2018 Taxo.online 434

R/SPECIAL CIVIL APPLICATION NO. 16731 of 2018 dated 29.10.2018





Central Goods and Service Tax Act, 2017

Section 83

Akil Kureshi, Justice & Umesh Trivedi, Justice

Partly in favour of assessee

High Court


Represented by: – 

Petitioner: – Mr D K Trivedi 

Respondent: –  

Order: – 

  1. Draft amendment is allowed. 
  2. The petitioner has challenged an order of attachment dated 09.10.2018 passed by the respondent authorities attaching the petitioner’s plant, machinery and present stock situated at the said plant. The petitioner is in the business of manufacturing agro­chemicals. 
  3. The facts admitted by the petitioner are that the petitioner could not discharge its GST liabilities for the past several months. According to the petitioner, tax of Rs.97.00 Lacs was collected but, could not be deposited with the Government on account of severe financial crisis. Out of such amount, the petitioner has, by now, paid about Rs.33.00 Lacs, leaving a residue of about Rs.64.00 Lacs. According to the petitioner, since it was unable to pay the tax, the Returns could not be filed. 
  4. The GST authorities, therefore, in exercise of powers under Section 83 of the Gujarat Goods and Service Tax Act, 2017 passed the impugned order attaching the petitioner’s plant, machinery and stock. 
  5. Learned counsel for the petitioner submitted that it was on account of acute financial crisis resulting out of the melt­down conditions in the market that the petitioner could not deposit the tax. The order passed by the authority would ensure that the petitioner would not be able to operate the factory thereby, bringing the petitioner’s manufacturing activities to a grinding halt. The petitioner has not been able to operate its factory since the date of passing of the order. The petitioner would not be able to pay its creditors and the workers their dues. The petitioner offered to clear all the taxes in installments. 
  6. Learned AGP Shri Trivedi opposed the petition contending that the petitioner has not paid the self-­assessed tax. Such tax has been collected from the purchasers. The petitioner cannot press financial hardship in depositing such tax with the Government revenue. The authorities have rightly exercised powers under Section 83 of the Act to protect the interest of Government revenue. 
  7. In the facts of the case, we would like to find a way out of the impasse so that the petitioner can re­start its manufacturing activities and start repaying the Government dues. In this context, few things become relevant. Firstly, according to the petitioner, the outstanding dues are in the vicinity of Rs.64.00 Lacs. This does not account for possible interest or penalty or late payment charges. The petitioner must clear the dues as soon as possible. The petitioner, having collected such taxes, would not get any sympathy from us, if the unpaid taxes are not deposited in the Government revenue.  Learned   AGP   may   also   be   correct   in pointing out that the figures of unpaid taxes are based on the petitioner’s self-­assessment and this would be subject to verification. The law permits the authorities to carry out best judgment assessment in case the Returns are not filed. The petitioner shall place before the respondent authorities material regarding its purchases and clearances in order to enable the authority to form the best judgment assessment, if so found necessary. All these procedures can continue.  
  8. In the meantime, however, subject to certain strict conditions, we would permit the petitioner to operate the factory and clear the goods manufactured. These conditions are as follows; 

(I) The petitioner shall deposit with the respondents a sum of Rs.5.00 Lacs latest by 02.11.2018  and a further sum of Rs.5.00 Lacs latest by 12.11.2018.   

(II) The remaining amount, as per the petitioner’s declaration, would be cleared in Three Equal Monthly installments. The first one of them starting from the month of December 2018. Each installment shall have to be deposited by the Fifth of the month.   

(III) The Director of the petitioner Company would file an Undertaking before this Court latest by 02.11.2018 that all these conditions would be fulfilled.  

9. The attachment on the petitioner’s stock, under the impugned order dated 09.10.2018, shall stand suspended. In other words, while maintaining the attachment on the plant and machinery, we permit the petitioner to carry out its manufacturing activities and clear the manufactured goods. Upon breach of any of the above condition nos.(I), (II) or (III), including failure to deposit any of the installments, such restrictions shall stand restored. 

10. The petitioner shall co-­operate with the proceedings for assessment or any other proceedings that the Department may initiate under the GST laws. The petition stands disposed of accordingly. Direct service permitted.

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