections 62, 63, 64, 67, 73, or 74 of the GST Acts, the respondents provisionally attached the petitioners’ bank accounts under Section 83 of the GST Acts. The petitioners argue that this attachment was without jurisdiction and illegal, leading them to file the present petition.
The petitioners’ lawyer, Mr. Uchit Sheth, argued that under Section 83 of the GST Acts, pending proceedings under specific sections is a prerequisite for exercising the powers of provisional attachment. He pointed out that although the attachment was claimed to be during proceedings under Section 67, the last search was on April 1, 2019, with no subsequent searches or ongoing proceedings under Section 67. Thus, the provisional attachment of the bank accounts was unjustified.
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