M/S Formative Tex Fab Through Its Partner Ratan Kumar Saraf vs. State Of Gujarat

Held

The Court held that the cause of action for the petition no longer survived as the provisional attachment order did not survive any longer by virtue of an order dated September 23, 2021. This order, referenced in paragraph 12 of the judgment, indicated the restoration of the provisionally attached property. The Court noted that the Assistant Commissioner of Sales Tax had directed the restoration of the property under Section 83 of the CGST Act, acknowledging that the tax liability had been determined via DRC-07 and therefore the attachment should be lifted. The Court disposed of the petition with a caution to the respondents to strictly comply with statutory provisions and not necessitate parties approaching the High Court for compliance. The Court refrained from imposing costs as the petitioner did not press for it.

Facts

The petitioner, M/s. Formative Tex Fab, filed a writ petition challenging the continuation of a provisional attachment of its property under Section 83 of the CGST Act. The attachment was initially made on July 24, 2020, via Form GST DRC-22, covering factory and residential premises. The petitioner argued that the attachment had continued beyond the one-year period prescribed by Section 83(2) of the CGST Act, making it violative of the law. The respondent-authority contended that the issue pertained to Assessment Years 2017-2018 and 2018-2019, and a demand order (DRC-7) was issued on September 6, 2021, determining a tax liability of Rs. 1.85 Crore. The authority also noted that the petitioner had engaged in billing transactions without actual movement of goods and investigated transactions with other entities. The respondent suggested furnishing a bank guarantee.

Key Issues

1. Whether the continuation of the provisional attachment of the petitioner's property beyond one year, as prescribed under Sub-Section (2) of Section 83 of the CGST Act, is legally valid? Petitioner's Argument: The petitioner argued that the provisional attachment order, issued on July 24, 2020, had continued beyond the statutory period of one year, which is impermissible under Section 83(2) of the CGST Act. They sought a direction to release the attached property. Revenue's Argument: The respondent-authority contended that a demand order (DRC-7) determining a tax liability of Rs. 1.85 Crore was issued on September 6, 2021, and that the petitioner was liable under Section 90 of the GST Act. They argued that the DRC-7 is appealable under Section 107 of the GST Act and that there were disputed questions of fact that the Court should not adjudicate. The authority also suggested furnishing a bank guarantee.