Case Law Details
Jv Creatives Pvt. Ltd. Vs Principal Additional Director General (Delhi High Court)
In the case of Jv Creatives Pvt. Ltd. Vs Principal Additional Director General, the Delhi High Court upheld the provisional attachment of the petitioner’s bank account by the Directorate General of GST Intelligence (DGGI). The order, dated June 26, 2024, was challenged by the petitioner on the grounds that the attachment was unjustified and that they had not been provided a copy of the original attachment order.
The dispute arose following an investigation into alleged Input Tax Credit (ITC) fraud. The DGGI found that the petitioner had claimed ITC amounting to ₹26,91,938 from two suppliers—M/s Gupta Enterprises and M/s Sunrise Ventures—both of which were identified as fictitious entities. It was discovered that M/s Gupta Enterprises was purportedly operated by one Vikram, who was actually a taxi driver and not involved in any business. Similarly, M/s Sunrise Ventures was supposedly run by Shesh Nath Prasad, a fitness coach, whose identity was misused to create another fake entity.
The Commissioner of GST Intelligence decided to provisionally attach the petitioner’s bank account to safeguard the revenue, given the substantial ITC claimed from these fraudulent entities. The petitioner contested this action, arguing that they had not received the attachment order and that the action was excessive.
The Delhi High Court examined the matter and found that the provisional attachment of the bank account was justified under Section 83 of the Central Goods and Services Tax Act, 2017. The Court held that the Commissioner’s decision was based on credible information linking the petitioner to fraudulent activities. The attachment was deemed necessary to protect the revenue and was supported by the available evidence.
The petition challenging the attachment was dismissed, and all pending applications related to the case were also resolved. The Court’s ruling reinforces the authorities’ ability to act decisively in cases involving significant ITC fraud.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, impugning an order dated 26.06.2024 (hereafter the impugned order) passed by the learned Principal Additional Director General, Directorate General of GST Intelligence, Gurugram Zonal Unit, whereby the objections preferred by the petitioner to the order provisionally attaching the bank account under Section 83 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act), was rejected.
2. The petitioner has not produced the order of attaching his bank Although, it is averred that the copy of the same has not been provided to the petitioner, there are no communications on record, which indicate that the petitioner had sought copy of the same from the concerned officer. The petitioner submits that he was informed by his banker (ICICI Bank, Dwarka, New Delhi) that its bank account No.046105000960 had been provisionally attached by the Commissioner.
3. The impugned order indicates that the Commissioner had taken such action pursuant to investigations, which revealed that the petitioner had filed Input Tax Credit (ITC) amounting to ₹26,91,938/- from two suppliers – M/s Gupta Enterprises and M/s Sunrise Ventures – who were found to be fake. It is alleged that M/s Gupta Enterprises is the sole proprietorship of one Vikram and was stated to be carrying on his business at his principle place of business at J.J. Colony, A-2/866, Madanpur Khadar, New Delhi– However, during physical verification the said concern was found to be nonexistent. On further inquiries it was revealed that Mr Vikram was a taxi driver by profession.
4.It is alleged that the said Mr Vikram had made a statement that he does not carry on any business in the name of M/s Gupta Enterprises and the same was created by one Shyam Dev Gupta. It is further alleged that Shyam Dev Gupta had created the tax entity and had issued “goods less invoices”. Similarly, it was found that M/s Sunrise Ventures was the proprietorship concern of one Shesh Nath Prasad, who was a national level player of Taekwondo and worked as fitness coach. It is alleged that his identity was also used by Shyam Dev Gupta to set up the fake tax entity (M/s Sunrise Ventures).
5. It is stated that Shyam Dev Gupta also acknowledged issuing of invoices without supply of any goods from M/s Sunrise Ventures.
6. In the aforesaid context, the Commissioner has considered it apposite to provisionally attach the petitioner’s bank account, to the extent of ₹ 26.91 lacs being the amount of ITC claimed in respect of allegedly fake supplies.
7. We are unable to accept that the exercise of power by the Commissioner is unwarranted. The facts clearly indicate the Commissioner had found it necessary to provisionally attach the petitioner’s bank account to protect the interest of the revenue. The facts as obtaining in this case clearly indicate that material available with the Commissioner has a live nexus with his opinion. And, the impugned order cannot be faulted.
8. The petition is unmerited and accordingly dismissed. Pending applications also stand disposed of.
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