Swati Enterprise vs. State Of Gujarat

Facts

The petitioner, Swati Enterprise, filed writ applications challenging the provisional attachment of its bank account and shops under Section 83 of the Gujarat Goods and Services Tax Act, 2017. The petitioner argued that the attachment of shops, valued at approximately Rs. 15 lakhs, was sufficient to protect the revenue's interest, and the attachment of the bank account with a balance of Rs. 63,642/- was unnecessary and detrimental to business operations. The revenue contended that the valuation of attached properties was pending and sought time to file a reply. Subsequently, a valuation report indicated the total attached properties were valued at Rs. 15,57,833/-, while the tax liability, interest, and penalty were Rs. 17,54,106/-. The petitioner also raised concerns about not being provided with relied-upon documents and the lack of an opportunity for a personal hearing before the final order was passed.

Held

The Court quashed and set aside the impugned order passed by the authority in MOV-07. The matter was remitted to the concerned authority for fresh consideration. The Court directed the authority to furnish all documents demanded by the writ applicant at the earliest. Upon receipt of these documents, the writ applicant would be required to file an appropriate reply. Subsequently, the authority would grant an opportunity of hearing to the writ applicant and then proceed to pass a final order on merits. The Court emphasized that this entire exercise should be undertaken and completed within a period of two months from the date of receipt of the writ of this order. The Court also noted that the provisional attachment of the bank account was lifted by a previous interim order, and it did not delve into other issues regarding the tax liability. The Court found that the final order was passed ex-parte without providing an opportunity of hearing, which was a gross violation of the principles of natural justice.

Key Issues

1. Whether the provisional attachment of the petitioner's bank account was justified, considering the attachment of other properties sufficient to cover the revenue's interest, and whether such attachment violated the principles of natural justice by causing undue hardship to the petitioner's business operations? (Relates to Section 83 of the Gujarat Goods and Services Tax Act, 2017 and principles of natural justice). Petitioner's Arguments: The petitioner argued that the attachment of shops, valued at approximately Rs. 15 lakhs, adequately protected the revenue's interest, making the attachment of the bank account with a much smaller balance unnecessary. They also contended that the prolonged attachment of the bank account hindered their ability to conduct business and pay employees. Furthermore, the petitioner claimed a violation of natural justice as they were not provided with relied-upon documents and were not given an opportunity for a personal hearing before the final order was passed. Revenue's Arguments: The revenue initially submitted that the valuation of attached properties was pending and sought time to file a reply. Later, they did not strongly resist the lifting of the bank account attachment, acknowledging that the substantial tax liability was protected by the attachment of the shops. The revenue also agreed to remit the matter for fresh consideration.