The Gujarat high court recently with the justices J B Pardiwala and Nisha M Thakore had discarded the order of provisional attachment which said that the GST officials are not eligible to provisionally attach personal properties of the partnership partner’s firms with the final liability determination of the firms which had been wrongly accused of availing the Input Tax Credit.
The justice considered the petition filed by Rajkot’s Utkarsh Ispat LLP, which has been doing the procuring of MS scraps for the manufacturing of TMT bar. In between the high court mentioned that the provisional attachment of goods, stocks, receivables are also restricted to the limits without the approval when the charges floating are in the third-party favour being created on them.
This makes the business halt its operations and the same does not comply with the Central Goods and Services Tax Act (CGST) policies. The state GST officials came to search the premises being based on the fake GST invoice to avail ITC without any real operation from May 2019 and November 2021.
The assistant commissioner of state taxes made a provisional attachment of the firm’s factory premises, plant and machinery, bank accounts, and also the fixed deposits of the organizations on the particular actions.
The partner of the firm Niraj Jaydev Arya, personal property was also attached in the provisional attachment making it a wrongful decision. Then after the authorities sensed that the property of only a taxable person can be attached they applied Sections 90 and 137 of the Act.
The justice after discussion of the law mentioned that the assistant commissioner is “wholly unjustified in provisionally attaching a personal property owned by a partner of the firm under Section 83 of the Act, 2017.”
The high court also mentioned that the LLP partner is not a taxable entity and also the firm’s liability is to determined.
“The day such liability is determined and fixed, it is open for the department to proceed not only against the firm as a taxable person, but also against the individual partner of the firm, Also the “Besides, the officer concerned had also ordered provisional attachment of goods, stocks and receivables, which were pledged, and a floating charge created in favour of the Kalupur Commercial Bank Ltd for availing cash credit facility.”
The attachment is not approved by the court and the attachment must not make any issues with the normal operation of the taxable person.
