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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, Niral R. Mehta, JJ.
M/s. Shree Dhanlaxmi Metal Industries Through Its Proprietor Kapil Hukmichand Kothari – Petitioner
Versus
The State Of Gujarat & Ors. – Respondent
R/Special Civil Application No. 1084 of 2024
Decided On : 14-06-2024
Provisional Attachment - Goods and Services Tax - Section 83, CGST Act - The court interpreted Section 83 of the CGST Act, emphasizing the necessity of tangible material for provisional attachment to protect government revenue, and ruled that the attachment was justified given the allegations of fraudulent ITC claims.
Fact of the Case:
The petitioner, a sole proprietorship engaged in copper trading, faced provisional attachment of assets due to allegations of bogus billing and fraudulent input tax credit claims. Despite a long-standing reputation and compliance history, the petitioner was accused of benefiting from fictitious transactions.
Finding of the Court:
The court found that the provisional attachment was justified as the petitioner had engaged in fraudulent activities, and the respondent had sufficient grounds to protect government revenue. The court emphasized the need for a balance between revenue protection and the petitioner's ability to conduct business.
Issues: Whether the provisional attachment of the petitioner's movable and immovable properties under Section 83 of the CGST Act was justified given the allegations of fraudulent ITC claims.
Ratio Decidendi: The court held that the exercise of power under Section 83 must be based on tangible material indicating a necessity to protect government revenue, and in this case, the evidence supported the provisional attachment.
Result: The petition was rejected, upholding the provisional attachment of the petitioner's properties.
ORDER :
BHARGAV D. KARIA, J.
1. Heard learned Senior Advocate Mr.Saurabh Soparkar with learned advocate Mr.Hardik V.Vora for the petitioner and learned AGP Ms.Shrunjal Shah for the respondent no.
2. By this petition under Article 226 of the Constitution of India the petitioner has prayed for the following reliefs:
b. A writ of certiorari, or any other appropriate writ, order and/or directions in the nature of certiorari to quash the provisional attachment orders dated 14.09.2023 (Annexure A) and release the attachment over moveable properties including stock lying at the premises, 2 current bank accounts, fixed deposit and all the debtors' balances;
c. A writ of mandamus, or any other appropriate writ, order and/or directions in the nature of mandamus directing the respondent to refrain from resorting to any coercive measure against the petitioner;
(cc) A writ of mandamus, or any other appropriate writ, order and/or directions in the nature of mandamus directing the respondent to forthwith return 2 mobile phones being Apple i-phone 11 Pro Max (512 GB) and Infinixhot 30i (128 GB) seized during course of search;
(cd) Pending the admission, hearing and final disposal of this petition, this Hon'ble Court may direct the Respondent authorities to release the attachment over immoveable properties including factory land, factory building, plant and machineries and 2 residential flats; and release the attachment over moveable properties including stock lying at the premises, 2 current bank accounts, fixed deposit and all the debtors' balancesand return 2 mobile mobile phones being Apple i-phone 11 Pro Max (512 GB) and Infinixhot 30i (128 GB).
d. A writ of mandamus, or any other appropriate writ, order and/or directions in the nature of mandamus to allow protection to petitioner in any further proceedings consequent to search;
e. A writ of Mandamus or writ, order, or direction in the nature of Mandamus directing the respondents to carry out any further Summons through in camera proceedings or proceedings in front of Advocate;
f. Any other and further relief deemed just and proper be granted in the interest of justice;
g. To provide for the cost of this petition.”
3. The brief facts of the case are has under:
3.1. The petitioner, a sole proprietorship firm engaged in the business of trading and processing of copper items, having its principal place of business at Plot nos.1,2,3 Opp. Pipe Factory, Kadodara Bardoli Road, Palsana, Surat-394315 and is registered under CGST Act, 2017 with registration No. 24AEBPK5633A1Z5.
3.2. Since its inception more than 28 years ago, the petitioner has diligently served various customers, consistently delivering quality products and services and over this extensive period, he has garnered an impeccable reputation built on trust, reliability, and unwavering dedication to ethical business practices. The petitioner is a regular tax payer and has diligently fulfilled all the compliances. Turnover of business for Financial Year 2022-23 was Rs.207.54 Crore, for Financial Year 2021-22 was Rs.322.98 crores and for Financial Year 2020-21 was Rs.110.72 crores.
3.3. An information was received by the Respondent no.3 that certain firms which were engaged in bogus billing have generated fake sale invoices to petitioner and fraudulently transferred input tax credit. Based on such information, it was alleged that the petitioner is one of the beneficiaries of fictitious billing activities and a search operation was conducted u/s 67(2) of the CGST Act and GGST Act at the residential premises as well as the business premises from 12.09.2023.
3.4. Various documents and digital data were verified by the officers but no incr
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Provisional attachments under Section 83 of the CGST/SGST Acts cannot extend beyond one year, and fresh orders cannot be issued after this period.
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Provisional attachment orders under Section 83 of the CGST Act cannot extend beyond one year as per the explicit language of the statute, requiring strict interpretation.
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