Delhi High Court directs GST Authority to decide on petitioner’s offer of giving Immovable Property and release frozen Bank Accounts [Read Order]

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Delhi High Court - GST Authority - immovable property - freezed bank accounts - Taxscan

The Delhi High Court directed the GST Authority to decide on petitioner’s offer of giving immovable property and release freezed bank accounts.

The petitioner, Mahavir Transmission Ltd. sought to quash the impugned Letters whereby Respondent authority has directed the Bankers of the Petitioner Company to Freeze and Provisionally attach the bank accounts of the Petitioner Company.

The Court, while issuing notice on the petition had passed an interim order granting permission to the Petitioner to use the overdraft facility enjoyed from ICICI Bank, Standard Chartered Bank, and Allahabad Bank.

Subsequently, the authorities have filed a status report, wherein several serious allegations have been made against the Petitioner, besides stating that Respondent Authority is conducting an inquiry in connection with fraudulent availing of and passing on of ineligible Input Tax Credit (ITC) by the Petitioner.

Mr. Harsh Sethi, Advocate appearing on behalf of the Petitioner, submitted that since the freezing of the bank accounts is causing grave hardship, the Petitioner is willing to offer valuable security, being an immovable property, which can secure the interest of the Revenue for the tax amount in dispute.

Mr. Sethit said that since immovable properties can also be a subject matter of attachment under Section 83 of the CGST Act, 2017 the same be provisionally attached in lieu of the bank accounts in question.

It was further urged that the GST Department can examine and investigate the title/ownership and validate the marketability of the immovable property offered, and if they are satisfied that it can protect the interest of the Revenue, the same be attached under Section 83 of the Act and the attachment order in respect of the bank accounts may be lifted.

Mr. Sethi further submits that in fact the bank accounts in question are overdraft accounts and cumulatively there is a positive balance of only Rs. 15 lakhs, therefore, the property being offered, would better serve the interest of the Revenue.

Mr. Harpreet Singh, Senior Standing Counsel appearing on behalf of the Respondents, on the other hand submits that no proposal or offer has been received from the Petitioner in this regard. He submits that in case such a proposal is received, the same would be examined and considered in accordance with law.

The division bench of Justices Rajeev Sahai Endlaw and Sanjeev Narula gave time-bound directions to the GST Authorities for taking a decision on the proposal made by the Petitioner.

The court directed that the Petitioner shall within a period of 7 days submit a proposal to the Respondents, giving the complete particulars along with copies of the complete chain of title documents of the immovable property offered as a security.

“The immovable property should be of value not less than the tax amount in dispute. It should also be free from any subsisting charge, liens, mortgages or encumbrances, property tax fully paid up to date and not involved in any legal conflicts. As and when required, Petitioner shall produce the original title deeds, provide all necessary information relating to the property, for the satisfaction of the concerned officer,” the court said

The court further directed the Revenue to consider the proposal and if so required, investigate, and verify the title, ascertain the value and marketability of the immovable property and take a decision on the same within a period of 45 days from the date of receipt of the offer, and communicate the same to the Petitioner.

The High Court listed the matter on 15th April, 2021 for the next hearing.

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