The Gujarat High court has refused to approve provisional attachment of goods, stock when entire stock have been pledged, floating charge has been created.
The writ applicant, Utkarsh Spat LLP is a limited liability partnership firm and is engaged in the business of procuring various type of M.S. Scrap used for the manufacturing of the TMT bars. The writ applicant is duly registered under the Goods and Services Tax Act. Its principal place of business is at Rajkot.
The officials of the GST Department undertook search proceedings at the registered premises of the writ applicant and also at the residential premises of one of the partners namely Niraj Jaydev Arya under Sub-section (2) of Section 67 of the Central Goods and Services Tax Act, 2017 [for short, “the Act, 2017”]. The search proceedings were undertaken on the allegation that the writ applicant has availed Input Tax Credit on the basis of fake invoices issued by fictitious firms without any movement of goods by the said fictitious firms for the period of May 2019 till the date of the search proceedings.
It appears that during the pendency of the search proceedings, the respondent passed an order provisionally attaching multiple properties like the factory premises, plant and machinery and bank accounts including the fixed deposits. The respondent No.3 issued multiple Form GST DRC – 22 in relation to the attachment of the aforesaid properties. The multiple Form GST DRC – 22 came to be issued by the respondent in exercise of powers under Section 83 of the CGST Act, 2017.
The division bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore do not approve the provisional attachment of the goods, stock and receivables, more particularly, when the entire stock and receivables have been pledged and a floating charge has been created in favour of the Kalupur Commercial Bank Limited for the purpose of availing the cash credit facility with the provisional attachment of the goods, stock and receivables the entire business will come to a standstill.
M/S UTKARSH ISPAT LLP vs STATE OF GUJARAT
CITATION: 2022 TAXSCAN (HC) 184
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