Case Law Details
JV Creatives Pvt Ltd Vs Principal Additional Director General (Delhi High Court)
Provisional Attachment under Section 83 valid when prima facie view arises that attachment is necessary to protect revenue interest
The Hon’ble Delhi High Court in the case of JV Creatives (P.) Ltd. v. Principal Additional Director General, DGGI, Gurugram Zonal Unit [W.P. (C) No. 10042 of 2024 dated July 23, 2024] dismissed the writ petition filed against the order of provisional attachment passed under Section 83 of the Central Goods and Services Tax Act (“the CGST Act”) wherein the Commissioner prima facie opined that passing of order was necessary to protect revenue interest in case where the Hon’ble High Court was of the view that there is nexus between the supplier and recipient in case wherein it has been alleged that the supplier was non-existent and the invoice has been issued without the supply of goods.
Facts:
JV Creatives (P.) Ltd. (“the Petitioner”) filed a writ petition against order dated June 26, 2024 (“the Impugned Order”) passed by DGGI Gurugram (“the Respondent”) wherein the order of provisional attachment has been passed under Section 83 of the CGST Act, alleging that the supplier of the Petitioner was non-existent and invoice have been issued without the supply of goods.
Held:
The Hon’ble Delhi High Court in the case of W.P. (C) No. 10042 of 2024 held that the facts clearly indicate that the Respondent Commissioner found it necessary to provisionally attach the Petitioner bank account to protect the interest of the revenue, it clearly seems that there is nexus between the supplier and the Petitioner. Hence, the writ petition is dismissed and the Impugned Order is upheld.
Our Comments:
As per Section 83(1) of the CGST Act, after initiation of assessment (Chapter-XII), inspection, search, seizure and arrest (Chapter XIV) and Demand and Recovery (Chapter XV) proceedings, the Commissioner is empowered to attach any property provisionally (including bank account) belonging to any taxable person or any person under Section 122(1A) of the CGST Act to protect government revenue interest. However, as per Section 83(2) of the CGST Act, the provisional attachment is effective only for a period of one year from the date of passing of order under Section 83(1) of the CGST Act. Further, as per Rule 159(1) of the CGST Rules, the Commissioner is required to pass order in Form GST DRC-22, for attachment of property, including bank account. Furthermore, as per Rule 159(5) of the CGST Rules, any person whose property is attached may file an objection in FORM GST DRC-22A to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in Form GST DRC- 23.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition, inter alia, impugning an order dated 26.06.2024 (hereafter the impugned order) passed by the learned Principal Additional Director General, Directorate General of GST Intelligence, Gurugram Zonal Unit, whereby the objections preferred by the petitioner to the order provisionally attaching the bank account under Section 83 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act), was rejected.
2. The petitioner has not produced the order of attaching his bank account. Although, it is averred that the copy of the same has not been provided to the petitioner, there are no communications on record, which indicate that the petitioner had sought copy of the same from the concerned officer. The petitioner submits that he was informed by his banker (ICICI Bank, Dwarka, New Delhi) that its bank account No.046105000960 had been provisionally attached by the Commissioner.
3. The impugned order indicates that the Commissioner had taken such action pursuant to investigations, which revealed that the petitioner had filed Input Tax Credit (ITC) amounting to ₹26,91,938/- from two suppliers – M/s Gupta Enterprises and M/s Sunrise Ventures – who were found to be fake. It is alleged that M/s Gupta Enterprises is the sole proprietorship of one Vikram and was stated to be carrying on his business at his principle place of business at J.J. Colony, A-2/866, Madanpur Khadar, New Delhi– However, during physical verification the said concern was found to be nonexistent. On further inquiries it was revealed that Mr Vikram was a taxi driver by profession.
4. It is alleged that the said Mr Vikram had made a statement that he does not carry on any business in the name of M/s Gupta Enterprises and the same was created by one Shyam Dev Gupta. It is further alleged that Shyam Dev Gupta had created the tax entity and had issued “goods less invoices”.
Similarly, it was found that M/s Sunrise Ventures was the proprietorship concern of one Shesh Nath Prasad, who was a national level player of Taekwondo and worked as fitness coach. It is alleged that his identity was also used by Shyam Dev Gupta to set up the fake tax entity (M/s Sunrise Ventures).
5. It is stated that Shyam Dev Gupta also acknowledged issuing of invoices without supply of any goods from M/s Sunrise Ventures.
6. In the aforesaid context, the Commissioner has considered it apposite to provisionally attach the petitioner’s bank account, to the extent of ₹ 26.91 lacs being the amount of ITC claimed in respect of allegedly fake supplies.
7. We are unable to accept that the exercise of power by the Commissioner is unwarranted. The facts clearly indicate the Commissioner had found it necessary to provisionally attach the petitioner’s bank account to protect the interest of the revenue. The facts as obtaining in this case clearly indicate that material available with the Commissioner has a live nexus with his opinion. And, the impugned order cannot be faulted.
8. The petition is unmerited and accordingly dismissed. Pending applications also stand disposed of.
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