Madhav Copper Limited vs. State Of Gujarat

Held

The Court chose not to enter into the merits of the case at this stage. However, it issued several directions to facilitate the ongoing process. The respondent authority was directed to deliver the order on the show cause notices within 10 days. The petitioner was permitted to utilize finished goods for fulfilling contractual obligations with Sri Lanka and the United Kingdom, as well as for two public sector contracts, with the amounts received to be deposited in a specific bank account for revenue monitoring. The Court noted that no order was needed for the unlocking of ITC worth Rs. 3 Crores at present, as it would be considered during adjudication. The company was directed to provide transaction details to the revenue authority and cooperate with the investigation, which was granted a further eight weeks to complete. The director of the petitioner company was directed to present himself before the Assistant Commissioner on a specified date and thereafter as necessary. The Court emphasized that cooperation with the investigating and assessing officers is mandatory, and prior statements or cooperation do not absolve them of their legal obligations. The petition was disposed of without prejudice to the rights of the parties before the authority concerned.

Facts

The petitioner, Madhav Copper Limited, a manufacturer of copper products, challenged a provisional attachment order issued under Section 83 of the CGST Act and GGST Act. The company had faced several notices and searches related to input tax credit (ITC) claimed on purchases from suppliers whose GSTN registrations were later cancelled. The authorities alleged that the petitioner wrongly availed and utilized ITC amounting to Rs. 10.43 crores. The petitioner argued that payments were made through banking channels and that explanations provided to the authorities were accepted. The company had also filed a previous Special Civil Application challenging actions under the CGST Act and the vires of certain sections. The current petition sought to challenge the provisional attachment order.

Key Issues

1. Whether the provisional attachment order under Section 83 of the CGST Act and GGST Act is justified in light of the ongoing investigation and the petitioner's cooperation? The petitioner argued that the directors have cooperated extensively, their statements have been recorded, and criminal complaints filed under Section 132(1)(B) of the CGST Act and GGST Act, along with Section 120B of the Indian Penal Code, do not mention the petitioner's involvement. They contended that further insistence on their presence is impermissible and aimed at arrest, especially after anticipatory bail was rejected. The revenue's argument is not explicitly recorded in the provided text, but their actions suggest they believe the attachment is necessary to safeguard revenue during the investigation. 2. Whether the petitioner should be permitted to utilize finished goods for contractual obligations during the pendency of the investigation? The petitioner sought permission to use existing finished goods to fulfill contracts with Sri Lanka, the United Kingdom, and public sector entities. The revenue's stance on this specific issue is not detailed.