M/S. Divyasree Nsl Infrastructure Private Limited (Dnipl) And 4 Others vs. The Union Of INDIA And 4 Others
Original PDF →Facts
The petitioners, Divyasree NSL Infrastructure Private Limited (DNIPL) and its directors, challenged the provisional attachment of DNIPL's bank accounts and summons issued by GST authorities. The dispute arose after DNIPL received a refund of Rs. 27,54,87,403.00 on July 1, 2022, sanctioned by the Deputy Commissioner. The Commissioner later reviewed this, and an appeal by the Deputy Commissioner against the refund order was pending. Subsequently, the Deputy Commissioner issued provisional attachment orders for DNIPL's bank accounts under Section 83 of the CGST Act, citing proceedings under Section 74, and issued summons under Section 70. The petitioners argued that the attachment was illegal and harassing, especially as an appeal against the refund order was pending.
Held
The Court, without entering into the merits of the rival contentions, directed the petitioners to deposit Rs. 28.00 crores in a nationalized bank as a fixed deposit on or before April 14, 2023, and hand over the FDR to the 3rd respondent within seven days thereafter. The Court ordered the respondents to forthwith withdraw the provisional attachment of the petitioners' bank accounts. The petitioners were directed to cooperate with any future summons related to proceedings under Section 74 of the CGST Act. Upon furnishing the FDR and cooperating with the investigation, the respondents were directed not to take any coercive measures against the petitioners. The Court noted that if the petitioners failed to comply, the respondents could take appropriate action. The Court explicitly left undecided the merits of the refund order and the proceedings under Section 74.
Key Issues
1. Whether the provisional attachment of bank accounts by the revenue authorities was justified and in accordance with the guidelines, given that an appeal against the refund sanction order was pending. Petitioner's arguments: The petitioners contended that the provisional attachment of bank accounts of an ongoing concern is a drastic measure and should be a last resort. They argued that the respondents did not follow the guidelines issued by the Central Board of Indirect Taxes and Customs dated February 23, 2021, when attaching the accounts. They further submitted that since an appeal against the refund order was pending, there was no reason for the provisional attachment. Revenue's arguments: The revenue contended that the petitioners should cooperate with the investigation and had not appeared despite summons. They alleged that the refund order was obtained fraudulently and that there is no provision for a stay of a refund sanction order by the appellate authority.
Sections Cited
Section 54(5), Rule 92(1), Section 107(2), Section 83, Section 74, Section 70
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
/;/ THE HON'BLE THE CHIEF JUSTICE UJJAL BHIryAN AND THE HON',BLE SRr JUSTTCE X. r!Ir{484I1'!II of ORDER: fer the Hodble the Chief Justice ujjal Bhugan) Heard Mr. R.N.Hemendranath Reddy, learned Senior counsel for the petitioners; Mr. B.Mukherjee, learned counsel representing Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India representing respondent No. 1; and Mr. Dominic Fernandes, learned counsel for respond.ents No.2 to 5. 2. In the hearing today, Mr. M.V.D'Praneeth, Deputy Commissioner (Anti-Evasion), Ranga Reddy GST Commissionerate, is also Present.
Petitioner No.l is a company incorporated under the Companies Act, 1956 and engaged in the business of construction, development and operation of IT Parks/ITES
2 i I ; i i!' ! t, !: ii i:ti iJ ii ii !' I i Special Economic Zone Parks etc. Petitioners No.2 to 5 are directors of petitioner No. 1. 4. An order was passed by respondent No.4 on a claim made by petitioner No.1 for refund for the period July 2O2O on 01.O7.2O22. By the aforesaid order, respondent No.4 had sanctioned refund of Rs.27,54,87,403.00 to petitioner No.l in terms of Section 5a(5) of the Central Goods and Services Tax Act, 2017 (briefly, 'the CGST Act'hereinafter) read with Rule g2(l) of the Central Goods and Services Tax Rules, 2Ol7 (briefly, 'the CGST Rules' hereinafter). It appears that respondent No.3 exercised powers und.er Section IOT (2) of the CGST Act and examined the proceedings of respondent No.4 leading to passing of the refund sanction order dated or.o7 .2022 following which order dated O4.0 L.2023 was passed by respond.snt No.
It was thereafter that respondent No.4 preferred appeal before the Joint Commissioner under Section LO7(21of the CGST Act. The appeal was filed on 3L.OL.2O23 and is. stated to be pending. While the matter rested thus, office 1 t i 1. 1
J of respondent No.3 in exercise of powers under Section 83 of the CGST Act issued notices dated 08.03.2023 to the bankers of petitioner No.l for provisional attachment of bank accounts of petitioner No.l. It is stated that the following bank accounts of petitioner No.l in different banks have been attached by respondent No.3 under Section 83 of the CGST Act on the ground that proceedings have been initiated against petitioner No.1 under Section 74 of the CGST Act: sl. No. Name of the Bank A/c. No. of Type Account 1 Indian Bank 7190833307 Current Account
Indian Bank 7 170208t29 Term Loan 3 Indian Bank 7185513806 Dividend 4 Indian Bank 7007368240 CSR
Indian Bank 502r426860 Escrow 6 State Bank of lndia 3060154380s Current account 7 State Bank of India 35793387835 Escrow Account 8 State Bank of India 38577636606 Loan Term Closed 9 State Bank of India 37298925568 Term 10 State Bank of India 64168693269 Gratuity Account
Indusland Bank 200000323075 Current Account 72 Indusland Bank 200999548020 Escrow Account 13 Indusland Bank 2 soo21121995 Escrow
4
Immediately thereafter on O9.O3.2O23, respondent No.S issued summons to the petitioners under Section 7O of the CGST Act.
Learned senior counsel for the petitioners have referred to the guidelines dated 23.02.2021 issued by the central Board of Indirect Taxes and customs and submits that while carrying out provisional attachment of the bank accounts of petitioner No.1, respondents have not followed the said guidelines. He submits that attachment of bank account of an ongoing concern, be it provisional or otherwise, is a drastic measure which should not be resorted to unless warranted, that too, as the last resort. such attachment of bank account may lead to economic death of such a concern. He further submits that though respondent No.4 has filed appear before the appellate authority, no stay has been granted. Therefore, there is no 14. Kotak Mahindra Bank 0646377597 Collection Account 15, Kotak Mahindra Bank 0552TL010000884 Term Loan
,,"/ ../r reason for the respondents to provisionally attach the bank accounts of petitioner No.1. 6. In the hearing which took place in the pre-lunch session we had asked the learned Senior counsel for the petitioners to furnish us the credit balance as against the bank accounts which have been provisionally attached.
In the post-lunch session, Mr. R.N.Hemendranath Reddy, learned Senior Counsel for the petitioners has furnished us the bank statements. However, he further submits that petitioners on their own will make the deposit of the entire refund sanction amount of 27.54 crores in a bank account which may be kept under provisional attachment during proceedings under Section 74 of the CGST Act. He however submits that because of the intervening year ending, some time may be given to the petitioners to work out the aforesaid arrangement.
Mr. Dominic Fernandes, learned CoUnSel fOf 5 respondents No.2 to S submits that petitioners should
6 cooperate with the investigation. Though respondents had issued summons to the petitioners, on one pretext or the other they did not appear before the summoning authority. Additionally, he submits that the refund order was obtained fraudulently by the petitioners. He also submits that there is no provision of stay of a refund sanction order by the appellate authority. Therefore, question of stay does not arise.
Having heard learned counsel for the parties and on perusal of the materials on record, we are of the view *rat without entering into the merits of the rival contentions, the following directions will meet the ends ofjustice: i) The refund sanction amount, as noticed above, is Rs.27.54 crores. petitioners shall make a deposit of Rs.28.00 crores in a nationalised bank by way of fixed deposit on or before 14.04.2023 and handover the fixed
1 deposit receipt (FDR) to respondent No.3 within seven days thereafter. ii) Petitioners shall cooperate with the summons that may be issued by the I I respondents or on behalf of the respondents in connection with the proceedings under Section 74 of the CGST Act iii) Respondents shall forthwith withdraw the provisional attachment of bank accounts of petitioner No.1 carried out on O8.O3.2O23, details of which have been mentioned above. irr) On furnishing of the fixed deposit receipt (FDR) by petitioner No.1 to respondent No.3 as above and cooperation of the petitioners with the investigation, respondents shall not take any coercive measures against the petitioners. 1 \ 1O. We order accordingly
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However, if there is non-compliance of the above conditions by the petitioners, it would be open to the respondents to take such action as may be deemed appropriate in accordance with law.
This disposes of the writ petition. Miscellaneous applications pending, if ?Dy, shatl stand closed. However, there shall be no order as to costs. //II T.JAYASREE ASSISTAryLREGISTRAR sEcHRr oFFtcER
The Principar secretary, Union of^rndia, Finance and Revenue Department _ 8/o North Block, New'Delhi- 11-0001
The chairman, central Board oflndirect raxes and customs (cBlc), R/o. - North Block, New Delhi- t tOOOi :li:,[?tT:"H:fi :[R"":T?,r]i,t,Xls_irr1silcommissionerate,6thF,oor,
The Deputy Commissioner, 6a6rrioowiibbToiririo, co m m-i SJdn Jri t", ot n F r oo 1", -po-i n ett B ha va n, Ti r a k fr.:il fl?[?: 3L 500001. To 5. 6. 7. B.
PSK. SB 0gti.
\ \ HIGH COURT DATED:16/0312023 ORDER WP.No.7289 of 2023 A- g'l'AT;i t':?t lTs :) \i DISPOSING OF THE WRIT PETITION WITHOUT COSTS. rl --Btf , e\+l zA
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.