Case Law Details
S.R Traders Vs Additional Director General (Kerala High Court)
In a recent judgment dated 9.6.2023, the Kerala High Court addressed the concerns raised by S.R Traders in a writ petition (WP(C)No.12591 of 2023) against the provisional attachment of immovable properties and bank accounts under the Central Goods and Service Tax Act and Rules. The appellant contended that the orders were passed without due consideration and violated certain legal provisions. Despite the dismissal of the writ petition by a learned single Judge, the appellant appealed against the judgment.
Background: The appellant, represented by Sri.Aswin Gopakumar, argued that the provisional attachment of all bank accounts would cripple their ability to conduct business during the ongoing investigation initiated by the respondents. The immovable properties had already been provisionally attached, providing sufficient security for the revenue’s interests. On the contrary, the respondents, represented by Sri. Sreelal N.Warrier, emphasized the substantial demand quantified in the show cause notice and potential additional liabilities arising from the ongoing investigation.
Court’s Deliberation: Upon hearing both sides, the court acknowledged that the value of the immovable properties might not be adequate to cover the demand outlined in the show cause notices. However, the court recognized that the appellant should not be financially stifled to the extent that it hampers legitimate business activities while simultaneously defending against the proceedings initiated by the respondents.
Modification of Judgment: The court, considering the interests of justice, decided to modify the judgment of the learned single Judge. The key modification allowed the appellant to operate two of its bank accounts during the pendency of the adjudication proceedings initiated by the respondents. This decision was aimed at ensuring that the appellant could continue its legitimate business operations while simultaneously addressing the legal proceedings against it.
The court specifically directed the lifting of the attachment in respect of the following two accounts:
i. A/c.No.50200027207947, HDFE Bank, Pattambi – savings account in the name of Safeek.K
ii. A/c.No.14120100032507, Federal Bank-PTB – savings account in the name of Ali.K.M.
The appellant was granted permission to operate these accounts until the culmination of the adjudication proceedings initiated by the respondents. Apart from this limited modification, the court refrained from interfering with the judgment of the learned single Judge in all other respects.
Conclusion: The judgment by the Kerala High Court reflects a delicate balance between the interests of the revenue and the rights of the appellant. Recognizing the importance of allowing legitimate business activities to continue, the court’s decision to permit the appellant to operate two bank accounts provides a pragmatic solution. This case sets a precedent for similar situations where financial restrictions during legal proceedings need to be carefully weighed against the need for businesses to function within legal constraints.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
This writ appeal is preferred against the judgment dated 9.6.2023 of a learned single Judge in WP(C)No.12591 of 2023. In the writ petition that was preferred by the appellant herein, the orders that provisionally attached immovable properties and the bank accounts of the appellant were impugned inter alia on the contention that the said orders were passed without application of mind and in flagrant violation of the certain provisions of law under the Central Goods and Service Tax Act and Rules. The learned single Judge after considering the contentions of the appellant found that Ext.P6 orders were passed by the first respondent who was legally empowered to pass such orders and further that the appellant had an effective alternate remedy to impugn the said orders before the appellate authority under the Act. The writ petition was dismissed mainly on the finding that there was an efficacious alternate remedy that the appellant could pursue against the orders impugned.
2. When this appeal came up for admission before us, we took note of the contention of the learned counsel for the appellant Sri.Aswin Gopakumar that if all the bank accounts pertaining to the appellant and its partners are attached by the respondents then it would be impossible for them to carry on their business during the pendency of the investigation, that is said to be underway at the instance of the respondents. It was also pointed out that at any rate since the immovable properties of the appellant have already been provisionally attached by the respondents the same would offer sufficient security to protect the interests of the revenue pending the adjudication of the show cause notices issued to the appellant, as also pending further investigation to be carried out by the respondents.
3. Per contra, it was the submission of the learned standing counsel for the respondents, Sri. Sreelal N.Warrier that the show cause notice issued to the appellant presently quantifies the demand at a figure of Rs.8.59 crores and one has also to factor in a possible liability towards penalty once the adjudication proceedings are over. It is also his submission that the investigation that is ongoing against into the activities of the appellant would also likely result in further show cause notices being issued and further liabilities being fastened on the appellant firm and its partners. He therefore submits that there is no warrant for interfering with the judgment of the learned single Judge.
4. On a consideration of the rival submission, we find that while it may be a fact that the value of the immovable properties attached is not sufficient to meet the demand contained in the show cause notices, we must necessarily remind ourselves that the appellant cannot be financially choked to the extent of preventing it from carrying on legitimate business activities while simultaneously defending the proceedings initiated by the respondents against him. We feel therefore that the ends of justice would require us to modify the judgment of the learned single Judge and permit the appellant to operate two of its bank account pending finalisation of the adjudication proceedings by the respondents so that the appellant can carry on its legitimate business activities even while defending the proceedings initiated against him by the respondents. Accordingly, we direct a lifting of the attachment in respect of the following two accounts pertaining to the appellant, and covered by Ext.P6 order that was impugned in this writ petition.
(1) A/c.No.50200027207947, HDFE Bank, Pattambi – savings account in the name of Safeek.K and
(2) A/c.No.14120100032507, Federal Bank-PTB – savings account in the name of Ali.K.M.
5. The appellant shall be permitted to operate the aforesaid accounts during the pendency of the adjudication proceedings initiated at the instance of the respondents and until the culmination thereof. Save for the above limited modification, we refrain from interfering with the judgment of the learned single Judge in all other respects.
The writ appeal is thus closed as above.
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