Madras High Court
The Principal Additional ... vs M/S. Mutharamman & Co on 21 December, 2021
WA No. 3048 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 21.12.2021
CORAM
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ
Writ Appeal No. 3048 of 2021
and
CMP. No.20990 of 2021
1. The Principal Additional Director General
DGGI, Chennai Zonal Unit
No 16, BSNL Building Tower II
5th and 8th Floor, Greams Road
Nungambakkam,Chennai – 600 006
2. The Senior Intelligence Officer
DGGI, Chennai Zonal Unit
No 16, BSNL Building Tower II
5th and 8th Floor, Greams Road
Nungambakkam,Chennai – 600 006 .. Appellants
Versus
1. M/s. Mutharamman & Co.,
Represented by its Proprietor
Mr.P.Sivakumar
No.240/5, Nagathamman Nagar
Nemilicherry, Thiruninravur
Chennai – 602 024.
2. The Branch Manager
Indian Bank
PB No.3452, W-100
II Avenue, Anna Nagar
Chennai – 600 040. .. Respondents
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WA No. 3048 of 2021
Writ Appeal filed under Clause 15 of Letters Patent against the order
dated 05.10.2021 made in W.P. No. 32 of 2021.
For Appellants : Mr. V. Sundareswaran
For Respondents : Mr. P. Rajkumar for R1
JUDGMENT
(Judgment of the Court was delivered by R. MAHADEVAN, J.)
This writ appeal is directed against the order dated 05.10.2021 passed
by the learned single Judge in W.P. No. 32 of 2021, whereby, the proceedings
dated 23.11.2020 issued by the first appellant attaching the first respondent’s
bank accounts in terms of Section 83 of CGST Act, was set aside and the
appellants were directed to complete the process of assessment within a period
of six weeks.
2.The necessary facts leading to the filing of this writ appeal would runt
thus:
The first respondent is a dealer in Scraps and an assessee under the
provisions of the Central Goods and Service Tax (CGST) Act, 2017. While so,
on 09.01.2020, a search was conducted in the head office of the first
respondent company by the second appellant's officials. During the course of
such search, statement was obtained from an employee of the company and
certain documents were recovered, which revealed that the first respondent
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WA No. 3048 of 2021
availed fraudulent input tax credit based on the invoices received from other
non-existent / bogus units, without actual receipt of any goods for the period
from 01.07.20017 to 31.03.2021. Following the same, summons were issued
to the first respondent company and its sister concerns, to give explanation
along with documentary evidence. Accordingly, the representative of the first
respondent company appeared and submitted their statement. However, it was
found that there are serious financial irregularities relating to fraudulent
availment of ITC by the first respondent and tax evasion amounting to more
than a crore of rupees. Therefore, in order to protect the interest of the
Government revenue, the bank account of the first respondent was attached
invoking Section 83 of the CGST Act, by order dated 23.11.2020. Aggrieved
by the same, the first respondent preferred W.P. No. 32 of 2021, which was
allowed by the learned single judge, by setting aside the order of attachment.
Challenging the said order dated 05.10.2021, the appellants are before this
court with this writ appeal.
3.The learned counsel for the appellants contended that the proceedings
initiated under section 67 and search of the business premises of the first
respondent on 09.01.2020 are in respect of investigation initiated against
M/s.SH Electronics Pvt. Ltd, who indulged in clandestine removal of goods of
various types of metal scraps to the first respondent without any tax invoices;
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WA No. 3048 of 2021
the first respondent received certain goods from SHEIPL without proper GST
invoices and also received tax invoices from non-existent suppliers without
actual receipt of goods, however, they availed and utilized ineligible ITC based
on such invoices to offset their output tax liability, which resulted in evasion of
GST; the attachment action was taken, only after a thorough study of
documents, such as GSTR2A filed by the first respondent and GSTR 1 filed by
the suppliers of the first respondent; and therefore, based on the report of the
investigation officer and the decision arrived at by the second appellant, the
first appellant has proceeded to provisionally attach the bank account of the
first respondent. Thus, according to the learned counsel, there is no error in
passing the order impugned in the writ petition, in the interest of the
Government revenue, but the learned single judge erred in setting aside the
same. The learned counsel further submitted that summons were duly sent to
the first respondent calling upon them to furnish their reply along with
documentary evidence, however, they have not respond to the same; and the
appellants are burdened with some other investigation works. Therefore, the
learned counsel prayed that the appellants may be permitted to complete the
investigation within a statutory time limit as prescribed in CGST Act, 2017,
instead of within 6 weeks as ordered by the learned single judge.
4.Resisting the grounds of appeal raised in the writ appeal, the learned
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WA No. 3048 of 2021
counsel for the first respondent submitted that the learned single judge after
taking note of all the factual as well as the legal position, has set aside the
attachment order passed by the first appellant and hence, the same warrants no
interference at the hands of this court. With regard to the further submission
made by the learned counsel for the appellants, the learned counsel submitted
that in response to the summons issued by the appellants, the first respondent
made appearance and produced all the documentary evidence available to them
and they are fully cooperating with the investigation conducted by the
appellants. Therefore, according to the learned counsel, there is no merit in the
contentions so raised on the side of the appellants and the writ appeal will have
to be dismissed.
5.Heard both sides and perused the materials placed before this court,
more particularly, the order impugned herein, wherein, the learned single Judge
while setting aside the order of attachment, has observed that the 'opinion' of
the second appellant is far more cryptic revealing total non-application of mind
and merely repeating what the first appellant has stated in the request for
sanction and accordingly, allowed the writ petition and directed the appellants
to complete the process of assessment within a period of six weeks.
6.Considering the facts and circumstances of the case and as agreed by
the learned counsel appearing for both sides, this court, without going into the
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WA No. 3048 of 2021
merits of the order impugned herein, finds it appropriate to modify the order
passed by the learned single judge, only in respect of the direction issued to the
appellants. Accordingly, the order impugned herein is modified to the effect
that the appellants are at liberty to issue show cause notice to the first
respondent within a period of four weeks from the date of receipt of a copy of
this judgement and on receipt of the same, the first respondent shall file their
objections and documentary evidence, if any, within a period of two weeks
thereafter. On such filing, the appellants shall examine the same and pass
assessment order, on merits, within a time frame, as stipulated in the CGST
Act, 2017.
7.With the above modification, this writ appeal stands disposed of. No
costs. Consequently, connected miscellaneous petition is closed.
(R.M.D., J.) (M.S.Q., J.)
21.12.2021
dhk/rsh
Internet : Yes / No
Index : Yes / No
To
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WA No. 3048 of 2021
The Branch Manager,
Indian Bank
PB No.3452, W-100 II Avenue, Anna Nagar
Chennai – 600 040.
R. MAHADEVAN, J.
https://www.mhc.tn.gov.in/judis
WA No. 3048 of 2021
and
MOHAMMED SHAFFIQ, J.
dhk/rsh
WA No. 3048 of 2021
21.12.2021
https://www.mhc.tn.gov.in/judis
