Divyasree Nsl Infrastructure Private Limited & Others vs. The Union Of India & Others
(Telangana High Court, Telangana)

Case Law
Petitioner / Applicant
Divyasree Nsl Infrastructure Private Limited & Others
Respondent
The Union Of India & Others
Court
Telangana High Court
State
Telangana
Date
Mar 16, 2023
Order No.
WRIT PETITION No.7289 of 2023
TR Citation
2023 (3) TR 7128
Related HSN Chapter/s
N/A
Related HSN Code
N/A

ORDER

ORDER: (PER THE HON’BLE THE CHIEF JUSTICE UJJAL BHUYAN)

Heard Mr. R.N.Hemendranath Reddy, learned Senior Counsel for the petitioners; Mr. B.Mukherjee, learned counsel representing Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India representing respondent No.1; and Mr. Dominic Fernandes, learned counsel for respondents No.2 to 5.

2. In the hearing today, Mr. M.V.D.Praneeth, Deputy Commissioner (Anti-Evasion), Ranga Reddy GST Commissionerate, is also present.

3. Petitioner No.1 is a company incorporated under the Companies Act, 1956 and engaged in the business of construction, development and operation of IT Parks/ITES Special Economic Zone Parks etc. Petitioners No.2 to 5 are directors of petitioner No.1.

4. An order was passed by respondent No.4 on a claim made by petitioner No.1 for refund for the period July 2020 on 01.07.2022. By the aforesaid order, respondent No.4 had sanctioned refund of Rs.27,54,87,403.00 to petitioner No.1 in terms of Section 54(5) of the Central Goods and Services Tax Act, 2017 (briefly, ‘the CGST Act’ hereinafter) read with Rule 92(1) of the Central Goods and Services Tax Rules, 2017 (briefly, ‘the CGST Rules’ hereinafter). It appears that respondent No.3 exercised powers under Section 107(2) of the CGST Act and examined the proceedings of respondent No.4 leading to passing of the refund sanction order dated 01.07.2022 following which order dated 04.01.2023 was passed by respondent No.3. It was thereafter that respondent No.4 preferred appeal before the Joint Commissioner under Section 107(2) of the CGST Act. The appeal was filed on 31.01.2023 and is stated to be pending. While the matter rested thus, office of respondent No.3 in exercise of powers under Section 83 of the CGST Act issued notices dated 08.03.2023 to the bankers of petitioner No.1 for provisional attachment of bank accounts of petitioner No.1. It is stated that the following bank accounts of petitioner No.1 in different banks have been attached by respondent No.3 under Section 83 of the CGST Act on the ground that proceedings have been initiated against petitioner No.1 under Section 74 of the CGST Act:

Sl. No.

Name of the Bank

A/c. No.

Type of Account

1.

Indian Bank

7190833307

Current Account

2.

Indian Bank

7170208129

Term Loan

3.

Indian Bank

7185513806

Dividend

4.

Indian Bank

7007368240

CSR

5.

Indian Bank

5021426860

Escrow

6.

State Bank of India

30601543805

Current account

7.

State Bank of India

35793387835

Escrow Account

8.

State Bank of India

38577636606

Term Loan Closed

9.

State Bank of India

37298925568

Term Loan

10.

State Bank of India

64168693269

Gratuity Account

11.

Indusland Bank

200000323075

Current Account

12.

Indusland Bank

200999548020

Escrow Account

13.

Indusland Bank

250021121995

Escrow Account

14.

Kotak Mahindra Bank

0646377597

Collection Account

15.

Kotak Mahindra Bank

0552TL010000884

Term Loan

4.1. Immediately thereafter on 09.03.2023, respondent No.5 issued summons to the petitioners under Section 70 of the CGST Act.

5. Learned Senior Counsel for the petitioners have referred to the guidelines dated 23.02.2021 issued by the Central Board of Indirect Taxes and Customs and submits that while carrying out provisional attachment of the bank accounts of petitioner No.1, respondents have not followed the said guidelines. He submits that attachment of bank account of an ongoing concern, be it provisional or otherwise, is a drastic measure which should not be resorted to unless warranted, that too, as the last resort. Such attachment of bank account may lead to economic death of such a concern. He further submits that though respondent No.4 has filed appeal before the appellate authority, no stay has been granted. Therefore, there is no reason for the respondents to provisionally attach the bank accounts of petitioner No.1.

6. In the hearing which took place in the pre-lunch session we had asked the learned Senior Counsel for the petitioners to furnish us the credit balance as against the bank accounts which have been provisionally attached.

7. In the post-lunch session, Mr. R.N.Hemendranath Reddy, learned Senior Counsel for the petitioners has furnished us the bank statements. However, he further submits that petitioners on their own will make the deposit of the entire refund sanction amount of 27.54 crores in a bank account which may be kept under provisional attachment during proceedings under Section 74 of the CGST Act. He however submits that because of the intervening year ending, some time may be given to the petitioners to work out the aforesaid arrangement.

8. Mr. Dominic Fernandes, learned counsel for respondents No.2 to 5 submits that petitioners should cooperate with the investigation. Though respondents had issued summons to the petitioners, on one pretext or the other they did not appear before the summoning authority.

Additionally, he submits that the refund order was obtained fraudulently by the petitioners. He also submits that there is no provision of stay of a refund sanction order by the appellate authority. Therefore, question of stay does not arise.

9. Having heard learned counsel for the parties and on perusal of the materials on record, we are of the view that without entering into the merits of the rival contentions, the following directions will meet the ends of justice:

i) The refund sanction amount, as noticed above, is Rs.27.54 crores. Petitioners shall make a deposit of Rs.28.00 crores in a nationalised bank by way of fixed deposit on or before 14.04.2023 and handover the fixed deposit receipt (FDR) to respondent No.3 within seven days thereafter.

ii) Petitioners shall cooperate with the summons that may be issued by the respondents or on behalf of the respondents in connection with the proceedings under Section 74 of the CGST Act.

iii) Respondents shall forthwith withdraw the provisional attachment of bank accounts of petitioner No.1 carried out on 08.03.2023, details of which have been mentioned above.

iv) On furnishing of the fixed deposit receipt (FDR) by petitioner No.1 to respondent No.3 as above and cooperation of the petitioners with the investigation, respondents shall not take any coercive measures against the petitioners.

10. We order accordingly.

11. However, if there is non-compliance of the above conditions by the petitioners, it would be open to the respondents to take such action as may be deemed appropriate in accordance with law.

12. This disposes of the writ petition. Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.

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