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Gujarat HC in the case of Kushal Ltd. Versus Union of India

Jan 21, 2021 by ConsultEase Administrator in Gujarat High Court 2019

Table of Contents

Case Covered:

Kushal Ltd.

Versus

Union of India

Facts of the Case:

By this petition under Article 226 of the Constitution of India, the petitioners have challenged the provisional attachment orders dated 18.10.2019 passed under section 83 of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter collectively referred to as the “GST Acts”) provisionally attaching the bank accounts of the petitioners. The petitioners seek further direction to the respondents to forthwith release the provisional attachment of other bank accounts of the petitioner’s copies of which have not been served upon the petitioners.

It is the case of the petitioners that they entered into certain transactions of sale of goods on “as is where is” basis in the year 2017-18. The goods were purchased from registered persons under the GST Acts on payment of tax under the GST Acts and they were in turn sold to other registered persons. The input tax credit was claimed of tax paid on purchases which were utilized towards payment of output tax liability and the differential tax amount was paid through an electronic cash ledger.

Observations:

From the facts and contentions noted hereinabove, it emerges that a search came to be conducted under section 67 of the GST Acts on 27.9.2018, whereupon it was discovered that the petitioners had purchased goods and availed input tax credit thereon and had passed on the input tax credit to various buyers by raising GST invoices without there being any actual movement of goods at their end either as recipient or as a supplier. During the course of the investigation, it was found that the petitioners were engaged in the business of trading of paper and electronics and had availed GST on the basis of only invoices and no goods were actually received by them. It appears that according to the respondents, investigation pursuant to the search conducted under section 67 of the GST Acts is still going on, and therefore, according to the respondents, the proceedings under section 67 of the GST Acts are not yet completed.

The Decision of the Court:

As discussed hereinabove, in the absence of pendency of any proceedings under sections 62, 63, 64, 67, 73, or 74 of the GST Acts, the orders of provisional attachment of the bank accounts of the petitioners under section 83 of the GST Acts are without the authority of law and are rendered unsustainable.

For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned orders of provisional attachment dated 18.10.2019 passed under section 83 of the GST Acts are hereby quashed and set aside and the respondents are directed to forthwith release the attachment over the said bank accounts as well as the bank accounts listed at Annexure-B to the petition.