Case Law Details
Madhav Copper Limited Vs State of Gujarat (Gujarat High Court)
Mr. Bairagar, the learned AGP, wants the writ applicant to apply for revocation of the cancellation of registration in the requisite Form GST REG 21 Online at the GST common portal in accordance with the provisions of Section 30 of the GGST Act read with rule 23 of the GGST Rules.
In this regard, we may only say that as the writ applicant has already filed an application for revocation of the cancellation of registration in physical form, as an exceptional case, let this application filed by the writ applicant in physical form be processed and appropriate order be passed. The department may not insist for applying online at the GST common portal as it may create some technical problems.
We direct the department to immediately look into the application dated 12.04.2022 referred to above and pass the necessary orders at the earliest. We direct the department to permit the writ applicant to make the payments towards staff salary, operational expenses, electricity bills etc. from the Cash Credit Account after being satisfied as regards the nature of the payment. The revocation application shall be decided within a period of one week from today and the intimation to the debtors shall also be issued within one week from today.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. The matter was taken up for further hearing today. We have heard Mr. Mihir Joshi, the learned Senior Counsel assisted by Mr. Chetan Pandya, the learned advocate appearing for the writ applicant, Mr. Vinay Bairagar, the learned AGP appearing for the respondents Nos.1 and 2 respectively and Mr. Pranav Desai, the learned counsel appearing for the respondent No.3 – Bank of Baroda.
2. To a larger extent, the parties have been able to arrive at some consensus to facilitate this Court to pass an appropriate interim order.
3. On 28.04.2022, this Court passed the following order:
“1. We have heard Mr. Mihir Joshi, the learned Senior Counsel assisted by Mr. Chetan Pandya, the learned advocate appearing for the writ applicant and Mr. Vinay Bairagar, the learned AGP appearing for the respondents.
2. In today’s hearing, essentially, three things were discussed. First, whether the department should be asked to inform all the 47 debtors of the writ applicant to start making payment towards the contract so that the amount which the debtors have to pay to the writ applicant can come to the bank accounts. The bank accounts are otherwise attached. There is no imminent threat that any amount would be withdrawn or utilized by the writ applicant. If there is some consensus on this issue then atleast one thing can be assured and that is the payment from the debtors.
3. We may only observe that the endeavour on the part of the department should be to secure the amount from the debtors rather than asking them not to make the payment. The second issue which was discussed was with respect to the finished goods. We are informed that the finished goods worth more than Rs.5.0 Cr. are lying in the godown. These goods are also attached. This finished goods are to be supplied to none other than Indian Railways, Bharat Heavy Electricals Ltd. (a Public Limited Company) and two or three other companies.
4. We are of the view that there should not be any difficulty in allowing the writ applicant to supply the finished goods so that the payment towards the same can be received in the bank accounts. However, there is a problem in this regard as today, the GST registration of the writ applicant has already been cancelled. The writ applicant has moved an application for revocation of the order cancelling the registration. No decision has been taken on such application. It will be in the fitness of things if an appropriate decision is taken as regards the application filed by the writ applicant seeking revocation of the cancellation order. Here also, the payment can be secured because ultimately, all the companies referred to above will be crediting the amount in the bank accounts. The third issue is with regard to statutory wages and dues. There are larger issues involved in this writ application which may have to be gone into while hearing this matter finally. However, prima facie, we are inclined to grant some relief to the writ applicant on the aforesaid three issues.
5. We want Mr. Bairagar, to immediately speak to the authority concerned and try to arrive at some consensus so that an appropriate order can be passed on 02.05.2022.
6. Post this matter on 05.2022.”
4. The understanding arrived at between the parties is three fold: First, the department would intimate/inform all the 47 debtors to make the necessary payments to the writ applicant towards the sale and purchase of the goods. All the 47 debtors would get the requisite amount credited in the Current Account of the writ applicant maintained with the respondent No.3-Bank. Secondly, once the amount starts getting credited in the Current Account of the writ applicant, a part of the amount may be transferred by the Bank to the Cash Credit Account of the writ applicant. Such transfer shall be with a distinct understanding that it would be only for the purpose of saving the account from being declared as a Non Performing Asset (NPA). However, the understanding is that the Bank shall not permit a single penny to be utilized by the writ applicant.
5. The second part of the understanding is that the finished goods lying at the factory premises and under provisional attachment of the department, would be permitted to be supplied to the public sector entities such as the Bharat Heavy Electricals Limited, Indian Railways etc. and also to the two foreign contracts with Sri Lanka and United Kingdom after following all the requisite procedure in accordance with the provisions of the GGST Act.
6. The third part of the understanding is that the raw materials lying at the factory premises and under provisional attachment of the department, would be permitted to be utilized for manufacturing the finished goods with a view to enable the writ applicant to fulfill its past contractual obligations towards the BHEL, Indian Railways and such other public sector entities.
7. In such circumstances referred to above, we proceed to pass the following directions:
7.1 The department shall at the earliest inform/intimate all the 47 debtors that they should make the necessary payments in accordance with the contracts in favour of the writ applicant and the requisite amount shall be credited to the Current Account maintained by the writ applicant with the respondent No.3 – Bank.
7.2 Once the amounts start getting credited in the Current Account of the writ applicant, a requisite amount may be transferred by the respondent No.3- Bank to the Cash Credit Account of the writ applicant to save the account from being declared as NPA.
7.3 We make it clear that whatever is the liability of the writ applicant towards the respondent No.3- Bank with respect to the Cash Credit Account, may be discharged from the amount that may be transferred. This is a one time arrangement. In future, if the writ applicant incurs any other liability towards the Bank with respect to the Cash Credit Account, the writ applicant will have to discharge it on his own in accordance with the rules and regulations of the Bank.
7.4 We direct the department to permit the writ applicant to supply the finished goods lying at the factory premises to the public sector entities such as BHEL, Indian Railways etc.. The department shall also permit the writ applicant to supply the finished goods to the two foreign companies at Sri Lanka and United Kingdom in accordance with the contract. The amount that may be received by the writ applicant towards the supply of the finished goods to the aforementioned companies, shall also be credited in the Current Account of the writ applicant maintained with the respondent No.3 -Bank.
7.5 The department shall also permit the writ applicant to utilize the raw materials lying at the factory premises for the purpose of manufacturing of the finished goods so as to enable the writ applicant to fulfill its contractual obligations towards the companies referred to above.
8. All the aforesaid directions shall be complied with by the department at the earliest and not later than one week from today.
9. With a view to protect the interest of the Bank as well as department, we want the writ applicant to file an undertaking on oath before this Court and the department as under:
“(a) Madhav Copper Ltd. would also intimate and ensure that amounts receivables from the list of all the 47 debtors, which are under provisional attachment of the department, would be received only in the Current Account Nos.03480200000834, maintained with Bank of Baroda, Main Branch, Bhavnagar;
(b) The finished goods lying in the factory premises and are under provisional attachment of the department, would be supplied only to the public sector entities such as Bharat Heavy Electricals Limited, Indian Railways, etc. and two foreign contracts of Sri Lanka and United Kingdom, after following all the required procedure and in accordance with the provisions of the GGST Act;
(c) The raw materials lying in the factory premises and are under provisional attachment of the department, would be utilised for manufacturing finished goods, only to complete the past contractual obligations received from Bharat Heavy Electricals Limited, Indian Railways and such other public sector entities, after following all the required procedure and in accordance with the provisions of the GGST Act;
(d) The writ applicant would not be using/utilizing any of the aforesaid amounts so received by the writ applicant in the Current Account No.03480200000834 maintained with Bank of Baroda, Main Branch, Bhavnagar and the said account would continue to be under provisional attachment of the department;
(e) The amounts transferred in the Cash Credit account from the Current Account will not be disturbed and that equivalent balance of the said amounts in the Cash Credit Account would be maintained at any given point of time.
(f) The writ applicant will ensure that the raw materials, stock and finished goods, would be dealt with in any manner under the supervision of the Deputy Commissioner of State Tax, Enforcement, Bhavnagar.”
10. The respondent No.3- Bank is also directed to file an undertaking before this Court and the department through a Responsible Officer as under:
“(a) The writ applicant would not be permitted to use/utilize the amounts credited in the Current Account No.03480200000834;
(b) The writ applicant would not be permitted to use the amounts transferred in the Cash Credit Account No.03480500000073 from the Current Account No.03480200000834 by virtue of order dated 04.05.2022;
(c) It would be ensured that equivalent balance of the amount so transferred in the Cash Credit Account from the aforesaid Current Account, by virtue of order dated 04.05.2022, would be maintained at any given point of time.”
11. Mr. Bairagar, the learned AGP, wants the writ applicant to apply for revocation of the cancellation of registration in the requisite Form GST REG 21 Online at the GST common portal in accordance with the provisions of Section 30 of the GGST Act read with rule 23 of the GGST Rules.
12. In this regard, we may only say that as the writ applicant has already filed an application for revocation of the cancellation of registration in physical form, as an exceptional case, let this application filed by the writ applicant in physical form be processed and appropriate order be passed. The department may not insist for applying online at the GST common portal as it may create some technical problems.
13. We direct the department to immediately look into the application dated 12.04.2022 referred to above and pass the necessary orders at the earliest. We direct the department to permit the writ applicant to make the payments towards staff salary, operational expenses, electricity bills etc. from the Cash Credit Account after being satisfied as regards the nature of the payment. The revocation application shall be decided within a period of one week from today and the intimation to the debtors shall also be issued within one week from today.
14. All other larger issues involved in this writ application shall be looked into as and when the matter is taken up for further hearing.
15. The connected writ application i.e. the Special Civil Application No.7677 of 2022 is ordered to be detached from the present writ application. Registry to take steps accordingly.
