Provisional attachment of a partner's personal property under the GST Act is impermissible as the partner is not a taxable person; the court mandates adherence to CBIC guidelines to ensure rightful attachment.

ORDER

(PER : HONOURABLE MS. JUSTICE SONIA GOKANI)

1. Petitioner is a Limited Liability Partnership (LLP) and is engaged in the business of manufacture and supply of goods like M.S. Billets (i.e. Mild Steel Billets). Petitioner No.2 is one of the partner of the petitioner.

2. Aggrieved by the communication dated 16.07.2022 received from the 3rd respondent, whereby proposal of the petitioner to replace provisionally attached movable property in the form of Fixed Deposits and Current Bank Accounts is rejected on 16.07.2022. Hence, this petition has been preferred.

3. The petitioner as a registered person is liable to pay GST on his taxable supplies by paying the tax in cash, or by utilizing Input Tax Credit (ITC). The tax paid on the input transactions is allowed as ITC under Section 16 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “the CGST Act”) and ITC so allowed on Input transactions can be utilized for discharging the GST liability on the transaction of the outward supplies.

3.1 It is the say of the petitioner that since the inputs in the raw-materials like M.S. scraps utilized by the petitioner are tax paid is been availing the ITC benefits of the taxes paid on the input/materials like M.S. scraps supplied to it by the registered persons under their tax invoices. The GST officers investigated in respect of certain suppliers of materials like M.S. scrap. The inputs that those persons were involved in passing on ITC on tax invoices issued by them without actually supplying tax paid materials under such invoices. It is averred that some of such suppliers who has sold and supplied to the petitioners during the period from May, 2019, the business premises of the petitioner had been searched along with the residences of one of the partners on 19.11.2021.

3.2 On 25.11.2021, the 3rd respondent had provisionally attached various movable and immovable properties of the petitioner as well as his partners by issuing various Forms DRC-22 on the self same date on 25.11.2021.

3.3 Order of provisional attachment was passed. On 27.11.2022, by the respondent No.3 on certain movable properties of the petitioner’s partner for which the Form DRC DRC-22 had been issued.

3.4 The 2nd petitioner was arrested on 30.11.2021, and thereafter, he has been released on bail by an order of the Court on 16.03.2022.

3.5 The petitioner filed objections before the respondent authorities under Rule 159(5) of the Central Goods and Services Tax (CGST) Rules, 2017 (hereinafter referred to as “the CGST Rules”) and made a request in writing to lift the provisional attachment of the properties. Respondent, since did not pay any heed to the same, aggrieved petitioner had preferred the Writ Petition being Special CA No.19216 of 2021, which was disposed of by this Court on 17.12.2021 directing the 3rd respondent to pass the order within 3 days as regards the petitioner’s objections filed under Rule 159(5) of the CGST Rules.

3.6 Pursuant to the said directions, the 3rd respondent passed the order dated 20.12.2021 and rejected the objections.

3.7 The petitioner preferred Special CA No.188 of 2022 before this Court seeking to quash the six provisional attachment orders in Form GST-DRC-22 and also prayed for the directions to bank to allow to use of banking facilities.

3.8 The said petition might be decided by this Court on 27.01.2022 and attachment of stock lying in the factory premises and attachment of the sundry debtors as also the attachment of the immovable properties of the second petition have been quashed and set aside. For other properties, which were attached, the Court declined to interfere while rendering the judgment.

3.9 The petitioner requested the 3rd respondent by a communication dated 28.03.2022 for lifting the provisional attachment of the properties, with an emphasis to allow the use of the FDs and the bank accounts with the