Coromandel Agrico PVT LTD Through Alpana Yagnesh Baktarwala vs. Commercial Tax Officer

Held

The Court acknowledged the petitioner's financial difficulties but emphasized that having collected taxes, the petitioner had a primary obligation to deposit them with the government. The Court noted that the outstanding dues of Rs. 64.00 Lacs did not account for potential interest or penalties. While the revenue's concern for protecting government dues was valid, the Court sought a way to allow the petitioner to restart operations and repay dues. Consequently, the attachment on the petitioner's stock was suspended, allowing it to operate its factory and clear manufactured goods. However, the attachment on the plant and machinery was maintained. This relief was granted subject to strict conditions: an initial deposit of Rs. 5.00 Lacs by 02.11.2018 and another Rs. 5.00 Lacs by 12.11.2018, followed by the remaining amount in three equal monthly installments starting from December 2018, with each installment due by the fifth of the month. The Director was required to file an undertaking to fulfill these conditions by 02.11.2018. Failure to comply with any condition would result in the restoration of the restrictions. The petition was disposed of with the direction for the petitioner to cooperate with assessment proceedings.

Facts

The petitioner, Coromandel Agrico Pvt Ltd, challenged an order dated 09.10.2018 passed by the Commercial Tax Officer, attaching its plant, machinery, and present stock. The petitioner, a manufacturer of agro-chemicals, admitted to not discharging its GST liabilities for several months due to severe financial crisis. It collected tax of approximately Rs. 97.00 Lacs but could only deposit Rs. 33.00 Lacs, leaving a residue of about Rs. 64.00 Lacs. The inability to pay tax resulted in non-filing of returns. The authorities invoked powers under Section 83 of the Gujarat Goods and Service Tax Act, 2017, to attach the petitioner's assets to protect government revenue.

Key Issues

1. Whether the attachment of the petitioner's plant, machinery, and stock under Section 83 of the Gujarat Goods and Service Tax Act, 2017, was justified given the petitioner's financial crisis and offer to pay taxes in installments? Petitioner's arguments: The petitioner contended that the attachment order would halt its manufacturing activities, leading to an inability to pay creditors and workers. It argued that the financial crisis was due to market conditions and offered to clear the outstanding taxes in installments. Revenue's arguments: The revenue opposed the petition, arguing that the petitioner had collected self-assessed tax from purchasers and could not use financial hardship as an excuse for non-payment. The authorities, it was argued, had rightly exercised their powers under Section 83 to protect government revenue.