Case Law Details

Case Name : Madhav Copper Limited Vs State of Gujarat (Gujarat High Court)
Appeal Number : R/Special Civil Application No. 15201 of 2021
Date of Judgement/Order : 23/11/2021
Related Assessment Year :

Madhav Copper Limited Vs State of Gujarat (Gujarat High Court)

Conclusion: In present facts of the case, the writ petition was disposed of by providing partial relief to the Petitioner for fulfilment of its business orders but with  a condition to cooperate with Revenue in investigation.

Facts: This is a petition under Article 226 of the Constitution of India challenging the provisional attachment order attaching the properties of Madhav Copper Limited under Section 83 of the CGST Act. The petitioner no.1 is a company engaged in the business of Copper Products and is a leading manufacturers of various products of copper like Copper Rod, Copper Wire, Fiber Glass Conductor etc. The petitioner no.1 also imports raw-materials/ scraps for manufacturing these products and export final products made out of the copper. It has its own Certificate of Importer-Exporter Code (IEC). The petitioner also supplies to the reputed private entities and government entities across the India.

A notice came to be issued by the Assistant Commissioner of State Tax in the Form GST DRC-01 on 08.07.2019 calling upon the petitioner no.1 to make payment for the input tax credit claimed for the purchase made through the suppliers who defaulted in payment of GST. The reply had been given on 06.08.2020 with a request to drop the proceedings, however, no communication has been received from the Assistant Commissioner of State Tax till this date. According to the petitioner, it has to be understood that the explanation is accepted.

The officers of the State Tax had caused search under the GGST Act at the office premises of the petitioner no.1 and drew the Panchnama on 04.10.2019 and seized various purchase files as noted in order of seizure on the very date under FORM GST INS-02. Since there was a discrepancy in the stock, the petitioner no.1 voluntarily deposited the GST to the tune of Rs. 1,76,198/- and 15% penalty by DRC-03. The petitioner has also substantiated the same with the Challan in FORM GST DRC-03.

Pursuant to the said search and seizure dated 04.10.2019, the respondent no.2 issued FORM GST DRC-01A under Rule 142(1A) on 22.07.2020 directing the petitioner to deposit the total tax of Rs. 10,43,33,762/- under Section 74(5) of the GGST Act on the ground that the ITC was not allowable as per the provisions of Section 16(2) of the GGST Act and the same was required to be recovered under the provisions of Section 74 of the GGST Act.

A show cause notice dated 22.07.2020 has been issued in the FORM GST DRC-01 for the financial years 2017-18, 2018-19 and 2019-20 on the ground that the suppliers’ GSTN had been cancelled ab-initio and hence, the petitioner no.1 has been asked to pay the tax of Rs. 2,37,20,365/- for the year 2017-18, Rs. 7,90,31,782/- for the year 2018-19 and Rs. 15,81,616/- for the year 2019-20. Although, it is a grievance of the petitioners that respondents did not disclose the details of dealers whose registrations were cancelled.

Once again, the search was conducted on 23.12.2020 and the Panchnama had been drawn. It is further averred that the petitioner has been summoned on 06.01.2021 under Section 70 of the CGST Act to appear before him on 20.01.2021 to give statement and produce documents mentioned in the summons. The petitioner therefore filed Special Civil Application No. 3729 of 2021 seeking various reliefs. The Court issued notice and passed the order on 08.03.2021. It has essentially challenged the actions of the respondent under the CGST Act and also challenged the vires of Section 16(1) and 16(2)(c) of the CGST Act and also has sought the striking down of Section 43(A)(6) of the GGST Act. It also sought the declaration in relation to the input tax credit to be reversed.

Since another search was carried out on 07.07.2021 pending the adjudication of the show cause notice dated 05.11.2020 and several documents were seized, the petitioner is before this Court challenging action of the Respondents to set aside the attachment order.

The Hon’ble High Court observed that essentially since the question is of the provisional attachment, without there being any proceedings pending, according to the petitioner, at the time of exercising the powers under Section 83 of CGST Act, the Commissioner is required to form his opinion. Neither has he formed any opinion nor is it justifiable for him to exercise these powers in absence of any pending proceedings.

The rejoinder affidavit has been filed denying all contentions raised in the affidavit-in-reply. According to the petitioner, the formation of the opinion for the purpose of purported protection of the state revenue should be based on objective facts and not on ipse dixit and caprice of the respondent authority. According to the petitioner, the proceedings under Section 67 have been completed on 10.08.2021 and hence, there is no proceeding pending or initiation of any proceedings as contemplated under Chapters XII, XIV and XV and therefore, the attachment orders are ex-facie illegal.

The Hon;ble High Court relied on the case of Radha Krishan Industries [2021 (48) G.S.T.L. 113 (S.C.)], where the Court has held that provisional attachment is a draconian power exercised before finalization of assessment or raising of demand. The same has to be exercised with due caution. The provisional attachment as in aid of something else and its purpose is to protect the revenue.

Further, it was observed that the statute has contemplated an attachment during the pendency of the proceedings under the stipulated statutory provisions noticed earlier. An attachment which is contemplated in Section 83, in other words, at a stage which is anterior to the finalization of an assessment or the rising of a demand. A provisional attachment under Section 83 contemplates during the pendency of certain proceedings, which means that a final demand or liability is yet to be crystallized. The anticipatory attachment of this nature must strictly conform to the requirements of substantive and procedural embodied in the statute and the rules.

Further, the Hon’ble High Court relied on Vinodkumar Murlidhar Chechani [2021 (45) G.S.T.L. 209 (Guj.)], wherein it was held that the Court can determine whether the opinion is arbitrary, capricious or whimsical. The order and record must record and indicate that it was necessary to take a drastic action.

The Hon’ble High Court observed that as is quite clear from the various decisions that there shall need to be ordinarily the pendency of proceedings under Sections 62 or 63 or 64 or 67 or 73 or 74 of the GST Act for the commissioner to form an opinion for the purpose of protecting the interest of the Government Revenue to order in writing to attach the provisionally any property including the bank account belonging to the taxable person. In absence of any kind of pendency of proceedings, it is not permissible for the respondent authority to invoke powers under Section 83 for the purpose of provisional attachment. This Court in case of Piyush Shamjibhai Vasoya vs. Union of India and Others [SCA 16437/2020, decided on 27.01.2021] has in categorical terms held thus and quashed and set aside the provisional attachment. The Apex Court in no unclear terms has adopted the test of tangible material and has emphatically held that the writ petition before this Court under Article 226 of the Constitution challenging the provisional attachment is maintainable. The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled. Such powers when exercised must need to be preceded by the formation of an opinion by the Commissioner that it is necessary to so do it for the purpose of protecting the interest of the Government Revenue and the opinion needs to be formed on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the Government Revenue.

In the instant case, the search was carried out under the GGST Act at the office premises of the petitioner no.1 and the panchnama was drawn on 04.10.2019. There was discrepancy noticed in the stock, therefore summons came to be issued on 22.10.2019 under Section 70 of the GGST Act. As detailed hereinabove, the various proceedings followed this action of search and seizure dated 04.10.2019. The Court notices that the search proceedings were initiated of Tax (Enforcement) and the search of the business as well as residential premises of M/s. Madhav Copper Limited had begun soon thereafter and the provisional attachment had been directed invoking the powers under Section 83. The Commissioner had delegated the powers to the officers subordinate to them and accordingly, the powers have been exercised by the Deputy Commissioner, Assistant Commissioner as well as the State Tax Officer. The search proceedings were initiated on 07.07.2021 at the residential premises and concluded on the same date, it concluded on 09.07.2021 at the head office and at the factory and office premises, it continued upto 15.07.2021. The directors since were not present, they were asked to remain present and the proceeding was postponed on 16.07.2021. Once again, the search team on 10.08.2021 had visited the factory and office premises to carry out the search.

Prima facie, there does not appear to be any sustainability of contention that in absence of any kind of proceedings, the invocation had been made at the end of the respondent authority. The said proceedings since had been initiated on 07.07.2021, the order of attachment of bank account in FORM GST DRC 22, the attachment of immovable properties, the vehicles, movable properties and the personal properties of the Directors as well as directions to the debtors not to make the payments were on different dates starting from 08.07.2021 to 27.07.2021. Therefore, that contention is not found sustainable.

The vital question that arise is as to whether the authority concerned has exercised the powers by safeguarding the procedural aspects of giving opportunity of hearing to the parties, where it is required to pass a reasoned order. Noticing the fact that the hearing has already taken place two months’ back and according to learned advocates appearing for the petitioners, it was an exhaustive hearing which lasted for many hours, the order is needed to be passed by the concerned authority and therefore, let such order be passed within 10 days by the authority concerned as giving an opportunity of hearing alone is not sufficient, passing of reasoned order will also be equally imperative and the same shall need to be done to fulfill the obligations under the principle of natural justice as also in due compliance of the directions issued in case of Radha Krishan Industries (supra) bearing in mind the provisions and rules in this regard.

GST Partial relief provided to taxpayer on condition of co-operation in investigation

This Court has prima facie noticed that the allegations made are of such a nature that the respondents have collected the material from the business premise during the investigation revealing that the company has availed the Input Tax Credit by engaging in billing transactions for wrongful availment of the ITC, the huge amount of ITC to the tune of Rs. 137 Crores is alleged to be fraudulently claimed by the petitioner and according to the petitioner, the cancellation of registration number of the companies with which it was dealing would not be in many manner putting an onus on the petitioner company. Here is a public limited company, the allegation of wrongful availment of Rs. 137 Crores and attachment order is without any credible material on record. According to the petitioner, unless the show cause notices are decided, it will be wrong to say on the part of the respondent that 36 registered dealers who had the GSTN and which were active on the date of supply of the goods and who had also filed the regular returns under the GST, for any default on their part, liability cannot be shifted on the petitioner. This version is already before the concerned authority for him to consider.

Finally this petition was disposed of without entering into the merits of the matter by not prejudicing the rights of the parties before the authority concerned. The investigation, as submitted before this Court, shall be completed within 8 weeks. The petitioner shall cooperate without fail. The petitioner was granted relief in terms of fulfilment of its business orders.

FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT

This is a petition preferred under Article 226 of the Constitution of India challenging the provisional attachment order attaching the properties of Madhav Copper Limited under Section 83 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’) and under the provisions of Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘GGST Act’).

2. The brief facts are as follows: –

2.1. The petitioner no.1 is a company incorporated in the year 2012 which is engaged in the business of Copper Products and is a leading manufacturers of various products of copper like Copper Rod, Copper Wire, Fiber Glass Conductor etc. The petitioner no.1 also imports raw-materials/ scraps for manufacturing these products and export final products made out of the copper. It has its own Certificate of Importer-Exporter Code (IEC). The petitioner also supplies to the reputed private entities and government entities across the India. All requisite licenses are with the petitioner for the purpose of manufacturing at their factory at Bhavnagar.

2.2. The petitioners had been issued the certificate of ISO 45001:2018 on 30.09.2019 for the period from 30.09.2019 to 29.09.2020 and also issued ISO 14001:2015 on 08.11.2019 and ISO 9001:2015 on 13.11.2019. The petitioners also applied for the GSTN on the commencement of GCST and GGST Acts, 2017. It enjoys the registration of GST. The State Jurisdictional Office for the purpose of assessment etc. is Division-9, Range-19, Ghatak-75, Bhavnagar. So far as the Central Jurisdiction is concerned, Bhavnagar Division-I, Ranger-I is the jurisdictional office.

2.3. A notice came to be issued by the Assistant Commissioner of State Tax in the Form GST DRC-01 on 08.07.2019 calling upon the petitioner no.1 to make payment for the input tax credit claimed for the purchase made through the suppliers who defaulted in payment of GST. The reply had been given on 06.08.2020 with a request to drop the proceedings, however, no communication has been received from the Assistant Commissioner of State Tax till this date. According to the petitioner, it has to be understood that the explanation is accepted.

2.4. The State Tax Officer-5, Unit 75, Bhavnagar sought an explanation under Section 61 of the GGST Act in FORM GST ASMT-10 dated 18.07.2019 in connection with the petitioners’ supplier M/s. Gujarat Enterprises and M/s. Royal Trading. Explanation has been given by way of reply dated 12.08.2019 to the State Tax Officer–5. No communication has been received from the said officer and hence also, according to the petitioner, the explanation is accepted.

2.5. It is further urged that to the shock and dismay of the petitioner, the officers of the State Tax had caused search under the GGST Act at the office premises of the petitioner no.1 and drew the Panchnama on 04.10.2019 and seized various purchase files as noted in order of seizure on the very date under FORM GST INS-02. Since there was a discrepancy in the stock, the petitioner no.1 voluntarily deposited the GST to the tune of Rs. 1,76,198/- and 15% penalty by DRC-03. The petitioner has also substantiated the same with the Challan in FORM GST DRC-03.

2.6. The summons came to be issued on 22.10.2019 exercising the powers vested under Section 70 of the GGST Act to appear before him on 25.10.2019 at Bhavnagar Office to give statement. The petitioner submitted the original invoices of purchase upto 25.10.2019, the original invoices from 01.11.2019 to 31.03.2020 and 01.04.2020 to 30.11.2020 also had been received by the Assistant Commissioner of State Tax on the very day.

2.7. Pursuant to the said search and seizure dated 04.10.2019, the respondent no.2 issued FORM GST DRC-01A under Rule 142(1A) on 22.07.2020 directing the petitioner to deposit the total tax of Rs. 10,43,33,762/- under Section 74(5) of the GGST Act on the ground that the ITC was not allowable as per the provisions of Section 16(2) of the GGST Act and the same was required to be recovered under the provisions of Section 74 of the GGST Act.

2.8. It is essentially on the ground that the registered company M/s. Madhav Copper Limited availed the credit of cancellation of GSTN and charges which is nothing but the recovery of the damages resulting from the breach of contract. Accordingly, it has held that the petitioner has wrongly availed and utilized ITC totally amounting to Rs. 10.43 crores (rounded off) which is not allowable under Section 16(2) of the GGST Act and hence, it was directed to be recovered along with interest and penalty.

2.9. The petitioner has further urged that the State Tax Officer-4 sought explanation under Section 61 of the GGST Act on 20.07.2020 in connection with supplier M/s. Gujarat Enterprises and M/s. Aksha Enterprises. The explanation has been made on 24.08.2020 and no communication has been received and therefore, the petitioner assumed that nothing objectionable was found.

2.10. A show cause notice dated 22.07.2020 has been issued in the FORM GST DRC-01 for the financial years 2017-18, 2018-19 and 2019-20 on the ground that the suppliers’ GSTN had been cancelled ab-initio and hence, the petitioner no.1 has been asked to pay the tax of Rs. 2,37,20,365/- for the year 2017-18, Rs. 7,90,31,782/- for the year 2018-19 and Rs. 15,81,616/- for the year 2019-20. Although, it is a grievance of the petitioners that respondents did not disclose the details of dealers whose registrations were cancelled.

2.11. According to the petitioner, the payments have been made to all through the banking channel towards the goods as well as tax, therefore, the respondent no.2 cannot ask the petitioner no.1 to pay the tax of the supplied goods. The discrepancies in the return also has been sought for in the FORM GST ASMT-10 on 14.12.2020 under Rule 99(1) of the GGST Rules, 2017.

2.12. Once again, the search was conducted on 23.12.2020 and the Panchnama had been drawn. The petitioners have cooperated all throughout. It is further averred that the petitioner has been summoned on 06.01.2021 by the Director General of Goods and Services Tax Intelligence, Surat Zonal Unit exercising the powers under Section 70 of the CGST Act to appear before him on 20.01.2021 to give statement and produce documents mentioned in the summons. The petitioner therefore filed Special Civil Application No. 3729 of 2021 seeking various reliefs. The Court issued notice and passed the order on 08.03.2021. It has essentially challenged the actions of the respondent under the CGST Act and also challenged the vires of Section 16(1) and 16(2)(c) of the CGST Act and also has sought the striking down of Section 43(A)(6) of the GGST Act. It also sought the declaration in relation to the input tax credit to be reversed.

2.13. Since another search was carried out on 07.07.2021 pending the adjudication of the show cause notice dated 05.11.2020 and several documents were seized, the petitioner is before this Court seeking following reliefs: –

“(A) To issue a writ of mandamus and/or writ of certiorari and/or any other appropriate writ, order or direction directing to quash and set Provisional Attachment Orders at Annexure-A, Annexure-B, Annexure-C, Annexure-D and Annexure-E passed by the respondent no.2 with consequential and incidental relief in favours of the petitioners on such terms and conditions as may be deemed fit and proper to this Hon’ble Court.

(B) To issue a writ of mandamus and/or writ of certiorari and/or any other appropriate writ, order or direction directing to quash and set aside communication / an order dated 27/07/2021 at Annexure-F passed by the respondent no.2 and declare that petitioner no.1 is entitled to receive its debts from the debtors (buyers) of the petitioner No.1 along with other consequential and incidental reliefs on such terms and conditions as may be deemed fit and proper to this Hon’ble Court.

(C) To issue a writ of mandamus and/or writ of certiorari and/or any other appropriate writ, order or direction to quash and set an order passed by the respondent no.2 blocking Input Tax Credit of Rs. 3,10,07,409/- of the petitioner no.1 company by communication dated 09/07/2021 at Annexure-G on such terms and conditions as may be deemed fit and proper to this Hon’ble Court.

(D) To issue a writ of mandamus and/or writ of certiorari and/or any other appropriate writ, order or direction to quash and set an order of Prohibition passed in FORM GST INS-03 dated 10/07/2021 by the respondent no.2 prohibiting the petitioners from removing, part with or otherwise deal with the goods except with the previous permission at Annexure-H on such terms and conditions as may be deemed fit and proper to this Hon’ble Court.

(E) Pending admission, final hearing and disposal of this petition, to stay implementation and operations of Provisional Attachment Orders at Annexure-A, Annexure-B, Annexure-C, Annexure-D and Annexure-E passed by the respondent no.2 on such terms and conditions as may be deemed fit and proper to this Hon’ble Court.

(F) Pending admission, final hearing and disposal of this petition, to stay implementation and operations of the order/communication dated 27/07/2021 at Annexure-F and to direct the respondent nos. 1 and 2 to communicate all 49 buyers (debtors) of the petitioner no.1 who are listed in communication dated 27/07/2021 at Annexure-F to make the payment against the Tax Invoice and goods received from the petitioner no.1 in the designated bank account declared before the GST authority on such terms and conditions as may be deemed fit and proper to this Hon’ble Court.

(G) Pending admission, final hearing and disposal of this petition, to stay implementation and operation of an order of Prohibition passed in FORM GST INS-03 dated 10/07/2021 by the respondent no.2 at Annexure-H prohibiting the petitioners from removing, part with or otherwise deal with the goods except with the previous permission and permit the petitioner no.1 to dispatch the finished goods to the Buyers of the petitioner no.1 on such terms and conditions as may be deemed fit and proper to this Hon’ble Court.

(H) To pass such other and further orders as this Hon’ble Court may deem just and proper in the facts and circumstances of the case and in the interest of the petitioners.

(I) To provide for the CGSTs of this petition. ”

3. On 07.10.2021 this Court issued notice. Essentially since the question is of the provisional attachment, without there being any proceedings pending, according to the petitioner, at the time of exercising the powers under Section 83 of CGST Act, the Commissioner is required to form his opinion. Neither has he formed any opinion nor is it justifiable for him to exercise these powers in absence of any pending proceedings.

4. Affidavit-in-reply is filed by the Assistant Commissioner of State Tax. According to the respondents, defreezing of the attachment over the immovable properties vide order dated 09.07.2021 in Form DRC-22 and attachment order by which the bank account of the petitioner also has been attached on 08.07.2021 are sought to be questioned. The attachment is also made of the vehicles of the petitioner. According to the respondent authority, the debtors also have been asked not to pay any amount to the petitioner and the input tax credit of the petitioner also has been blocked. The authorities also blocked the ITC worth Rs. 3,10,07,409/-.

5. The petitioner has also challenged the action of the respondent of removing, parting with the stock, plant and machinery etc. without prior permission of the authorities. According to the respondent, in exercise of the powers under Section 83 of the Goods and Services Tax Act, 2017 the respondent authorities have acted in accordance with the provisions of Section 67 of the GST Act whereby the search warrant was issued by the Additional Commissioner of State Tax (Enforcement) and accordingly the authorities initiated the search proceedings at the business and residential premises of the petitioner no.1. For the purpose of protecting the government revenue, it is necessary to provisionally attach the property and hence, the exercise of powers under Section 83 have been done. The Commissioner have powers of delegation under Section 5 of the GST Act and it has delegated his powers to the officer subordinate to him.

5.1. It is further urged that the search proceedings have been concluded on 07.07.2021 at the residential places.

Search proceedings at the Head Office were concluded on 09.07.2021 and at the place of factory and office it were continued on day to day basis upto 15.07.2021. Since no Director was available at such places, summons were issued to Directors of M/s. Madhav Copper Limited to remain present at the State Tax Office and the proceedings were postpone till 16.07.2021.

5.2. On 10.08.2021, the search team visited at the place of factory and office and carried out further proceedings and also seized the documents etc. The bank accounts have been attached on 08.07.2021 in exercise of powers under Section 83. The vehicles, properties etc. have been attached and the ITC have been blocked under Rule 86(A) of the GST Rules.

5.3. On different dates various directions have been issued for the attachment of the properties and precluding the debtors to make payments. Reliance is place on Sections 67, 83 and 137 of the GST Act, 2017 and Rule 86(A) of the GST Rules and urged that exercising such powers, actions have been taken.

5.4. According to the respondent, the search proceedings under Section 67 of the GST Act were initiated on 07.07.2021 and got concluded on 10.08.2021. A detailed report of which was prepared and furnished to the appropriate authority. Confidential report in a sealed cover was also furnished before the Apex Court in Special Leave Petition bearing W.P. (Cr.) No. 301 of 2021, where the Apex Court directed the petitioner to approach the appropriate forum for any other relief during the progress of investigation and the confidential report which was furnished by the authorities in sealed envelop was taken on record and the matter was adjourned on 21.10.2021.

5.5. The grievance on the part of the respondent is that the authorities issued summons under Section 70 however, nobody has appeared and after the direction of the Apex Court, they appear before the authority on 17.09.2021. The material has been collected and the investigation is still under process which established a clear link of the petitioner in the fraud of wrongfully availing Input Credit Tax having its nexus with approximately 36 bogus firms. Therefore, there is a possibility of its involvement in billing transaction.

5.6. Section 137 specifies that when an offence is committed by a company, every person who is in charge of the company shall be deemed to be guilty. It is therefore urged that no interference at this stage is desirable. It cannot be said that the authorities have transgressed or acted beyond the scope and powers.

6. This Court has extensively heard learned advocate Mr. B.M.Mangukia assisted by learned advocate Mr. Chetan Pandya for the petitioners who has along the line of the memo of the petition argued this matter.

6.1. Reliance is placed on the following judgments: –

(i) Radha Krishan Industries vs. State of Himachal Pradesh [2021 (48) G.S.T.L. 113 (S.C.)]

(ii) Bhavesh Kiritbhai Kalani vs. Union of India [2021 (50) G.S.T.L. 37 (Guj.)]

(iii) Vinodkumar Murlidhar Chechani vs. State of Gujarat [2021 (45) G.S.T.L. 209 (Guj.)]

(iv) Jay Ambey Filament Private Limited vs. Union of India [2021 (44) G.S.T.L. 41 (Guj.)]

(v) Valerius Industries vs. Union of India [2019 (30) G.S.T.L. 15 (Guj.)]

(vi) Coromandel Agrico Private Limited vs. Commercial Tax Officer [2019 (26) G.S.T.L. 460 (Guj.)]

(vii) Patran Steel Rolling Mill vs. Asstt. Commissioner of State Tax, Unit 2 [2019 (20) G.S.T.L. 732 (Guj.)]

(viii) Prakashsinh Hathisinh Udavat vs. State of Gujarat [2019 (31) G.S.T.L. 583 (Guj.)]

6.2. The rejoinder affidavit has been filed denying all contentions raised in the affidavit-in-reply. According to the petitioner, the formation of the opinion for the purpose of purported protection of the state revenue should be based on objective facts and not on ipse dixit and caprice of the respondent authority. According to the petitioner, the proceedings under Section 67 have been completed on 10.08.2021 and hence, there is no proceeding pending or initiation of any proceedings as contemplated under Chapters XII, XIV and XV and therefore, the attachment orders are ex-facie illegal.

7. Learned Assistant Government Pleader Ms. Maithili Mehta has argued along the line of the contentions raised in the affidavit-in-reply. According to her, the investigation is going on. She does not dispute that the hearing has been completed two months back and the order needs to be yet passed. She further has submitted that the liability of the petitioner is huge and hence, at the stage of provisional attachment, the Court may not interfere.

8. During the hearing, the Court directed the additional affidavit on behalf of the petitioners and accordingly, the petitioner no.2 has solemnly affirmed that the stock of the company is approximately Rs. 18 Crores being 209156.6 kgs. in quantity and the finished goods worth approximately Rs.4.64 Crores being 53,128.24 kgs in quantity is lying with the company. The finished goods which are to be supplied to the public sector as well as private sector companies within the Country and out side are to be discharged the contractual obligations where one company is at Sri Lanka and another at United Kingdom.

8.1. It is further the say of the petitioner no.2 that the company has supplied the finished goods to several other companies prior to July, 2021 and Rs. 38.68 Crores are required to be recovered from the debtors of the company. According to the petitioner, various orders have been received from the different customers worth Rs. 59 Crores as per the current price of the material. The final product lying ready would approximately be of Rs. 70 Crores. The public sector entities like Indian Railway – CLW, Northern Railway, South Eastern Railway, Bharat Heavy Electricals Limited – Bhopal and Jhansi, Suzlon Energy Limited, Pubuddu Engineering Limited – Sri Lanka and Cannock Chemicals Limited – United Kingdom. It is further the say that the company is running its current account in the Bank of Baroda. It has an arrangement of overdraft of about Rs. 10 Crores and deficit is of Rs. 7 Crores. The company also needs to make payment of tax to the revenue authorities approximately to the tune of Rs. 2.5 Crores and the company has to receive the ITC of approximately Rs. 3 Crores. Therefore, the request is made to unblock the same.

8.2. It is ensured that the company would provide the details of every transaction at the end of the day to the revenue authority without fail. All the transactions of purchase and other expenses would be through the bank transaction and not by cash. It is also the say of the petitioner that the director would not draw any remuneration of any nature until the authority permits. The company would not pay any dividend to any share-holders. The company will have no objection of the revenue authority will place any officer at the factory premises of the petitioner. Such operation will be posted with every financial transaction immediately.

9. Since the affidavit has been filed today, learned Assistant Government Pleader Ms. Mehta and learned Senior Standing Counsel Mr. Nikunt Raval also have been heard. On receiving the instructions from the respective officers, they have objected to the allowing of the proposal at para 6, 7 and 8 of the additional affidavit.

9.1 It is further urged that the supply which needs to be made to the private as well as public undertakings to fulfill the contractual obligations, the Court may consider deputing of the officer of the rank of Assistant Commissioner of State Tax or the Deputy Commissioner of the State Tax and the amount to be deposited in the current account and not in the CC Account. It has a serious reservations regarding lifting of any attachment of the bank.

10. Noticing the decision of the Apex Court in case of Radha Krishan Industries (Supra), where the Court has held that provisional attachment is a draconian power exercised before finalization of assessment or raising of demand. The same has to be exercised with due caution. The provisional attachment as in aid of something else and its purpose is to protect the revenue. Its validity would be depend on strict observance of statutory pre-conditions. The formation of Commissioner’s opinion must have proximate and live nexus to protection of revenue interest and it is not left to unguided subjective discretion. Commissioner’s opinion must be based on tangible material regarding statutory requirements. Thus, the powers are with the commissioner to levy the provisional attachment but the formation of the opinion has to be on the part of the concerned officer. The power to levy the provisional attachment is considered draconian in nature by exercising the powers. The property belonging to the taxable person may be attached including the bank account.

The statute has contemplated an attachment during the pendency of the proceedings under the stipulated statutory provisions noticed earlier. An attachment which is contemplated in Section 83, in other words, at a stage which is anterior to the finalization of an assessment or the rising of a demand. Conscious as the Legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including bank account of the taxable person, it conditioned the exercise of the powers by employing specific statutory language which conditions the exercise of the power. There is an insistence of formation of opinion. The procedural requirement is of right to submit objection and opportunity of hearing which according to the Apex Court requires strict compliance. There must be a reasoned order passed accepting or rejecting the objections. Thus, the statute has provided a guided discretion of the Commissioner and the formation of the opinion to have a proximate and live nexus for the purpose of protecting the interest of the Government Revenue. The necessity, according to the Apex Court, postulates a more stringent requirement than a mere expediency. A provisional attachment under Section 83 contemplates during the pendency of certain proceedings, which means that a final demand or liability is yet to be crystallized. The anticipatory attachment of this nature must strictly conform to the requirements of substantive and procedural embodied in the statute and the rules.

“34 Similar to the decisions of the Gujarat High Court, other High Courts have recognized the restrictive nature of the power of provisional attachment under Section 83 of the SGST Act and the need for it to be based on adequate substantive material. The High Courts have also underscored the extraordinary nature of this power, necessitating due caution in its exercise.

40 The marginal note to Section 83 provides some indication of Parliamentary intent. Section 83 provides for “provisional attachment to protect revenue in certain cases”. The first point to note is that the attachment is provisional – provisional in the sense that it is in aid of something else. The second point to note is that the purpose is to protect the revenue. The third point is the expression “in certain cases” which shows that in order to effect a provisional attachment, the conditions which have been spelt out in the statute must be fulfilled. Marginal notes, it is well-settled, do not control a statutory provision but provide some guidance in regard to content. Put differently, a marginal note indicates the drift of the provision. With these prefatory comments, the judgment must turn to the essential task of statutory construction. The language of the statute has to be interpreted bearing in mind that it is a taxing statute which comes up for interpretation. The provision must be construed on its plain terms. Equally, in interpreting the statute, we must have regard to the purpose underlying the provision. An interpretation which effectuates the purpose must be preferred particularly when it is supported by the plain meaning of the words used.

48 Now in this backdrop, it becomes necessary to emphasize that before the Commissioner can levy a provisional attachment, there must be a formation of “the opinion” and that it is necessary “so to do” for the purpose of protecting the interest of the government revenue. The power to levy a provisional attachment is draconian in nature. By the exercise of the power, a property belonging to the taxable person may be attached, including a bank account. The attachment is provisional and the statute has contemplated an attachment during the pendency of the proceedings under the stipulated statutory provisions noticed earlier. An attachment which is contemplated in Section 83 is, in other words, at a stage which is anterior to the finalization of an assessment or the raising of a demand. Conscious as the legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, it conditioned the exercise of the power by employing specific statutory language which conditions the exercise of the power. The language of the statute indicates first, the necessity of the formation of opinion by the Commissioner; second, the formation of opinion before ordering a provisional attachment; third the existence of opinion that it is necessary so to do for the purpose of protecting the interest of the government revenue; fourth, the issuance of an order in writing for the attachment of any property of the taxable person; and fifth, the observance by the Commissioner of the provisions contained in the rules in regard to the manner of attachment. Each of these components of the statute are integral to a valid exercise of power. In other words, when the exercise of the power is challenged, the validity of its exercise will depend on a strict and punctilious observance of the statutory preconditions by the Commissioner. While conditioning the exercise of the power on the formation of an opinion by the Commissioner that “for the purpose of protecting the interest of the government revenue, it is necessary so to do”, it is evident that the statute has not left the formation of opinion to an unguided subjective discretion of the Commissioner. The formation of the opinion must bear a proximate and live nexus to the purpose of protecting the interest of the government revenue.

49 By utilizing the expression “it is necessary so to do” the legislature has evinced an intent that an attachment is authorized not merely because it is expedient to do so (or profitable or practicable for the revenue to do so) but because it is necessary to do so in order to protect interest of the government revenue. Necessity postulates that the interest of the revenue can be protected only by a provisional attachment without which the interest of the revenue would stand defeated. Necessity in other words postulates a more stringent requirement than a mere expediency. A provisional attachment under Section 83 is contemplated during the pendency of certain proceedings, meaning thereby that a final demand or liability is yet to be crystallized. An anticipatory attachment of this nature must strictly conform to the requirements, both substantive and procedural, embodied in the statute and the rules. The exercise of unguided discretion cannot be permissible because it will leave citizens and their legitimate business activities to the peril of arbitrary power. Each of these ingredients must be strictly applied before a provisional attachment on the property of an assesses can be levied. The Commissioner must be alive to the fact that such provisions are not intended to authorize Commissioners to make preemptive strikes on the property of the assessee, merely because property is available for being attached. There must be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the government revenue.

50 These expressions in regard to both the purpose and necessity of provisional attachment implicate the doctrine of proportionality. Proportionality mandates the existence of a proximate or live link between the need for the attachment and the purpose which it is intended to secure. It also postulates the maintenance of a proportion between the nature and extent of the attachment and the purpose which is sought to be served by ordering it. Moreover, the words embodied in sub-Section (1) of Section 83, as interpreted above, would leave no manner of doubt that while ordering a provisional attachment the Commissioner must in the formation of the opinion act on the basis of tangible material on the basis of which the formation of opinion is based in regard to the existence of the statutory requirement. While dealing with a similar provision contained in Section 4536 of the Gujarat Value Added Tax Act 2003 , one of us (Hon’ble Mr Justice MR Shah) speaking for a Division Bench of the Gujarat High Court in Vishwanath Realtor v State of Gujarat37 observed:

“8.3. Section 45 of the VAT Act confers powers upon the Commissioner to pass the order of provisional attachment of any property belonging to the dealer during the pendency of any proceedings of assessment or reassessment of turnover escaping assessment. However, the order of provisional attachment can be passed by the Commissioner when the Commissioner is of the opinion that for the purpose of protecting the interest of the Government Revenue, it is necessary so to do. Therefore, before passing the order of provisional attachment, there must be an opinion formed by the Commissioner that for the purpose of protecting the interest of the Government Revenue during the pendency of any proceedings of assessment or reassessment, it is necessary to attach provisionally any property belonging to the dealer. However, such satisfaction must be on some tangible material on objective facts with the Commissioner. In a given case, on the basis of the past conduct of the dealer and on the basis of some reliable information that the dealer is likely to defeat the claim of the Revenue in case any order is passed against the dealer under the VAT Act and/or the dealer is likely to sale his properties and/or sale and/or dispose of the properties and in case after the conclusion of the assessment/reassessment proceedings, if there is any tax liability, the Revenue may not be in a position to recover the amount thereafter, in such a case only, however, on formation of subjective satisfaction/opinion, the Commissioner may exercise the powers under Section 45 of the VAT Act.” (emphasis supplied)

53 Under sub-Rule (1) of Rule 159, an attachment of property by the Commissioner under Section 83 is effected by passing an order mentioning the details of the property which is attached. The form in which the order is to be made is prescribed in form GST DRC-22. This form is extracted below: FORM GST DRC 23

10.1. This Court in case of Bhavesh Kiritbhai Kalani (Supra), was considering the provisional attachment of the bank account, where there were no proceedings pending under Sections 62, 63, 67, 73 and 74 of the CGST Act, 2017, the proceedings were in connection with the third parties and hence, invocation of powers under Section 83 were held not to be availed with departmental authorities.

“11. Having heard both the sides, firstly, the decision rendered by this Court in case of Piyush Shamijibhai Vasoya vs. Union of India (Supra) delivered on 27.01.2021, shall need to be regarded. There also the controversy was in relation to the third party, in whose case the bank account in exercise of the powers under Section 83 of the CGST Act, 2017 had been freezed. It was a question of some actions taken by the authority concerned against few other individuals. The Court having noted that there being no proceedings under sections 62, 63, 64, 67, 73 or 74, having been initiated or pending against the writ applicant, held that the powers under Section 83 of the Act could not have been invoked by the respondents for the purpose of provisional attachment. Paragraph 6 to 9 are reproduced herein:

“6. Section 83 of the Act, 2017 reads thus: SECTION 83. Provisional attachment to protect revenue in certain cases. — (1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

7. Indisputably, in the case on hand, no proceedings under Section 62 or Section 63 or Section 64 or Section 67 or Section 73 or Section 74 of the Act have been initiated or pending against the writ applicant. In the absence of pendency of any such proceedings referred to above, the respondent no.2 could not have invoked Section83 of the Act for the purpose of provisional attachment. Assuming for the moment that something has surfaced in the course of any inquiry or investigation against the writ applicant as regards some business transaction with any other individuals, the same by itself will not confer jurisdiction to the respondent no.2 to invoke the Section 83 of the Act. The language of Section 83 of the Act is plain and simple. In the absence of any proceedings pending as on date against the writ applicant under the provisions of the GST Act as referred to under Section83 of the Act, the order of provisional attachment could not have been passed.

9.In such circumstances referred to above, we are left with no other option to quash and set aside the impugned order of provisional attachment. However, we clarify that in future if any proceedings are initiated as referred to in Section83 of the Act and if the authority deems fit, then he may proceed to invoke the Section83 of the Act in accordance with law. However, as on date, the order of provisional attachment cannot continue.

9. In the result, this writ application succeeds and is hereby allowed. The impugned communication at Page 24, Annexure-C to this writ-application is hereby quashed and set aside. The attachment is ordered to be lifted. The bank shall permit the writ-applicant to operate his bank account.

12. Mr. Vyas would submit that the proceedings under Section 79 of the Act, 2017 have been initiated against the writapplicant and they are pending as on date. We may only say that if such proceedings have been initiated and are pending, the same may continue in accordance with law. We do not express any opinion on merits as regards the proceedings initiated under Section79 of the Act, 2017.”

13. We have given to understand by the learned advocate, Mr. Paneri that as the proceedings under Section 79 of the Act have already been initiated against the writ applicant under jurisdiction of the Bombay High Court, he earlier also have challenged such proceedings initiated under Section 79 of the Bombay high Court and the same have not been initiated here as he was waiting for this writ petition to be taken up and the action on the part of the bank of freezing his account also be interfered with.

14. We have noticed that in the instant case also, there are no proceedings against the present petitioner under Sections 62, 63, 64, 67, 73 and 74 of the Act. There is no reason therefore, to invoke section 83 against the writ applicant and proceedings. Since the proceedings are initiated by the authorities in connection with the third parties, invocation of powers under Section 83 are not available with the respondents. Therefore, the order of the provisional attachment in connection with the bank account No.3785569992 of M/s. Global Corporation be interfered with. It is also necessary to note that despite of due service to the bank the bank has chosen not to remain present. Under the RTI Act, where
information was sought by the petitioner, It has chosen not to divulge on the ground of pending investigation strangely. It is rightly pointed out before us that this action of freezing account is harsh and to be resorted as provided under the Statute. Thus, being a
drastic power, the authority concerned cannot be oblivious of the serious consequences of provisional attachment of the bank account. Even if for the purpose of safeguarding the interest of the government revenue, the bank had chosen to follow the directions from the respondents, not to intimate to the petitioner as to why his account was freezed is wholly impermissible. In relation to the third party when such powers are impermissible to be exercised under section 83 of the Act, the bank ought to have applied its mind and more so when even under the RTI Act, the bank had been requested to furnish the details. Let a copy of this order be sent to the legal department of the bank for the future reference where it is not to be a party to something which the statute does not permit.

14. We notice at this stage that section 79 of CGST Act, 2017 which provides for the powers to the proper officer to recover the amount where the amount payable by a person to the government under the provisions of this act and rules, is not paid. What would be relevant for the purpose of this matter is to refer to Section 79 (1)(c)(i) where the proper officer by a notice in writing require any other person from whom money is due or may become due to such person or who holds or may subsequently hold money for or on account of such person, to pay the government either forthwith upon the money becoming due or being held, or within the time specified in the notice not being before the money becomes due or is held, so much of the money as is sufficient to pay the amount due from such person or the whole of the money when it is equal to or less than that amount. Such person to whom such a notice is issued, is bound to comply with the notice and where the notice is issued to a post office, banking company or an insurer, it shall not be necessary to produce any pass book, deposit receipt, policy or any other document for the purpose of entry, endorsement or the like being made before payment is made. Section (1) (C)(iii) also provides that in case of a person to whom the notice has been issued, fails to make the payment in pursuance to thereof of the government despite of the notice, he shall be deemed to be a defaulter in respect of the amount specified in the notice and all the consequences of this Act or the rules made thereunder shall follow. The proper officer may detain any movable or immovable property belonging to such person and detain the same until the amount payable is paid.”

10.2. This Court in case of Vinodkumar Murlidhar Chechani (Supra), was considering the provisional attachment of the bank account, it held that the Court can determine whether the opinion is arbitrary, capricious or whimsical. The order and record must record and indicate that it was necessary to take a drastic action.

“42. Thus, the amount as on date in the two bank accounts aggregates to Rs.22,065=00. What good purpose the department is going to achieve by provisionally attaching the two bank accounts with balance of a paltry amount of Rs.22,065=00.

43. Let us try to take a practical view of the matter. The avowed object of exercise of power under Section 83 of the Act for the purpose of provisional attachment of any property is to protect the interest of the Revenue. Say for instance, tomorrow an order of assessment is passed and liability of the assessee to pay a particular amount is fixed. It is at that stage that the department may consider recovering the amount determined towards the tax liability from the amount lying in the bank accounts. In the same manner, if any immovable property has been provisionally attached and final liability towards the payment of tax is fixed under the order of assessment, then such immovable property can be put to auction for the purpose of recovering the dues. In the case on hand, we do not propose to interfere with the investigation already undertaken by the department. Ultimately, if sufficient material surfaces indicating the involvement of the writ-applicant in some bogus transaction, the next step in the process can always be a show-cause notice under Section 73 or Section 74 of the Act, as the case may be. However, to provisionally attach all the bank accounts and that too those accounts in which there is hardly any balance would only cause undue hardship to the assessee. This is the grey area where the Revenue or the authority concerned needs to the apply its reason mind why be for in thVale rius power is Industries exercised (supra)This this

Court observed that the considerations are altogether different for the purpose of exercising the power of provisional attachment under Section 83 of the Act. Just because some proceedings are initiated under Section 67 of the Act by itself may not be sufficient to arrive at the subjective satisfaction that it is necessary to provisionally attach the property for the purpose of protecting the interest of the Government Revenue. An order of provisional attachment cannot be as a matter of course. It is one of the drastic measures which the authority may be compelled to take if the situation demands for the purpose of protecting the interest of the Government Revenue.

50. In the overall view of the matter, more particularly, having regard to the fact that there is hardly a balance of Rs.22,065/- in the two bank accounts, we see no good reason to continue the provisional attachment.

51. In the result, this writ-application succeeds and is hereby allowed. The impugned order of provisional attachment of the two bank accounts is hereby quashed and set-aside. The connected Civil Application would not survive and the same is disposed of accordingly.”

11. As is quite clear from the various decisions which have been discussed hereinabove, that there shall need to be ordinarily the pendency of proceedings under Sections 62 or 63 or 64 or 67 or 73 or 74 of the GST Act for the commissioner to form an opinion for the purpose of protecting the interest of the Government Revenue to order in writing to attach the provisionally any property including the bank account belonging to the taxable person. In absence of any kind of pendency of proceedings, it is not permissible for the respondent authority to invoke powers under Section 83 for the purpose of provisional attachment. This Court in case of Piyush Shamjibhai Vasoya vs. Union of India and Others [SCA 16437/2020, decided on 27.01.2021] has in categorical terms held thus and quashed and set aside the provisional attachment.

11.1. The Apex Court in no unclear terms has adopted the test of tangible material and has emphatically held that the writ petition before this Court under Article 226 of the Constitution challenging the provisional attachment is maintainable. The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled. Such powers when exercised must need to be preceded by the formation of an opinion by the Commissioner that it is necessary to so do it for the purpose of protecting the interest of the Government Revenue and the opinion needs to be formed on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the Government Revenue.

11.2. The reference to the provisions of Rule 159(5) also provides that a person whose property is attached is entitled to the safeguard of submitting the objections that the property was or is not liable to attachment and needs to be given an opportunity of being heard and the Commissioner is duty bound to deal with the objections by passing a reasoned order which must be communicated to the taxable person whose property is attached.

12. In this background, the Court needs to consider the actions on the part of the respondent authority. Firstly, it needs to be held that the aspect of alternative remedy will not have any bearing. The writ petition under Article 226 is maintainable when there is a provisional attachment made by the respondent authority. Section 67 of the GST Act speaks of the power of inspection, search and seizure where the proper officer not below the rank of Joint Commissioner has a reason to believe that a taxable person has suppressed any transaction relating to supply of goods or services or both or the stock of goods in hand or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of the provisions of this Act or rules made thereunder to evade tax under this Act, he may authorize in writing any other officer of central tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place.

13. In the instant case, the search was carried out under the GGST Act at the office premises of the petitioner no.1 and the panchnama was drawn on 04.10.2019. There was discrepancy noticed in the stock, therefore summons came to be issued on 22.10.2019 under Section 70 of the GGST Act. As detailed hereinabove, the various proceedings followed this action of search and seizure dated 04.10.2019. The Court notices that the search proceedings were initiated of Tax (Enforcement) and the search of the business as well as residential premises of M/s. Madhav Copper Limited had begun soon thereafter and the provisional attachment had been directed invoking the powers under Section 83. The Commissioner had delegated the powers to the officers subordinate to them and accordingly, the powers have been exercised by the Deputy Commissioner, Assistant Commissioner as well as the State Tax Officer. The search proceedings were initiated on 07.07.2021 at the residential premises and concluded on the same date, it concluded on 09.07.2021 at the head office and at the factory and office premises, it continued upto 15.07.2021. The directors since were not present, they were asked to remain present and the proceeding was postponed on 16.07.2021. Once again, the search team on 10.08.2021 had visited the factory and office premises to carry out the search.

14. Prima facie, there does not appear to be any sustainability of contention that in absence of any kind of proceedings, the invocation had been made at the end of the respondent authority. The said proceedings since had been initiated on 07.07.2021, the order of attachment of bank account in FORM GST DRC 22, the attachment of immovable properties, the vehicles, movable properties and the personal properties of the Directors as well as directions to the debtors not to make the payments were on different dates starting from 08.07.2021 to 27.07.2021. Therefore, that contention is not found sustainable.

15. The vital question that arise is as to whether the authority concerned has exercised the powers by safeguarding the procedural aspects of giving opportunity of hearing to the parties, where it is required to pass a reasoned order. Noticing the fact that the hearing has already taken place two months’ back and according to learned advocates appearing for the petitioners, it was an exhaustive hearing which lasted for many hours, the order is needed to be passed by the concerned authority and therefore, let such order be passed within 10 days by the authority concerned as giving an opportunity of hearing alone is not sufficient, passing of reasoned order will also be equally imperative and the same shall need to be done to fulfill the obligations under the principle of natural justice as also in due compliance of the directions issued in case of Radha Krishan Industries (supra) bearing in mind the provisions and rules in this regard.

16. This Court has prima facie noticed that the allegations made are of such a nature that the respondents have collected the material from the business premise during the investigation revealing that the company has availed the Input Tax Credit by engaging in billing transactions for wrongful availment of the ITC, the huge amount of ITC to the tune of Rs. 137 Crores is alleged to be fraudulently claimed by the petitioner and according to the petitioner, the cancellation of registration number of the companies with which it was dealing would not be in many manner putting an onus on the petitioner company. Here is a public limited company, the allegation of wrongful availment of Rs. 137 Crores and attachment order is without any credible material on record. According to the petitioner, unless the show cause notices are decided, it will be wrong to say on the part of the respondent that 36 registered dealers who had the GSTN and which were active on the date of supply of the goods and who had also filed the regular returns under the GST, for any default on their part, liability cannot be shifted on the petitioner. This version is already before the concerned authority for him to consider.

17. Today, learned Assistant Government Pleader Ms.Maithili Mehta has placed before us the order of this Court dated 14.10.2021 in anticipatory bail delivered in Criminal Misc. Application Nos.17697, 17700 and 17702 of 2021, where the Court after perusing the confidential papers supplied by the learned Public Prosecutor noticed the evasive reply to certain important questions on the part of the applicants to hold that they have not been cooperating with the Investigating Agency.

17.1. We could notice that the recall of the order also was sought by way of Criminal Misc. Applications (Recall)No. 01 of 2021 in Criminal Misc. Application No. 17697 of 2021, Criminal Misc. Applications (Recall)No. 01 of 2021 in Criminal Misc. Application No. 17700 of 2021 and Criminal Misc. Applications (Recall)No. 01 of 2021 in Criminal Misc. Application No. 17702 of 2021 which has been also decided by this Court on 29.10.2021 rejecting the request of the petitioners and the Court had chosen not to go into the merits by considering the recall application to hold that the submissions canvased by both the sides have been duly recorded and regarded, there was no occasion for the Court to recall.

17.2. We have also heard both the sides on this aspect including the recording of the statements of all the three directors on 17.09.2021 and 18.09.2021 after the Apex Court’s order dated 15.09.2021.

17.3. We could see the detailed recording of statements of Mr. Nileshbhai Natubhai Patel who essentially is having a key role in the decision making process as also handling the Banking and Finance. The statement of Mr. Rohitbhai Bhikhabhai Chauhan who according to the petitioner, is availing the technological support to the company and Mr. Divya Arvindbhai Monpara, who though is director and the signatory to the various transactions of the company, he emphasizes the role of Mr.Nilesh Patel as a key person to the company as a director.

18. According to the learned AGP, the Investigating Officer will take about eight weeks’ time to complete the investigation.

19. Learned advocate, Mr. Mangukiya appearing for the petitioners has urged that the directors of the petitioner company have been cooperating with the Investigating Agency. Exhaustive statements of theirs have been recorded and therefore, there will not be any requirement for them to once again be called by the officer concerned, except for the purpose of their arrest in wake of the rejection of the anticipatory bail and according to him, that is impermissible. He has also relied on the complaints which have been filed under Section 132 (1)(B) of the CGST Act and GGST Act along with Section 120B of the Indian Penal Code before the Court of learned Additional Chief Metropolitan Magistrate being Criminal Case Nos. 108899/2021, 124170/2021, 129904/2021 and 108884/2021.

20. Insistence on the part of the petitioner is that nowhere in the complaint made before the Court there is a whisper about the involvement of the present petitioner and hence, that should also be a guiding factor for the officer not to insist on the presence of the petitioner.

21. The Court chooses not to enter into the arena of the merit at this stage when the hearing has already been concluded, however, noticing that there are certain obligations to be fulfilled by the company, we deem it appropriate to direct as follows: –

(i) The respondent authority shall deliver the order of the hearing, concluded of the show cause notices, within 10 days of the receipt of the copy of this order.

(ii) The finished goods produced by the company which have been lying with the company can be permitted to be utilized for fulfilling the contractual obligations of the two countries namely Sri Lanka and United Kingdom.

(iii) Two of the contracts which are to be carried out of public sector are also to be permitted to be fulfilled out of the finished goods lying with the company which is of 53,128.24 kgs.

(iv) Once the company supplies the finished goods to the public sector entities as also to the foreign companies, the amount received shall be deposited in the current account in Bank of Baroda of the company so that the track of same can be recorded by the Revenue Authority.

(v) So far as the operating of the current account in Bank of Baroda, the credit of the ITC worth Rs. 3 Crores and unlocking of the same, no order is presently needed to be passed. The same is urged before the respondent already and the same shall be considered by the concerned authority at the time of adjudication.

(vi) The company shall provide the details of every transaction physically as well as through e-mode to the Revenue Authority without fail. As ensured before this Court, all the transactions of the supply shall be monitored by the Deputy Commissioner of State Tax Department, Bhavnagar.

(vii) With regard to any other directions sought by way of requests, the same shall be considered by the authority concerned who is directed to adjudicate the matter within 10 days from the date of receipt of this order.

(viii) As we have noted above that the process of investigation is continuing and as urged before us, it is about further six to eight weeks which will be required for the same to be completed, considering the magnitude of allegations, the period of eight weeks is granted for the investigation to be completed.

(ix) It is also being directed that the petitioner, who is before this Court seeking to invoke the writ jurisdiction of this Court shall need to essentially cooperate with the Investigating Officer and the Assessing Officer who is looking into this matter. Recording of his earlier statement or his cooperation at an earlier date will not in any manner relieve him of his obligations under the law, more particularly, being the directors of the company which has allegation of taking undue benefits of the provision of the law.

(x) The director of the petitioner company (petitioner no.2) will present himself before the Assistant Commissioner on 01.12.2021 at 11:00 a.m. in furtherance of the cooperation which is required by the officer in connection with this and thereafter, whenever necessary during the period of investigation. However, the officer concerned shall also attempt to complete the individual interrogation expeditiously.

22. This petition is being disposed of without entering into the merits of the matter. The disposal of this matter shall not prejudice the rights of the parties before the authority concerned. The investigation, as submitted before this Court, shall be completed within 8 weeks. The petitioner shall cooperate without fail. Any absence of cooperation from the petitioner, the authority shall be at liberty to take the legal recourse available.

23. Without entering into the merits and as discussed hereinabove, we chose to pass the above directions including the specific direction to the directors of the petitioner company for cooperation.

24. For carrying out the specified transactions which have been permitted in this order, for any further detailing, anything if is needed to be done, without in any manner truncating the order or without improvisation thereof, the Deputy Commissioner, appointed by this Court, shall be at liberty to take the decision.

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