Sai Kripa Confectioneries vs. The Union Of INDIA And Ors

Held

The Court accepted the unconditional apology tendered by the Commissioner, Vinayak Azaad, who admitted an error in his judgment. The Court noted that the two provisional attachments, dated February 3, 2022, had been raised, and communications were sent to the banks. The Court directed the Joint Commissioner of State GST, Maharashtra, to unblock the Petitioner's ITC of Rs. 24,26,371/- within 24 hours, emphasizing that non-availability of the order would not be an excuse. Regarding the refund application, the Court directed the Customs Authorities to process it within two weeks, noting that since the provisional attachments were withdrawn, the 'Alert' could also be deemed withdrawn. The Court clarified it was not making observations on the merits of the refund application. While the Revenue alleged illegal input credit, the Petitioner denied this, stating a reversal was done under protest. The Court acknowledged the Revenue's right to investigate but stressed it must be done in accordance with law and due process, warning against arbitrary actions.

Facts

The Petitioner, Sai Kripa Confectioneries, filed a writ petition before the Bombay High Court challenging actions taken by the revenue authorities. The Commissioner, GST Audit, Vinayak Azaad, admitted an error in his judgment and tendered an unconditional apology. He also stated that two provisional attachments, dated February 3, 2022, had been raised and communications sent to Axis Bank and Standard Chartered Bank. Furthermore, a communication was sent to the Joint Commissioner of State GST, Maharashtra, to unblock the Petitioner's Input Tax Credit (ITC) of Rs. 24,26,371/-. The Petitioner also faced issues with Customs Authorities not processing a refund application due to an 'Alert' in the system, attributed to Respondent No. 7 identifying the Petitioner as risky exporters based on data analytics and adverse verification reports from CGST Thane Rural.

Key Issues

1. Whether the provisional attachments and the 'Alert' in the customs system, which prevented the processing of the Petitioner's refund application, were erroneously issued and should be withdrawn? (Question of law and fact, turning on principles of natural justice and due process). Petitioner's Contention: The Petitioner argued that the actions leading to the provisional attachments and the 'Alert' were arbitrary and without proper justification, causing financial hardship and preventing the processing of their refund. They relied on the subsequent admission of error by the Commissioner and the withdrawal of attachments as evidence of the initial incorrectness of the revenue's actions. Revenue's Contention: The Revenue, through the Commissioner's affidavit, admitted an error in the provisional attachments and stated they had been raised. Regarding the 'Alert' for risky exporters, it was based on data analytics and adverse verification reports from CGST Thane Rural. The Revenue also raised allegations of illegal and ineligible input credit availed by the Petitioner from vendors, with one vendor arrested by CGST, Delhi, North Commissionerate.