ATTACHMENT OF BANK ACCOUNTS – NOT TO BE IN THE NATURE OF DRASTIC MEASURE FOR A TEMPORARY PERIOD AND CANNOT BE EXERCISED IN A ROUTINE MANNER
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 28-6-2018
In 'Remark Flour Mills Private Limited v. State of Gujarat' – 2018 (4) TMI 1292 – GUJARAT HIGH COURT the petitioner company is engaged in the supply of wheat flour, meslin flour, cereal flour etc.,. They are supply such goods in packets which are branded as well as unbranded. The packing of more than 25 Kgs. are branded while the others are unbranded.
The Departmental officers visited the petitioners on 20.02.2018 and noticed that the petitioners were not paying GST either on branded or unbranded goods. Under coercion the Authorities collected three cheques for a mount of ₹ 19.47 lakhs. The Revenue remitted the cheque which was returned back since the petitioner instructed the bank not to clear the cheques.
On 27.02.2018 the Department issued a
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st grievance
The High Court in respect of the first grievance of the petitioner that the Departmental authorities forcibly collected cheques even before the tax liability of the petitioner was ascertained. In this respect the High Court held that the action of the department cannot be countenanced. The collection of post dated cheques under coercion during raid is not permissible when no tax has been confirmed or crystallized. This is not to suggest that if the assessee voluntarily gives such cheques in order to avoid harsher measures of provisional attachment of premises, stock or bank accounts, the High Court held that the action of the authorities must fail in such a case. The High Court found that there did not appear to be any justification of the departmental authorities to collect and the petitioners to voluntarily give cheques. The High Court, therefore directed the department to return such cheques to the petitioner.
Second grievance
The second grievance of the petitioner i
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r any willful misstatement or suppression of facts.
Section 74(1) of the Act provides that if the proper officer would issue notice for recovery of unpaid tax on account of fraud, willful misstatement or suppression of facts why the amount specified in the notice should not be recovered with interest and penalty. Section 74(2) provides for time limit for issuance of such notice. Section 74(3) provides that the proper officer is to serve a statement containing the details of tax unpaid, short paid or erroneously refunded for a period other than covered under section 74(1) where a notice has been issued for any period. Thus section 74(3) cannot be exercised for expanding or enlarging the liability arising out of show cause notice under section 74(1) from the said period. Section 74(1) and 74(3) are envisaged to cover separate periods.
The High court held that the respondents are wholly incorrect in issuing a fresh show cause notice for the same period of July 2017 to 20.02.2018 which n
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State of Gujarat [ 2015 (3) TMI 258 – GUJARAT HIGH COURT ]' – 2014 SC Online Gujarat 14217. The Supreme Court held with reference to VAT Act, the following, on the power of provisional attachment by the Department-
* The power of provisional attachment is in the nature of extraordinary measure available to the revenue authorities for the purpose of protecting the interest of Government revenue.
* Even before any assessment is made, such powers can be exercised if the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to do so.
* This power is of drastic nature which is coupled with the duty to exercise such power with due care and in appropriate cases.
* The Authority exercising such powers must have a strong prima facie case to show that upon ultimate conclusion of the assessment, there is a likelihood of tax, interest and/or liability being attached on a dealer and further that pending such consideration,
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