Case Law Details
Huawei Telecommunications (India) Company Pvt. Ltd. Vs DDIT (Delhi High Court)
Mr. Datar states that the Respondents have been granted complete access to the Company’s Accounting Enterprise Planning (ERP) system. He states that ERP system is a primary source of transaction undertaken by the Petitioner and comprises of data pertaining to ledger accounts, expenditure, remittances, receivables, payables, related party transactions, fixed assets, etc.
Datar states that due to the impugned orders, the Petitioner has defaulted in making payment of statutory dues like GST and TDS. He also states that the Petitioner has not been able to pay salary to its 400 (approx.) permanent employees and 190 contractual employees as well as clear dues of its vendors/ suppliers.
Having heard learned counsel for the parties, this Court is of the view that the present matter requires a detailed examination. Consequently, to balance the equity, the impugned orders are stayed subject to the following conditions:- (i) The Petitioner shall prepare a Fixed Deposit Receipt of Rs.100 crores in DBS Bank Account No.820200251860, which shall be renewed automatically from time to time. A photocopy of the said FDR shall be filed with the Assessing Officer within a week. The Banker is also directed to ensure that the Petitioner and/or any of its officials/nominees/authorised representatives do not deal with the FDR in any manner. (ii) The Respondents are directed not to release any refund [which is stated to be to the tune of Rs.30 crores (approx.)] to the Petitioner till further orders. (iii) The Petitioner shall not repatriate any money abroad till the next date of hearing without leave of this Court. (iv) It is clarified that the Petitioner is entitled to receive inward foreign remittances [which is stated to be to the tune of Rs.556 crores (approx.)] from its Inter-Company Overseas Customers. (v) The Petitioner shall also file its monthly statement of ‘Payments Received as well as Made’.
This Court clarifies that the aforesaid arrangement is provisional and is subject to further orders to be passed by this Court.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
C.M.No.19201/2022
Exemption allowed, subject to all just exceptions.
Accordingly, the application stands disposed of.
W.P.(C) No.6352/202 & C.M.No.19200/2022
1. Present writ petition has been filed challenging the provisional attachment of bank accounts as well as trade receivables effected by the impugned orders dated 17th February, 2022 and 19th February, 2022 as modified vide orders dated 10th March, 2022 and 14th March, 2022 respectively passed under Section 132(9B) of the Income Tax Act, 1961 (‘the Act’).
2. Petitioner also challenges the Letter dated 02nd March, 2022 whereby the request of the Petitioner for release of its bank accounts and trade debtors attached provisionally vide impugned orders and for release of funds to enable the Petitioner in meeting its fund requirements for day-to-day operational expenses and continuity of business operations was rejected.
3. Arvind Datar, learned senior counsel for the Petitioner states that over Rs.1500 crores of funds of the Petitioner have been attached resulting in severely constricting the business and operations of the Petitioner in a completely disproportionate manner. He submits that the impugned attachments are beyond Section 132 (9B) of the Act inasmuch as the two fold conditions i.e. existence of ‘reasons’ and ‘necessity’ to undertake the attachment for the purpose of ‘protecting the interest of revenue’ are not satisfied. He emphasises that, as of now, there is no demand against the Petitioner.
4. Datar states that Section 132 (9B) of the Act further requires the Second Schedule to the Act to be followed mutatis mutandis even in these proceedings requiring issuance of a notice, time to file response, estimation of amounts as well as proportionate exercise of powers during attachment. He states that the above-mentioned conditions enumerated under Section 132(9B) of the Act read with Second Schedule have been completely brushed aside and severe and drastic step of attaching almost all the bank accounts as well as majority of trade receivables of the Petitioner have been undertaken by the Respondents. To illustrate the width, amplitude and effect of the attachment order, he states that the Petitioner has not even been allowed to receive inward foreign remittance of Rs. 556 crores (approx.) from its Inter-Company Overseas Customers.
5. In support of his submission, Mr.Datar relies upon the judgment of the Supreme Court in Radha Krishan Industries vs. State of Himachal Pradesh 2021 (48) GSTL 113 (SC), wherein, while dealing with similarly worded provisions relating to provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 (“CGST Act”), it was held that the power of attachment of bank account cannot be exercised as per whims and caprices of the Authority and there must be existence of necessity based on some tangible material that the interest of the revenue can be protected only by a provisional attachment without which the interest of the revenue would stand defeated.
6. Issue notice. Mr. Zoheb Hossain, learned counsel accepts notice on behalf of the Respondents. He states that the holding company of the Petitioner as well as its sister concern is situated abroad. He emphasises that the Petitioner has not granted access to its books of accounts to the officials of the respondents and has repatriated Rs.750 crores to its holding company in the last year.
7. In rejoinder, Mr. Datar states that the Respondents have been granted complete access to the Company’s Accounting Enterprise Planning (ERP) system. He states that ERP system is a primary source of transaction undertaken by the Petitioner and comprises of data pertaining to ledger accounts, expenditure, remittances, receivables, payables, related party transactions, fixed assets, etc.
8. Datar states that due to the impugned orders, the Petitioner has defaulted in making payment of statutory dues like GST and TDS. He also states that the Petitioner has not been able to pay salary to its 400 (approx.) permanent employees and 190 contractual employees as well as clear dues of its vendors/ suppliers.
9. Having heard learned counsel for the parties, this Court is of the view that the present matter requires a detailed examination. Consequently, to balance the equity, the impugned orders are stayed subject to the following conditions:-
(i) The Petitioner shall prepare a Fixed Deposit Receipt of Rs.100 crores in DBS Bank Account No.820200251860, which shall be renewed automatically from time to time. A photocopy of the said FDR shall be filed with the Assessing Officer within a week. The Banker is also directed to ensure that the Petitioner and/or any of its officials/nominees/authorised representatives do not deal with the FDR in any manner.
(ii) The Respondents are directed not to release any refund [which is stated to be to the tune of Rs.30 crores (approx.)] to the Petitioner till further orders.
(iii) The Petitioner shall not repatriate any money abroad till the next date of hearing without leave of this Court.
(iv) It is clarified that the Petitioner is entitled to receive inward foreign remittances [which is stated to be to the tune of Rs.556 crores (approx.)] from its Inter-Company Overseas Customers.
(v) The Petitioner shall also file its monthly statement of ‘Payments Received as well as Made’.
10. This Court clarifies that the aforesaid arrangement is provisional and is subject to further orders to be passed by this Court. List on 06th July, 2022.
