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TMI Blog2025 (2) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... to issue revocation orders concerning all the attachment orders passed on 17.10.2023 and 26.10.2023 respectively under section 83 of the Act in form GST DRC 22 and communicate the same forthwith to the bankers of the Petitioner i.e. ICICI Bank (Ashram Road Branch), Kotak Mahindra Bank (Relief Road Branch), Yes Bank (Relief Road Branch), State Bank of India (Botad Road Branch), to the Office of the Sub-Registrar, Memnagar, Ahmedabad and to the office of the Sub-Registrar, Narol-5, Ahmedabad; BB. Quash and set aside the provisional attachment notice dated 13.11.2024 issued by the Respondent under section 83 of the Gujarat Goods and Service Tax At, 2017 to the banker of the Petitioner attaching the bank account of the Petitioner maintained with ICICI Bank, Relief Road Branch, Ahmedabad at ANNEXURE K; BBB. Quash and set aside the provisional attachment notices dated 18.12.2024 issued by the Respondent under section 83 of the Gujarat Goods and Service Tax At, 2017 along with the satisfaction notes to the Petitioner attaching the bank accounts of the Petitioner maintained with [ICICI Bank (Relief Road Branch) Yes Bank, (Relief Road Branch), Kotak Mahindra Bank (Relief Road Branch) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brands like Apple, Samsung, Oppo, One-Plus, Vivo, Xiaomi, Poco, etc. These are global giants whose mobile products reach to its ultimate consumers by routing through authorized dealers, wholesalers, retailers, etc. So ideally, there has to be a seamless flow of transactions along with legitimate passage of Input Tax Credit at various stages till it reaches to the end buyer. The taxpayer is believed to be primarily involved with, or is one such contriving elements of a nationwide large economic scam. Investigation: * On the strength of ground intelligence, in-depth analysis of various taxpayer profiles, inputs from data analytics, return analysis, field based survey and other online intelligence tools used by the SGST department of Gujarat, a countrywide scam of obtaining bogus refund by exporting high end mobile phones was unearthed. The Prima facie analysis of the data of returns filed by the tax payer revealed some glaring inconsistencies. * It was observed that as many as 115 registered taxpayers from Gujarat have been working in connivance for the organized flow of ineligible Input Tax Credit and thereby defrauding the government exchequer from its revenue. The primary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res thereof are in motion. As per the primary investigation, the quantum of the suspicious bogus GST refund scam let alone in state of Gujarat is approximately Rs. 360 Crores. * During the initial investigation, at the principal place of business and at the stage of pre-investigation, the department could not find any details of free-hold properties and fixed assets of the taxpayer. Looking at the gravity and magnitude of the tax evasion and considering the extensive possibilities of countrywide scam, the interests of the government revenue becomes very crucial. * Prima facie this is the case of an open fraud. Hence there is good reason to believe that the taxpayer may end up jeopardizing the entire tax amount and may end up absconding. The only details of lien free assets available with the investigating authority is that of the bank accounts of the tax payer available on record. * In absence of necessary accounting documents and enough information related to fixed assets of the firm, the department is left with no option than to turn towards the bank account balances as a last resort which is one kind of a current assets of the firm and is eligible for attachment under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed of by order dated 18.11.2024, which reads as under: "1. Learned advocate Mr. Ashutosh Dave submitted that he has instructions to appear on behalf of the petitioner and seeks permission to file his appearance. Permission is granted. 2. By this petition, the petitioner has prayed for the following reliefs : "(A) YOUR LORDSHIPS may be pleased to admit and allow this Writ petition; (B) YOUR LORDSHIPS may be pleased to issue a writ of certiorari or writ in the nature of certiorari or any other appropriate writ, order to quash and set aside the impugned orders passed by the respondent no. 2 dated 17-10-2023 and 26-10-2023 for provisional attachment under Section 83 of CGST/GGST Act, 2017 Annexure-A-B; (C) YOUR LORDSHIPS may be pleased to grant the interim relief pending admission and final disposal of this petition by way of issuing a writ of certiorari or writ in the nature of certiorari or any other appropriate writ, order to release of the provisional attachment of the properties forthwith; (D) YOUR LORDSHIPS be pleased to grant such other and further reliefs as are deemed fit, in the interest of justice." 3. As per Sub-section (2) of Section 83 of the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort "the Act") without putting any justification on the satisfaction note which was issued on 18.11.2024. 2. As against the satisfaction note which was issued on 17.10.2023, the Petitioner had filed its objections under rule 159 of the Gujarat Goods and Services Tax Rules, 2017 (for short "the Rules") on 01.05.2024 [Re: page no. 30-37] which was never adjudicated upon by the Respondent. Pursuant to the ratio laid down by the Hon'ble Supreme Court in the case of M/s. Radha Krishan Industries v. State of Himachal Pradesh, it is incumbent upon the Respondent to afford an opportunity of hearing before confirming the attachment. In the captioned case, post filing of the petition, the Respondent never called upon the Petitioner for hearing rendering the directions issued by the Hon'ble Supreme Court otiose. 3. The Respondent accepts the fact that the attachment orders passed on 13.11.2024 and 18.12.2024 are the renewal orders of the attachment orders passed on 17.10.2023. It is stated that for one of the attachment orders attaching the Yes Bank Account of the Petitioner, the Respondent has precariously invoked section 45 of the Gujarat Value Added Tax Act, 2003 for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Supreme Court has inter alia held that that the formation of the opinion must be based on tangible material which indicates a live link to the necessity to order a provisional attachment to protect the interest of the government revenue. Under sub-rule (5) of rule 159, the person whose property is attached is allowed seven days' time to file an objection that the property attached 'was or is not liable to attachment. Sub-rule (5) stipulates that the Commissioner may 'after affording an opportunity of being heard to the person filing the objection' release the property by an order in form GST DRC-23. In the case on hand, the Respondent vide letter dated 18.12.2024 [Re: Page No. 62C] has afforded in 1 day to the Petitioner to file objections to the order which is passed on the even-date thereby deviating from the observations made by the Hon'ble Supreme Court. 8. On the aspect of the reliance placed on the judgement rendered by this Hon'ble Court in the case of M/s. Dhanlaxmi Metal Industries v. State of Gujarat, the facts are distinct and distinguishable from the facts of the present case. In the case of Dhanlaxmi Metal Industries (supra), the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the challenge made by the petitioner to the first provisional attachment order dated 17.10.2023 could not be decided within one year. The petitioner has raised this contention as the same authority has passed the order of renewal of provisional attachment. 4.14 It was submitted that as per the settled legal position on completion of one year from the date of the provisional attachment order as per sub-section (2) of section 83 of the GST Act, the effect of such provisional attachment order shall cease and thereafter the provisional attachment would not be in operation. It was pointed out that the respondent has passed the renewal of provisional attachment for the bank account of the petitioner with ICICI Bank on 13.11.2024 and with regard to other three bank accounts on 18.12.2024. After 17.10.2024, there cannot be any provisional attachment which is required to be renewed inasmuch as, the provisional attachment order dated 17.10.2023 / 26.10.2023 has lived its life till 17.10.2024 and such order thereafter did not exist in view of the provisions of section 83 (2) of the GST Act. 4.15 It appears that so far as the account of YES Bank is concerned, the respondent passed an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with YES Bank of the petitioner was attached under section 45 of the Gujarat Value Added Tax Act by order dated 17.10.2023 and the same could not have been renewed by the respondent by passing order under section 83 of the GST Act on 18.12.2024. It was submitted that so far as the provisional attachment of the bank account of the petitioner with YES Bank is concerned, the first order dated 17.10.2023 could not have been passed under provisions of the VAT Act after 01.07.2017 and therefore, there was no question of renewal of the said bank account under section 83 of the GST Act arises. 5.5 Reliance was also placed on the decision of this Court in the case of Mahakali Enterprises vs. Union of India [(2022) 142 taxmann.com 315 (Gujarat)], wherein it is held that the order of provisional attachment passed by the department could not be said to be in force or in operation on completion of one year as it outlived its statutory life and the petitioner ought to have been allowed to operate its bank account immediately. 5.6 It was submitted that the impugned renewal of provisional attachment orders dated 13.11.2024 and 18.12.2024 may be ordered to be quashed and set aside. 6. Per cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voices rather there were sale record of mobile phones of companies such as apple, Samsung etc. (hereinafter high-end phones). However, the cheaper phones which has been found on the inward side but the same has not been found on the outward side and neither stock nor credit/debit note nor record of the same has been found. Moreover, in furtherance of the investigation it has been discerned that the high-end phones inward records were neither available nor present, however the outward of the same was found. Hence overall it has been construed that the ITC of accounted inward cheaper phones was used to set off the liability of the high-end phones (which are unaccounted at the time of inward) showing illegal set off liability by the petitioner. ii. Thereafter, since the HSN Code of Mobile Phones remain the same, the ITC claimed from cheaper mobile phones was utilized to pay the output tax liability arising on sale of expensive phones like Apple, Samsung to third party dealers. iii. The cheaper mobile phones were sold in the market in cash without recording such transactions in their books and this cash was actually utilized to purchase the high-end mobile phones in cash without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.3 It was submitted that the respondent is having the jurisdiction to conduct the search and further assessment proceedings as per the circular dated 05.10.2018 providing clarification on ambiguity regarding initiation of enforcement action by the Central tax officers in case of taxpayer assigned to the State tax authority and vice versa and the circular dated 22.06.2020, wherein it is clarified that the officers of the State and Central will discharge the functions as proper officer for all the purposes of the CGST Act and SGST Act. It was submitted that the contention raised on behalf of the petitioner relying upon the order dated 15.01.2018 would not be applicable in the facts of the case as the respondent has been authorized to carry out the search as per the authorization order dated 16.10.2023 by the Assistant Commissioner of State Tax (2), Enforcement, Division-5, Vadodara on the basis of the information received forming par of the authorization order. Learned AGP further referred to and relied upon the statement of the petitioner recorded pursuant to the summons issued under section 70 on 21.10.2023 to point out that the HSN code of the mobile phones dealt with by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner would not be applicable in the facts of the case when it is prima facie found by the respondent that the petitioner is being engaged in the modus operandi to defraud the revenue and there is a bogus GST refund scam in the State of Gujarat alone, to the tune of approximately Rs.360 crore. 6.7 Learned AGP referred and relied upon the circular dated 23.02.2021 issued by the Central Board of Indirect Taxes and Customs providing guidelines for provisional attachment of property under section 83 of the GST Act. It was submitted that the respondent has followed the said guidelines. Reliance is placed on para 3.3 pertaining to cases fit for provisional attachment of property and the case of the petitioner squarely falls within clauses a, b and c for supplying any goods or services or for issuing any invoice or bill without supply of goods or services or availing input tax credit using the invoice or bill referred to in clause (b) or fraudulently availed input tax credit without any invoice or bill. 6.8 It was submitted that the bank accounts of the petitioner are therefore rightly attached by the respondent and the petitioner may file reply to the intimation issued under Form DRC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 70 of the GST Act and placed on record, it clearly shows the admission on the part of the petitioner that the petitioner has indulged into the fraudulent activity of issuance of the bogus bills as well as availing the input tax credit which shows the prima facie case against the petitioner. Moreover, on perusal of the intimation of the tax ascertained as being payable under section 74 (5) of the GST Act issued by the respondent on 04.12.2024, it clearly shows the modus operandi of the petitioner for financial year 2022-23 for which the estimated total liability of tax, penalty and interest comes to Rs.12,33,58,313/-. 8. Therefore, considering the record which is available for perusal before us, it is prima facie apparent that the petitioner has indulged into fraudulent activity which requires the exercise of powers conferred under section 83 of the Act for provisional attachment which was made by the respondent on the date of search on 17.10.2023. Therefore, the question now paused before this Court is whether on completion of one year from the date of the provisional attachment on 17.10.2023 of the bank account of the petitioner, the respondent could have renewed the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as the respondent has applied its mind for the provisional attachment of the bank accounts after recording the satisfaction and after issuance of the intimation in Form DRC 01A. Therefore, only on that ground that the orders are for renewal of provisional attachment, the same cannot be quashed and set aside by adopting the modus operandi to defraud the revenue along with others is not tenable. This Court in the case of M/s. Dhanlaxmi Metal Industries (supra) in similar facts, has held as under: "30. On perusal of the above circular the case of the petitioner would fall within second issue as the petitioner has received invoices without any underlying supplying goods and has availed input tax credit on the basis of the tax invoices and the petitioner has issued invoices along with underlying supply of goods or services to its buyers and utilized the ITC availed on the basis of the bogus invoices for payment of his tax liability in respect of outward supplies and hence the petitioner would be liable for the demand and recovery of the ITC along with penal actions, interest and penalty under the provisions of Section 74 of the CGST Act. Therefore, the facts of the case clearly show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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