Case Law Details
Redamancy World Vs Additional Director General Goods And Services Tax Intelligence (Delhi High Court)
Aggarwala, learned counsel appearing for GST department assures High Court that they will be more careful in future in ensuring that orders such as attachment of the bank accounts or assets is issued strictly in accordance with the provisions of the CGST Act.
GST dept promises HC
Introduction: The case of Redamancy World Vs Additional Director General Goods and Services Tax Intelligence involves a petitioner’s complaint against an improper communication/order under Section 83 of the CGST Act. The situation escalated with a communication directing the freezing of the petitioner’s bank account and another preventing customers from making payments to the petitioner. The case was brought before the Delhi High Court, which evaluated the matter.
Analysis: The core issue in this case revolved around the miscommunication and lack of due process concerning the provisional attachment of assets and the restraining of payments to the petitioner. The absence of the requisite Form GST DRC-22 and any order of provisional attachment under Section 83 of the CGST Act were central to the petitioner’s grievances.
The Court’s analysis exposed several weaknesses in the administrative handling of the situation:
- Lack of Proper Order: No proper attachment order was found in the records.
- Communication Issues: Unlawful communications were sent to suppliers without proper authority.
- Time Limit Issues: Any potential order under Section 83 would have lapsed as per the CGST Act.
- Assurance from Respondents: The respondents assured the Court that they would follow the law more carefully in the future.
Conclusion: The ruling by the Delhi High Court in Redamancy World Vs Additional Director General Goods and Services Tax Intelligence emphasizes the importance of adhering to the provisions of the CGST Act. By disposing of the petition, the Court highlighted the lack of compliance and proper communication by the authorities involved. This ruling acts as a reminder for the tax authorities to follow the law meticulously, ensuring due process is observed in all actions and decisions related to taxation. The assurance of being “more careful” in the future reflects a positive step towards improved transparency and adherence to the legal framework.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, impugning a communication/order dated 29.04.20 19 purportedly issued under Section 83 of the Central Goods & Service Tax Act, 2017 (hereafter the ‘CGST Act’). Admittedly, the said communication was not served on the petitioner. The petitioner became aware that its bank account was directed to be frozen by an communication dated 29.04.20 19 (Letter No.DGGI/GZU/INV/Gr-E/REDAMANCY/1 91/2018-19) from a letter dated 24.05.2019, issued by Canara Bank, sent in response to its letter dated 23.05.2019.
2. In compliance with the order dated 26.07.2023 passed by this Court, Mr. Neeraj Prasad, Additional Director General, Directorate General of Goods & Service Tax Intelligence (DGGSTI), Gurugram Zonal Unit has appeared along with the relevant files. The same has been perused by us.
3. It is apparent that no order in the requisite Form GST DRC-22 was issued to the petitioner.
4. The petitioner also impugns the communication sent to various customers of the petitioner (namely, Gravita India Ltd. (Unit-II), Gravita Metal Inc., Sarika Industries Pvt. Ltd. and Gravita India Ltd.) directing them not to make payments for the goods supplied by the petitioner. The petitioner has also filed a communication dated 14.05.2018 sent by the respondent (DGGSTI) addressed to M/s Radha Krishan Industries, Kala Amb, Himachal Pradesh directing the said entity not to release the payments of the petitioner, which were due as consideration for the raw material purchased by them, from the petitioner.
5. The learned counsel appearing for the respondents submits that the letter addressed to various customers of the petitioner was withdrawn, and the same was also communicated to the customers of the petitioner. He further submits that the competent authority has by a letter dated 03.05.2019 requested the Chandigarh Unit to allow the petitioner’s customers to make payment directly into the petitioner’s bank account.
6. A perusal of the files, produced today in the Court, indicates that no orders of provisional attachment, under Section 83 of the CGST Act, were issued.
7. Section 83 of the CGST Act empowers the Commissioner to issue orders for provisional attachment of assets including the bank account of the taxpayer provided that it is necessary to protect the interest of the Revenue. We do not find that there is any specific noting in the files, to the effect that such an action is necessary in the facts of the present case. Although, the files produced today indicate that there are allegations of wrongful availment of Input Tax Credit by the petitioner and the respondent authorities are also investigating the chain of suppliers; there is no order passed by the Commissioner recording his satisfaction that orders of provisional attachment are necessary to safeguard the interests of Revenue.
8. It is also the respondents’ case that no order under Section 83 of the CGST Act is operating against the petitioner and the communications issued to various suppliers have been withdrawn
9. Insofar as the provisional attachment of the bank account is concerned, even if an order under Section 83 of the CGST Act was issued, the same would have lapsed by virtue of Section 83(2) of the CGST Act.
10. The communications issued to the petitioner’s customers restraining them from making any payment against supplies made by the petitioner is also without authority of law.
11. Aggarwala, learned counsel appearing for the respondents assures this Court that respondents will be more careful in future in ensuring that orders such as attachment of the bank accounts or assets is issued strictly in accordance with the provisions of the CGST Act.
12. In view of the above, we don’t consider it apposite to pass any further orders. Since the orders freezing the petitioner’s bank account and the communications restraining the petitioner’s customers from making payments to the petitioner are no longer operative; the petitioner’s grievance does not survive.
13. The petition is, accordingly, disposed of.
