Valerius Industries Vs Union of India (Gujarat High Court)
Gujarat High Court has held that the power under Section 83 of the Central GST Act, 2017 is a drastic power which should be used sparingly and only on substantive weighty grounds. It observed that attachment of bank accounts and trading assets should be the last resort, and that blockage of input tax credit by way of computer entry was illegal. The Court was of the view that subjective satisfaction, which is required for the purpose of Section 83, is not dependent on Section 67. It noted that just because a search has been undertaken resulting in seizure of goods, it by itself may not be sufficient to arrive at the subjective satisfaction that it is necessary to pass an order of provisional attachment to protect government revenue. The High Court also held that the order for attachment can only be passed by a Commissioner and not by subordinate officers.
FULL TEXT OF THE HIGH COURT ORDER / JUDGEMENT
1. Rule returnable forthwith. Ms. Maithili Mehta, the learned Assistant Government Pleader waives service of notice of rule for and on behalf of the respondents.
2 By this writ application under Article 226 of the Constitution of India, the writ applicant – a partnership has prayed for the following reliefs:
“(A) Your Lordships may kindly be pleased to issue a writ of certiorari or an appropriate writ, orders, directions and thereby be pleased to quash and set aside the order dated 17.06.2019, passed by the respondent No. 4 – Commercial Tax Officer at Vadodara, Gujarat in reference No.ZA2406190010233 whereby the petitioner is demanded to pay the total amount of Rs.1,60,79,302/;
(B) Your Lordships may kindly be pleased to issue a writ of certiorari or an appropriate writ, orders, directions and thereby be pleased to quash and set aside the orders of provisional attachment of the stock of goods, amounting Rs.1,60,00,000/ dated 27.11.2018 and the orders of provisional attachment of the petitioner’s current account bearing A/C No.01880200001055 and FD/RD CC A/c No.01880500000081, registered at Bank of Baroda, Alkapuri Branch, Vadodara dated 20.11.2018 and the blockage of Input Tax Credit dated 13.2.2019 passed by the respondent No.3 – State Tax Officer at Vadodara, Gujarat.
(C) Pending hearing and final disposal of the present petition, Your Lordships may kindly be pleased to issue an appropriate writ, orders, directions and thereby be pleased to stay the operation and implementation of the orders dated 17.06.2019 passed by the respondent No.4 and the orders of provisional attachment dated 27.11.2018 dated 20.11.2018 and the orders of blockage of input tax credit of the petitioner.
(D) Exparte adinterim relief in terms of para 6(C) may kindly be granted.
(E) To grant any other such relief in the nature of case may require.”
3 The writ applicant seeks to challenge the order dated 17th June 2019 (Annexure : ‘A’ to this writ application) passed by the respondent No.4 – Commercial Tax Officer at Vadodara, State of Gujarat in the Reference No.ZA2406190010233 whereby a demand has been raised of the total amount of Rs.1,60,79,302/ (One Crore Sixty Lakh Seventy Nine Thousand Three Hundred Two only) (tax + interest + penalty) under the provisions of the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 (for short, “the GST Act, 2017). The writ applicant also seeks to challenge the action of blockage of the input tax credit passed whereby the input tax credit of the writ applicant is blocked under the provisions of the GST Act, 2017. The writ applicant also seeks to challenge the order of provisional attachment of the stock of goods valued at Rs.1,60,00,000/ (Rupees One Crore Sixty Lakh only) dated 27th November 2018 and the order of provisional attachment of the writ applicant’s current account being Account No.01880200001055 and FD/RD CC Account No.01880500000081 registered at the Bank of Baroda, Alkapuri Branch, Vadodara dated 20th November 2018 passed by the respondent No.3, State Tax Officer, Vadodara. The State Tax Officer – 1, Unit 44, Vadodara has provisionally attached the aforementioned accounts in exercise of powers under Section 83 of the GST Act, 2017.
4 The case of the writ applicant, as pleaded in the writ application, is as follows:
“2.1 The petitioner is a partnership firm and therefore the present petition is filed by its partner, who has been authorized to be the legal representative of the firm to perform and act all the legal representation, who is the national and citizen of India and hence he is entitled to the fundamental and civil rights guaranteed under the Constitution of India.
2.2 The petitioner respectfully states that the petitioner firm is engaged in the business of purchasing and selling the material of copper whereby the scrap material of copper is purchased by the firm and the same is being melted and converted into the copper pipes before selling it into the market. The petitioner firm is registered with the GST department with GSTIN No. 24AANFV4191NIZH.
2.3. The petitioner respectfully states that according to the business practice, the petitioner firm has purchased the copper scrap material from the Various firms/companies, which is volumed as 291538.38 kilograms, amounting Rs.15,51,00,399/ in the tax year of 2017-18. That out of the said amount of volume, the following limited amount of material was purchased from the below mentioned firm:
