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2023 (5) TMI 849 - DELHI HIGH COURTProvisional attachment of petitioner's Bank Accounts - fraudulent transfer of Input Tax Credit (ITC) - it was alleged that the petitioner company was created as a dummy company of M/s Best Crop Science Pvt. Ltd. for availing ITC by fraudulent means - HELD THAT:- It is relevant to note that the opening sentence of Section 122(1) of the CGST Act also refers to a taxable person. Thus, the assets of a person falling under Sub-section (1A) of Section 122 of the CGST Act can be attached only by a Commissioner who exercises jurisdiction in respect of the said taxable person - Sub-section (1A) of Section 122 of the CGST Act is applicable to any person who retains the benefit of the transaction covered under Clauses (i), (ii), (vii) and (ix) of Section 122(1) of the CGST Act and at whose instance such transaction is conducted. There is no allegation that the petitioner has retained the benefit of any of the alleged transactions covered under any of the specified clauses of Section 122(1) of the CGST Act. On the contrary, the allegation is that the petitioner has facilitated M/s Best Crop Science LLP / M/s Best Crop Science Pvt. Ltd. to avail fraudulent ITC. More importantly, there is no allegation that any of the allegedly offending transactions were conducted at the instance of the petitioner. On the contrary, it is alleged that the petitioner company was set up by the promoters of M/s Best Crop Science Pvt. Ltd. for availing fraudulent ITC - The impugned order is, thus, liable to be set aside on this ground alone. The second reason that the petitioner is a dummy company because the director of the petitioner is/was an employee of M/s Best Crop Group is also somewhat in the realm of assumptions. The petitioner had stated that Shri Raman Kumar was employed by M/s Best Crop Group but he had since moved on and had taken up his role as a director of the petitioner company - there must be a live nexus between the reasons for provisionally attaching assets and bank accounts and the material available with the Commissioner. Merely because there was some material (although disputed) to indicate that one of the directors of the petitioner was an employee of another company cannot be the basis to believe that the petitioner company is a dummy company given the material as provided. The language of Section 83 of the CGST Act requires the Commissioner to form an opinion that it is necessary to attach the property of a taxable person. However, the said opinion is required to be based on relevant facts and not merely on grounds of suspicion. It is difficult to imagine that a company would survive if its bank accounts are frozen for a protracted period of time. Thus, the nature of the power makes it necessary that the same is exercised with due caution and only when it is necessary - Mere suspicion that the petitioner is a dummy company, which is founded on the basis of statements that one of the directors of the petitioner company was, or is an employee of M/s Best Agrolife Group, and is in complete disregard of the corporate documents of the petitioner, would clearly fall foul of the requirement of forming an opinion, as it does not meet the standards required for taking an action under Section 83 of the CGST Act. The attachment order is set aside. It is, however, clarified that the concerned authorities are not precluded from proceeding against the petitioner in accordance with law - petition disposed off.
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