Siddharth Mandavia Vs Union of India and others (Bombay High Court)
The issue under consideration is whether any official empowered to suspend and cancel Importer Exporter code (IEC) number?
FULL TEXT OF THE HIGH COURT ORDER/JUDGEMENT
Heard Dr. Sujay Kantawala along with Mr. P. Choudhari, learned counsel for the petitioner and Mr. Pradeep Jetly, learned senior counsel along with Mr. J. B. Mishra, learned counsel for the respondents.
2. By filing this petition under Article 226 of the Constitution of India, petitioner has sought for the following reliefs:-
1. for a direction to the respondents restraining them from adopting any coercive measures without issuing show cause notice to compel the petitioner to pay further customs duty and / or goods and services 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 Commissioner can exercise jurisdiction under Section 83. First precondition is pendency of any proceedings under Section 62 or Section 63 or Section 64 or Section 67 or Section 73 or Section 74 of the Central Goods and Services Tax Act, 2017. Second precondition is that Commissioner must form an opinion that provisional attachment of any property including bank account is necessary for protecting the interest of Government revenue. Once these two preconditions are satisfied, Commissioner is required to pass an order in writing provisionally attaching any property including bank account belonging to the taxable person.
4] From a perusal of the notice at page 195, we find that it is basically a garnishee notice issued to the Bank Manager of Indusind Bank. In the said notice the deponent has mentioned that proceedings have been launched against the taxable person i.e. the Petitioner under Sections 67 and 74 of the Central Goods and Services Tax Act, 2017. But in what manner the proceedings have been launched is not discernible.
5] For proper appreciation, we feel that it would be appropriate if the Respondents produce before us the order passed by the Commissioner under Section 83 of the Central Goods and Services Tax Act, 2017 in respect of all the garnishee notices.
6] Ordered accordingly.”
5. Following the aforesaid order, additional affidavit on behalf of respondent Nos.5 to 7 was filed on 13.10.2020.
6. The interim prayer was finally heard on 15.10.2020 whereafter order was reserved.
7. For a proper appreciation of the rival contentions vis-a-vis the interim relief sought for by the petitioner, it would be apposite to briefly narrate the relevant facts as projected by the petitioner.
8. According to the petitioner, he is the sole proprietor of the proprietorship firm M/s. XS Components which is engaged in the business of export of various products, such as, garments, footwear, leather accessories etc. Petitioner holds Importer Exporter Code bearing No.0314035460.
8.1. Petitioner has stated how the goods are purchased locally from wholesale traders and thereafter exported out of India through the container freight supply terminal at Inland Container Depot, Tuglakabad. Goods are loaded in the containers in the presence of customs officials who verify and oversee the process. Once the goods are exported and petitioner receives payment from 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 Rs.30,00,000.00 without prejudice to his rights and contentions vide three demand drafts dated 17.01.2020, 20.01.2020 and 28.01.2020, all drawn in favour of Commissioner of Customs, Tuglakabad.
8.5. Notwithstanding the same, the importer exporter code of the petitioner continued to be blocked. Because of continuing blockage of the importer exporter code, petitioner could not receive drawback incentives to the tune of Rs.8,51,374.00, Integrated Goods and Service Tax (IGST) refund of Rs.58,00,601.00 and Merchandise Export Incentive Scheme (MEIS) refund of Rs.45,98,702.00. Further, because of such blockage, many export orders received by the petitioner from overseas buyers had to be cancelled.
8.6. Parallely respondent Nos.6 and 7 commenced investigation against petitioner’s firm vide summons dated 12.02.2020 directing appearance of the petitioner on 17.02.2020. In his reply, petitioner expressed inability to appear as he was out of station. When the next summons were issued on 21.02.2020, petitioner appeared before respondent No.7 on 28.02.2020 when his statement was recorded.
8.7. Petitioner had gone to Dubai for some business work but got stuck there due to the global pandemic and he could not return back. When respondent No.4 made telephonic enquiries on 16.06.2020, petitioner wrote back on the same day informing about his stay at Dubai and furnished copies of passport and flight details.
8.8. To the utter surprise of the petitioner, in the month of July, 2020, he was informed by various bank authorities that accounts belonging to him and his family members have been frozen by respondent Nos.6 and 7. Details of the bank accounts frozen by the offices of respondent Nos.6 and 7 have been disclosed in the writ petition, which are extracted hereunder:-
