The Hon’ble High Court of Kerala vide its order dated 25.07.2023 in the matter of M/s S.R.Traders Vs. The Additional Director General, DGGI & Others in WA No. 1250 of 2023, held that if the value of the immovable properties attached is not sufficient to meet the demand proposed against the assessee, the assessee cannot be financially choked to the extent of preventing it from carrying on legitimate business activities while simultaneously defending the proceedings initiated by the respondents against it.

The Appellant preferred the Writ Appeal before the Hon’ble Division Bench challenging the order dated 09.06.2023 passed by the learned Single Judge in WP(C) No. 12591 of 2023, wherein the orders that provisionally attached immovable properties and the bank accounts of the appellant were assailed, on the ground that the said orders were passed without application of mind and in flagrant violation of the certain provisions of law under the CGST Act and Rules.  Though, the learned single judge after considering the contentions of the appellant found that orders were passed by the first respondent who was legally empowered to pass such orders and further that the appellant had an effective alternate remedy to impugn the said orders before the appellate authority under the Act.  The writ petition was dismissed mainly on the finding that there was an efficacious alternate remedy that the appellant could pursue against the orders impugned.

It was submitted on the behalf of the Appellant that if all the bank accounts pertaining to the appellant and its partners are attached by the respondents then it would be impossible for them to carry on their business during the pendency of the investigation, that has been initiated y the Respondents.  Further, since the immovable properties of the appellant have already been provisionally attached by the respondents, the same would offer sufficient security to protect the interests of the revenue pending the adjudication of the show cause notices issued to the appellant, as also pending further investigation to be carried out by the respondents.

On the other hand, it was submitted on the respondents that the show cause notice issued to the appellant presently quantifies the demand at a figure of Rs.8.59 crores.  Also, the investigation that is ongoing against into the activities of the appellant would also likely result in further show cause notices being issued and further liabilities being fastened on the appellant firm and its partners.  Therefore, it was submitted that there is no warrant for interfering with the judgment of the learned single Judge.

Held: –

• The Hon’ble Bench after considering the submissions made and facts of the case, found that it may be a fact that the value of the immovable properties attached is not sufficient to meet the demand contained in the show cause notices, we must necessarily remind ourselves that the appellant cannot be financially choked to the extent of preventing it from carrying on legitimate business activities while simultaneously defending the proceedings initiated by the respondents against him.
• Therefore, it was observed by the Hon’ble Bench that the ends of justice would require us to modify the judgment of the learned single Judge and permit the appellant to operate two of its bank account pending finalisation of the adjudication proceedings by the respondents, so that the appellant can carry on its legitimate business activities even while defending the proceedings initiated against him by the respondents.
• The Hon’ble Bench accordingly, directed lifting of the attachment in respect of the following two accounts pertaining to the appellant, and covered by the order impugned in the writ petition.

The Hon’ble Court with the above findings and observations, disposed of the appeal with the directions that the appellant shall be permitted to operate the aforesaid accounts during the pendency of the adjudication proceedings initiated at the instance of the respondents and until the culmination thereof.  However, the Hon’ble Bench refrain from interfering with the judgment of the learned single Judge in all other respects.