The Delhi High Court while directing the release of bank accounts noted that there was no evidence showing a link between a taxable person and purported fake invoices.
The petitioner, Roshni Sana Jaiswal was acting as a director on the Board of Directors of a company, going by the name of Milkfood Ltd., between 2006 and 2008. The petitioner is also a shareholder in the said company, and owns approximately 14.33 % equity shares. The petitioner drew a salary of Rs.1.50 crores per annum qua the financial year 2019-2020.
The respondent, based on the information received, that Milkfood Ltd. was availing ITC against fake/ineligible invoices, commenced investigation, under Section 67 of the Central Goods and Services Tax Act, 2017, against Milkfood Ltd.
The respondent claims that, the statement of the persons, who controlled entities, which enabled Milkfood Ltd. to claim ITC, were recorded in the course of the investigation. It is in this connection, the respondent claims, that “the voluntary statement” of the petitioner was recorded.
The petitioner, as per the respondent, in her statement made to the concerned officer, inter alia, admitted to the fact that she had acted as a director of the company, i.e., Milkfood Ltd., between 2006 and 2008, and since then, she has been working in the company in the capacity of a mentor/advisor.
The petitioner is also said to have stated that, it is in her capacity as the mentor/advisor to Milkfood Ltd., that she received Rs.1.50 crores in the concerned FY i.e. 2019-2020, from Milkfood Ltd. According to the petitioner, this money was given as she had been providing “strategic guidance” to Milkfood Ltd.
On the other hand, Mr. Harsh Sethi, who appears on behalf of the petitioner, submitted that. the proceeding initiated against the petitioner. under Section 83 of the Act. is without jurisdiction, as the petitioner does not fall within the ambit of the definition of a „taxable person‟; the taxable person being Milkfood Ltd and not the petitioner. Therefore, the impugned orders cannot be sustained, as this crucial jurisdictional ingredient is missing.
The division bench of Justices Rajiv Shakdher and Talwant Singh noted that the petitioner claimed, in her voluntary statement, that she was paid Rs.1.50 crores in the FY 2019-2020 for rendering services in her capacity as a mentor/advisor to Milkfood Ltd.
“Therefore, even if we assume, for the moment, that, since investigations are on against the taxable person, and therefore, proceedings are pending under Section 67 of the Act, there is nothing placed on record to show that there was material available with the respondent, linking the petitioner to purported fake invoices,” the Bench said.
The court held that in the absence of such material, the impugned action concerning provisional attachment of the petitioner‟s bank accounts, which is otherwise a “draconian” step, was unsustainable. In the zeal to protect the interest of the revenue, the respondent cannot attach any and every property, including bank accounts of persons, other than the taxable person.
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