By Rasheela Basheer – On April 14, 2022 11:04 am
A division bench of the Gujarat High Court has held that the provisional attachment under the Central GST Act, 2017 shall not be enforced in such a way as to hamper the normal business of the assessee.
The writ petitioner/assessee is in the business of manufacturing and selling ingots, having a factory situated near Rajkot, Gujarat State. The assessee is duly registered under the GST Act. A demand was raised against the assessee in relation to the claim for input tax credit availed by the assessee on the ground that the firm from whom the assessee had made a purchase was not found to be genuine. During the course of recovery, the GST department has provisionally attached the stock of goods lying at the factory premise of the writ applicants, along with the Demat account and current account of the writ applicants.
The petitioner claimed that these are the valuable assets of the writ applicants, more particularly, raw material, and the finished goods are valuables that are otherwise necessary for running the business of the applicants. Even operating the Demat account and current account are essentially required for the routine business of the writ applicants.
A division bench of Justice J.B. Pardiwala and Justice Nisha M. Thakore observed that “time and again, this Court as well as even the instructions issued by the higher authority of the respondents, has directed the proper officer to ensure that their action of the provisional attachment should not hamper normal business activities of the taxable person.”
disapproving the provisional attachment of the goods, stock and receivables more particularly, the Court held that “when the entire stock and receivables have been pledged and a floating charge has been created in favor of the Kalupur Commercial Bank Limited for the purpose of availing the cash credit facility with the provisional attachment of the goods, stock and receivables the entire business will come to a standstill.”To Read the full text of the Order CLICK HERE