TMI Blog2020 (11) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... he prescribed format. Contention of the petitioner that there was violation of the provisions of section 83 of the CGST Act and no due process was followed while provisionally attaching the bank accounts and the rebuttal contentions of the respondents that there has been due compliance to the statutory requirement of section 83 read with rule 159 may require a detailed examination. However, for the moment we may consider attachment of the bank accounts from the perspective of the taxable person i.e., the petitioner Mr. Siddarth Mandavia and his proprietorship firm M/s. XS Components - there is no allegation or any averment made by the respondents that any money belonging to the petitioner or to his firm have been credited into the joint accounts of the petitioner with his wife or with his minor son or into the account of his wife. As a matter of fact, in paragraph 38 of their first affidavit, respondent Nos.5 to 7 have stated that the reason for attachment of other bank accounts appears to be their link with the petitioner or his PAN. They being not the tax payers in this case, provisional attachment of their bank accounts therefore would not be justified. Liberty may be gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices tax (GST) dues which are disputed by the petitioner; 2. for a direction to the respondents to unfreeze the 12 bank accounts of the petitioner and family members as per details furnished in the writ petition including in the prayer portion; 3. for a direction to the respondents to unfreeze the Importer Exporter Code No.0314035460 of the proprietorship firm of the petitioner by the name of M/s. XS Components ; and 4. for a direction to the respondents allowing presence of a lawyer of petitioner s choice during investigation (questioning) of the petitioner. 3. On 08.09.2020, this Court had issued notice on admission as well on stay while directing the respondents to file affidavit. Subsequently an affidavit was filed by the respondents. 4. On 08.10.2020, the interim prayer of the petitioner was heard whereafter the following order was passed:- 2] Our attention has been drawn to Section 83 of the Central Goods and Services Tax Act, 2017 as well as to the garnishee notices issued including the one at page 195 of the Writ Petition. 3] From a reading of Section 83, we find that there are two preconditions which must be satisfied before the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the overseas buyers, payments are made to the local suppliers. For the goods exported out of India, petitioner claims various export incentives as is permissible in law. 8.2. With regard to export incentives claimed by the petitioner, office of respondent Nos.3 and 4 carried out search operations in the residence and office premises of the petitioner on 11.09.2019 whereafter various documents etc. were seized. Simultaneously, the importer exporter code of the petitioner was blocked. According to the petitioner, the search warrant was only in respect of M/s. XS Components; nonetheless, documents belonging to another entity called Evertime Trading Private Limited were also seized. However, seizure memo has not been furnished to the petitioner. 8.3. Thereafter summons were issued to the petitioner by respondent No.4 on 06.11.2019 seeking certain information pertaining to export incentives claimed by the petitioner which was replied to by the petitioner on 13.11.2019. Further details were furnished by the petitioner to respondent No.4 on 15.11.2019. 8.4. It is stated that on the insistence of respondent No.4, petitioner made payment of ₹ 30,00,000.00 without prejudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dharth P. Mandavia 5111185073 5 Kotak Mahindra Bank Ltd. Mansi Mandavia Siddharth P. Mandavia 3811295986 6 Kotak Mahindra Bank Ltd. Hriaan Siddharth Mandavia (Minor) Siddharth P. Mandavia 7511305259 7 Kotak Mahindra Bank Ltd. Evertime Overseas Pvt. Ltd. 2012351880 8 Kotak Mahindra Bank Ltd. E-global Trading Ltd. 4811811701 9 Indusind Bank Ltd. Siddharth P. Mandavia 159920799999 10 Indusind Bank Ltd. Mansi Siddharth Mandavia 159820756968 11 HDFC Bank Ltd. Santacruz (W) Hriaan Siddharth Mandavia (Minor) Siddharth P. Mandavia 00791460006096 12 HDFC Bank Ltd. Santacruz (W) Mansi Mand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uppliers by the petitioner. It was thereafter that summons under section 70 of the Central Goods and Services Tax Act, 2017 was issued to the petitioner. 9.2. In his statement recorded on 28.02.2020, petitioner admitted that in certain cases he had received only invoices without actual receipt of goods or services, giving a list of 8 firms from whom he received such invoices. After his appearance on 28.02.2020, petitioner did not appear before the investigating authorities despite summons. Instead he left India for Dubai on 09.03.2020 without informing the authorities. 9.3. According to the respondents, investigations carried out prima facie indicates that there is a network of fictitious entities set up only to pass on fake ITC; petitioner appears to have utilized such fake ITC to discharge his IGST liability on export of goods with an intention to get ineligible refund and thus to defraud government exchequer. 9.4. From an analysis of the bank transactions in the two bank accounts of the petitioner in Karnataka Bank Limited and in Indusind Bank, it appeared that after receipt of the IGST refund, he had transferred substantial amounts to various other accounts. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement but one made under duress. He has stated that M/s. XS Components has exported goods worth ₹ 114 crores and had realized about ₹ 22 crores. Before the entire dues could be realized and paid to the suppliers, the search was carried out and original documents were seized, further blocking importer exporter code of the petitioner. Regarding freezing of bank accounts, he has stated that it came to his notice only when his son s school payment cheque got dishonoured. 11. In the additional affidavit filed by respondent Nos.5 to 7 following order of this Court dated 08.10.2020, reference has been made to office memorandum dated 12.05.2019 issued by the Central Board of Indirect Taxes and Customs wherein it is provided that provision for provisional attachment of property including bank accounts contained in section 83 of the CGST Act read with rule 159 of the CGST Rules should be invariably invoked in cases of fake invoices detected during investigations. In the said affidavit, relevant note-sheets have been annexed wherefrom it is seen that Principal Additional Director General had noted on 08.07.2020 that in the light of the apparent findings of fraudulent availment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1). 16. We had done some analysis of this provision in our order dated 08.10.2020. To enable invocation of section 83, first and foremost there must be pendency of any proceeding either under section 62 or under section 63 or under section 64 or under section 67 or under section 73 or under section 74 of the CGST Act. Thereafter, the Commissioner must form an opinion that for the purpose of protecting the interest of the government revenue, it is necessary to attach any property provisionally, including bank account belonging to the taxable person. On satisfaction of the above two conditions, the Commissioner must pass an order in writing provisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per sub-rule (1), when the Commissioner decides to attach any property including bank account in terms of section 83, he shall pass an order in Form GST DRC-22 mentioning therein the details of property which is attached. Sub-rule (5) says that any person whose property is attached may, within 7 days of attachment, file an objection to such provisional attachment and if such objection is filed, Commissioner may release the said property after affording an opportunity of being heard to the person filing the objection. As per sub-rule (6), the Commissioner may, upon satisfaction that the property was or is no longer liable for attachment, release such property. 17.2. In so far sub-rule (6) is concerned, the same is in consonance with the provisional nature of attachment. Under section 83 and rule 159 we are dealing with provisional attachment of property, including bank account. Therefore, by its very nature such attachment is temporary as opposed to permanent. Dictionary meaning of provisional is arranged or existing for the present, possibly to be changed later ; Black s Law Dictionary, 8th Edition has defined it as temporary or conditional . Being provisional such attachme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le person i.e., the petitioner Mr. Siddarth Mandavia and his proprietorship firm M/s. XS Components. From the list of bank accounts mentioned in paragraph 8.8, it is seen that the bank accounts at Sr. Nos.3, 5 and 12 are in the joint names of Ms. Mansi Mandavia and Mr. Siddharth P. Mandavia whereas the bank account at Sr. No.10 is solely in the name of Ms. Mansi Siddharth Mandavia. It has been clarified that Mansi Mandavia and Mansi Siddharth Mandavia is one and the same person and is the wife of the petitioner. On the other hand we find that the bank accounts at Sr. Nos.6 and 11 are in the joint names of the petitioner and Hriaan Siddharth Mandavia (minor) who is stated to be the son of the petitioner. Prima facie, Mansi Mandavia alias Mansi Siddharth Mandavia and Hriaan Siddharth Mandavia (minor) are not the concerned tax payers in this case. There are no allegations against them. To be more specific, there is no allegation or any averment made by the respondents that any money belonging to the petitioner or to his firm have been credited into the joint accounts of the petitioner with his wife or with his minor son or into the account of his wife. As a matter of fact, in paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any of the provisions of this Act or any rules or orders made thereunder or the foreign trade policy or any other law for the time being in force relating to Central excise or customs or foreign exchange or has committed any other economic offence under any other law for the time being in force as may be specified by the Central Government by notification in the Official Gazette; or (b) the Director-General or any other officer authorised by him has reason to believe that any person has made an export or import in a manner prejudicial to the trade relations of India with any foreign country or to the interests of other persons engaged in imports or exports or has brought disrepute to the credit or the goods of, or services or technology provided from, the country; or (c) any person who imports or exports specified goods or services or technology, in contravention of any provision of this Act or any rules or orders made thereunder or the foreign trade policy, the Director-General or any other officer authorised by him may call for the record or any other information from that person and may, after giving to that person a notice in writing informing him of the grounds on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed officer for the reasons specified and in the manner provided in section 8 of the said Act. Respondents arrayed in this petition are neither the Director General of Foreign Trade nor his authorized officer. Prima facie, they are not empowered either to suspend or cancel the importer exporter code of the petitioner, the only two measures provided under law. There is no provision for blocking of importer exporter code, that too by an authority which is not competent either to suspend or cancel such code. It is interesting to note that on the allegation of blocking of importer exporter code of the petitioner by respondent No.3 made in paragraph 11 and ground No.S of the writ petition, respondents in paragraph 32 of their first affidavit have offered no comment, so also in paragraph 64. If that be the position, blocking of importer exporter code of the petitioner by any authority other than the Director General of Foreign Trade or by his authorized officer under section 8 of the Foreign Trade (Development and Regulation) Act, 1992 would be unauthorized, unwarranted and without jurisdiction. 25. That being the position, we feel that the following directions may meet the ends of jus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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