Case Law Details
Nirajkumar Nareshkumar Lakhyani Vs State of Gujarat (Gujarat High Court)
In the case of Nirajkumar Nareshkumar Lakhyani v. State of Gujarat [Special civil application no. 6777 of 2023 dated April 27, 2023], the Gujarat High Court, in its esteemed judgment, overturned the ruling of the Adjudicating Authority. The Court granted permission to the assessee to fulfill their tax liability through installment payments, consequently lifting the provisional attachment of the assessee’s bank account.
Facts:
Nirajkumar Nareshkumar Lakhyani (“the Petitioner”) is engaged in the business of trading in metal scrape. The Department visited the business premises of the Petitioner on November 29, 2022 to enquire about the details of certain purchases, but the premises of the Petitioner was closed.
A summon was issued on November 30, 2022 under section 70(1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) and Adjudicating Authority pass an order dated April 25, 2023 (“the Impugned order”) to provisionally attach the current Bank Account, No. 045361900003074 of the Petitioner held with the YES Bank Limited, on November 30, 2022.
The Petitioner contended that he is willing to make pay the liability of INR 2,13,04,290/- (CGST Rs. 1,06,52,145/- + SGST Rs. 1,06,52,145/-) in 15 (fifteen) equal monthly instalments commencing from May, 2023.
Aggrieved with the Impugned order the Petitioner filed a writ petition in Gujarat High Court to set aside the Impugned Order passed by the Adjudicating Authority.
Issue:
Whether the Provisional Attachment can be lifted as assessee agreed to pay tax liability in installments?
Held:
The Hon’ble Gujarat High Court in Special civil application no. 6777 of 2023 held as under:
- Observed that, the Petitioner has expressed his willingness to pay the demand raised by the Adjudicating Authority within span of 15 equal monthly installments commencing from May, 2023
- Held that, the attachment of the current bank account of the Petitioner shall be lifted forthwith.
- Set aside the Impugned Order.
Our Comments:
In a similar case, the Hon’ble Kerala High Court in the matter of Pazhayidom Food Ventures (P) Ltd v. Superintendent Commercial Taxes [WP(C). No. 14275 of 2020 dated July 24, 2020], had directed the respondent tax authority to accept the belated returns and permitted the Petitioner therein to discharge the balance tax liability inclusive of any interest and late fee thereon, in equal monthly instalments commencing from August 25, 2020 and culminating on March 25, 2021.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
Heard learned advocate Ms. Vaibhavi Parikh for the petitioner and learned Assistant Government Pleader Mr. Raj Tanna for the respondent No.1 State and its authorities.
2. In this petition filed under Article 226 of the Constitution, the petitioner has prayed to set aside order dated 30.11.2022, whereby the Current Bank Account No.045361900003074 of the petitioner held with the YES Bank Limited, came to be provisionally attached. By way of interim prayer, the petitioner has prayed to lift the said attachment.
2.1 Following interim prayer was made in para 7(c),
“pending the admission, hearing and final disposal of this petition, permit the petitioner to make payment towards the outstanding tax amount to the tune of Rs. 2,13,04,290/- in twelve equal installments”
3. The petitioner is engaged in the business of trading in metal scrape and holds valid registration certificate under the Central Goods and Services Tax Act, 2017 and the Gujarat Goods Services and Tax Act, 2017.
3.1 It appears that a visit was paid by the officers of the respondents on 29.11.2022 at the business premises of the petitioner to enquire about the details of certain purchases, but the premises of the petitioner was closed.
3.2 It further appears that the summons was issued on 30.11.2022 under section 70(1) of the Central Goods and Services Tax Act, 2017 and under section 70(1) of the Gujarat Goods and Services Tax Act, 2017. Subsequently, the authorities attached the aforementioned bank account of the petitioner.
4. On 25.4.2023, the following order was passed,
‘Learned advocate Ms. Vaibhavi Parikh seeks time stating that as per prayer made in paragraph No. 7(c), the petitioner is ready and willing to make payment of outstanding tax in 15 equal installments. She further stated that she would also file a separate undertaking giving the schedule of payment incorporating 15 equal installments by which the amount may be paid.’
5. When the petition came up for consideration today, learned advocate for the petitioner, apropos to the aforesaid order dated 25.4.2023, tendered on record the undertaking filed by the petitioner Nirajkumar Nareshkumar Lakhyani stating to be residing at Matru Krupa, Plot No. 45, Survey No. 72/01 Gokuldham, Galpadar, Gandhidham.
5.1 In the undertaking, the following aspects are stated, which are not disputed.
“(c) It is pertinent to mention at this stage that there are no adjudication proceedings pending in the case of the Petitioner before the Respondents.
(d) The respondent No.3 somewhere in December, 2022 tendered an unsigned statement of disputed input tax credit which indicated total outstanding amount to the tune of Rs. 2,13,04,290/- (CGST-Rs. 1,06,52,145/- + SGST – Rs. 1,06,52,145/-).”
5.2 The petitioner has on oath further undertook to pay the disputed tax liability adjudged to the tune of Rs. 2,13,04,290/- by paying the same in 15 equal monthly installments.
5.3 The petitioner has stated on oath thus,
“(e) I hereby undertake without prejudice that the Petitioner shall pay the said unascertained and proposed so-called liability computed by the Respondent No.3 which has yet not been crystelised as mentioned in the unsigned and undated Statement amounting to Rs. 2,13,04,290/- (CGST-Rs. 1,06,52,145/- + SGST – Rs. 1,06,52,145/-) in 15 (fifteen) equal monthly installments commencing from May, 2023.
(f) The said payment to the tune of Rs. 2,13,04,290/- made by the Petitioner is without prejudice to the rights and contentions of the Petitioner to defend as per law, any order or direction whereby the proposed so-called liability to the tune of Rs. 2,13,04,290/- is eventually finalized and becomes a statutory liability pursuant to any adjudication order to that effect being passed.”
5.4 In other words, the petitioner has shown readiness and willingness to pay up the demand of Input Tax Credit raised by the authorities although without prejudice to the rights and contentions of the petitioner in the future adjudicatory proceedings, which may commence.
5.5 According to learned Assistant Government Pleader and as stated above, summons under section 70(1) of the Central Goods and Services Tax Act, 2017 and under section 7091) of the Gujarat Goods and Services Tax Act, 2017, is issued. This aspect is fortified by the petitioner also.
6. In view of the above position arising where the petitioner would be paying within span of 15 equal monthly installments the tax demanded, order dated 30.11.2022 provisionally attaching Current Bank Account No.045361900003074 of the petitioner held with the YES Bank Limited, is hereby set aside. As a consequence, the attachment of the abovementioned bank account shall be lifted forthwith.
6.1 In future proceedings, if any, the rights and contentions of both the sides shall remain open.
6.2 This court has not gone into the merit aspects of the case of either of the parties.
7. The petition is disposed of as allowed in the aforesaid terms.
Direct service is permitted today.
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