GST: Gujarat HC upholds Provincial Attachment of Bank Accounts accused involved in bogus billing and fake generation of E­-Way Bill [Read Judgment]

The Gujarat High Court upheld provincial attachment of bank accounts accused involved in bogus billing and fake generation of E-­Way bills without the actual physical movement of goods.

It is the case of the petitioner, JST Sons, that respondents authority have provisionally attached the bank accounts of the petitioners under section 83 of the Gujarat Goods and Service Tax Act, 2017 maintained with respondents banks without intimating the petitioners about their action of attaching such bank accounts of the petitioners.

The petitioners submitted that respondent,­ Commissioner of State Tax has failed to form an opinion that is necessary to pass the order of provisional attachment for the purpose of protecting the interest of the Government Revenue.

It was further contended by petitioner that respondent authority has failed to consider whether the petitioners would be able to pay the tax dues after completion of the assessment proceedings inasmuch as it is not the case of the respondent authorities that the petitioners are a fly by night operators or they do not have the means to pay the dues that may result at the end of the assessment proceedings which has not yet commenced.

It was alleged by the respondent authority that the petitioner issued various E­-Way bills over a short span of time with different entities namely, Chaniyara E-­Commerce situated at Jamnagar, Solani Brothers situated at Jamnagar and other such entities, which according to the opinion of the respondent authorities are involved in bogus billing transactions.

The division bench of Justice J.B. Pardiwala and Justice Bhargav D. Karia prima facie it appears from the record that the petitioners were involved in the activity of bogus billing and generation of E-­Way bill without physical movement of the goods, it cannot be said that the impugned orders passed for provisional attachment are used as tool to harass the petitioners or it would have irreversible detrimental effect on the business of the petitioners.

The court further noted that prima facie it appears that the petitioners have misused the provisions of the GGST Act by generating E­-Way bills so as to claim input tax credit by indulging in bogus billing without physical movement of the goods from remote villages in Jamnagar district.

Therefore, the court said that no interference is required to be made in exercise of powers under section 83 of the GGST Act by the respondent authorities while exercising extraordinary powers under Articles 226 and 227 of the Constitution of India by provincially attaching the bank account.