Madras High Court
Forte Solutions Pvt. Ltd vs The Principal Addl. Director ... on 12 July, 2021
W.P. No.12965 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.07.2021
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P. No.12965 of 2021
and WMP Nos.13766 & 13767 of 2021
Forte Solutions Pvt. Ltd.,
Rep. by its Director,
P.Mala D/o A.Ponnuswamy,
No.20, 3rd Cross Street, West CIT Nagar,
Chennai-600 035. …Petitioner
Vs
1.The Principal Addl. 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,
Zonal Unit,
No.16, BSNL Building, Tower II, 5th and 8th floor,
Greams Road, Nungambakkam,
Chennai-600 006. …Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to
Writ of certiorari to call for the records of the 2 nd respondent made in
F.No/INV/DGGI/CZU/GST/03/2018 dt 27.11.2020 freezing the current account of
1
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W.P. No.12965 of 2021
the petitioner company with South India Bank, Branch code 0912 Ambattur Branch,
Chennai-600 098 and quash the same consequently direct the banking operations to
be resumed in a normal manner by the petitioner company.
For Petitioner : Mr.B.Kumar, Senior Counsel
for Mr.S.Ramachandran
For Respondents : Mr.V.Sundareswaran
Senior Panel Counsel
*********
ORDER
The petitioner in this writ petition claims to be a first generation woman
entrepreneur, in the business of recruitment of manpower. Manpower is supplied
according to the requirement of companies and the petitioner receives a commission
in regard to the services rendered.
2. On 22.02.2018, there was a search initiated by the 2nd respondent i.e. the
Intelligence Officers under the provisions of the Goods and Service Tax Act, 2017
(GST Act). On the basis of materials collected, the Intelligence Department levelled
allegations to the effect that Service Tax as well as Goods and Service Tax (ST &
GST) had been collected from the recipient companies, but had not been remitted to
the Department. That is, though the petitioner is registered under the Finance Act,
1994 as well as the GST Act, 2017 and returns have been filed under the aforesaid
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W.P. No.12965 of 2021
two enactments, the petitioner did not, and this is admitted, remit the amounts of ST
and GST collected by it from the service recipients.
3. A statement was recorded from the petitioner at the time of investigation
and a letter filed thereafter, dated 22.07.2020, admitting to the position that the total
GST shortfall for the period 2017-18 to 2019-20 would be a sum of
Rs.28,58,90,794/-. Post remittance of a sum of Rs.9,38,52,849/-, the shortfall stood
determined at an amount of Rs.19,20,37,945/-. As against the admitted dues of GST,
the petitioner has furnished a tabulation giving a scheme of installment stretching
upto December 2021.
4. As far as the service tax dues are concerned, the petitioner has approached
the revenue by way of an application under the Sabka Viswas (Legacy Dispute
Resolution) Scheme, 2019. We are however, not concerned with the arrears of
service tax in this matter. Learned Senior Counsel appearing for the learned counsel
for the petitioner would confirm that up and until May 2021, an amount in the region
of around six (6) crores has been remitted. Admittedly, however, the petitioner has
not been able to adhere to the scheme of installments, as agreed upon, in light of the
difficulties faced on account of the on-going pandemic.
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W.P. No.12965 of 2021
5. The thrust of this writ petition is a challenge to a provisional attachment
made under Section 83 of the Act, of the bank account of the petitioner bearing
No.0912083000000023 with the South Indian Bank, Ambattur Branch. Learned
Senior Counsel for the learned counsel for the petitioner would, while not disputing
the fact that the petitioner is in arrears of revenue, point out that there is nothing to
be gained by virtue of the impugned provisional attachment since the attachment
only stands in the way of the petitioner carrying on business and making efforts to
settle the arrears due. Quite apart from the fact that there are manifold difficulties
being faced by businesses on account of the pandemic, the petitioner has, he says,
been making and is continuing to make, an earnest attempt to repay the dues to the
revenue.
6. Per contra, Mr.V.Sundareswaran would state that in light of the admitted
arrears, the department has no other option, but to recover the arrears by any means
at its disposal.
7. Having regard to the rival contentions that have been advanced, I am of
the view that the petitioner must be permitted to approch the revenue by way of a
representation seeking lifting of the bank attachment, conditional upon her
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W.P. No.12965 of 2021
furnishing an undertaking therein to made earnest efforts to repay the admitted dues
in line with a scheme of installment to be arrived at, and I do so. The revenue will
consider the representation, take into account the amounts remitted by the petitioner,
till date, arrive at a new scheme of installment and thereafter, consider lifting the
bank attachment.
8. I agree with Mr.Kumar that there is nothing to be gained by thwarting the
attempt of an assessee to engage in legitimate business. In fact, this would be in the
best interests of both the petitioner as well as the revenue, subject of course to there
being scrupulous monitoring of the inflow and outflow in the account itself and
bonafide attempts by the petitioner to remit the outstanding dues to the revenue. To
this effect, I would also direct the South Indian Bank through Mr.V.Sundareswaran,
since the bank is not arrayed before me, to circulate a statement of inflow and
outflow/debit and credit to the respondents on a monthly basis, should the revenue
be inclined to lift the attachment.
9. I draw support in this regard from a judgment of a three Judge Bench of
the Supreme Court in Internet and Mobile Association of India v. Reserve Bank of
India (2020 (10) Supreme Court Cases 274) that considered a challenge to a circular
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W.P. No.12965 of 2021
issued by the Reserve Bank of India placing an embargo on dealings in virtual
currency/cryptocurrency. The Bench considers the test of proportionality as
enunciated in the case of Modern Dental College and Research Centre v. State of
Madhya Pradesh & Ors. (2016 7 SCC 353), to the effect that the remedy must not be
worse than the evil that it seeks to protect from. By attaching the bank account and
preventing fruitful productivity, nobody stands to gain. Thus, it is in the best interest
of both parties to permit the petitioner to continue in business operations subject to
the caveats laid by me above and any further that the revenue may choose to impose.
10. In the case of Nokia India Private Limited v. Additional Commissioner
of Income Tax and others (2015 13 Supreme Court Cases 729), an order under
Section 281(B) of the Income Tax Act, provisionally attaching the bank accounts of
that assessee under the Income Tax Act for arrears of income tax, was considered by
the Hon'ble Supreme Court and noticing the position that the petitioner was
managing a running concern, the bank account was ordered to be lifted, upon
condition that a monthly statement of account is filed in hard copy, to ensure proper
monitoring of the receipts and payments from that account.
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W.P. No.12965 of 2021
11. If a representation is filed by this petitioner, let it be disposed within a
period of three (3) weeks from date of receipt thereof, after hearing the petitioner.
12. This writ petition stands disposed. Connected miscellaneous petitions are
closed. No costs.
12.07.2021
vs
Index: Yes
Speaking order
To
1.The Principal Addl. 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,
Zonal Unit,
No.16, BSNL Building,
Tower II, 5th and 8th floor,
Greams Road, Nungambakkam,
Chennai-600 006.
https://www.mhc.tn.gov.in/judis/
W.P. No.12965 of 2021
DR. ANITA SUMANTH, J.
vs
W.P. No.12965 of 2021
and WMP Nos.13766 & 13767 of 2021
12.07.2021
https://www.mhc.tn.gov.in/judis/
