Forte Solutions Pvt. Ltd vs The Principal Addl. Director General

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 12.07.2021

CORAM

THE HONOURABLE DR. JUSTICE ANITA SUMANTH

W.P. No.12965 of 2021 and WMP Nos.13766 & 13767 of 2021

Forte Solutions Pvt. Ltd., Rep. by its Director, P.Mala D/o A.Ponnuswamy, No.20, 3rd Cross Street, West CIT Nagar, Chennai-600 035. …Petitioner Vs

1.The Principal Addl. Director General, DGGI, Chennai Zonal Unit, No.16, BSNL Building, Tower II, 5th and 8th floor, Greams Road, Nungambakkam, Chennai-600 006.

2.The Senior Intelligence Officer, Zonal Unit, No.16, BSNL Building, Tower II, 5th and 8th floor, Greams Road, Nungambakkam, Chennai-600 006. …Respondents

Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to Writ of certiorari to call for the records of the 2 nd respondent made in F.No/INV/DGGI/CZU/GST/03/2018 dt 27.11.2020 freezing the current account of

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the petitioner company with South India Bank, Branch code 0912 Ambattur Branch, Chennai-600 098 and quash the same consequently direct the banking operations to be resumed in a normal manner by the petitioner company.

For Petitioner : Mr.B.Kumar, Senior Counsel for Mr.S.Ramachandran For Respondents : Mr.V.Sundareswaran Senior Panel Counsel *********

ORDER

The petitioner in this writ petition claims to be a first generation woman

entrepreneur, in the business of recruitment of manpower. Manpower is supplied

according to the requirement of companies and the petitioner receives a commission

in regard to the services rendered.

2. On 22.02.2018, there was a search initiated by the 2nd respondent i.e. the

Intelligence Officers under the provisions of the Goods and Service Tax Act, 2017

(GST Act). On the basis of materials collected, the Intelligence Department levelled

allegations to the effect that Service Tax as well as Goods and Service Tax (ST &

GST) had been collected from the recipient companies, but had not been remitted to

the Department. That is, though the petitioner is registered under the Finance Act,

1994 as well as the GST Act, 2017 and returns have been filed under the aforesaid

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two enactments, the petitioner did not, and this is admitted, remit the amounts of ST

and GST collected by it from the service recipients.

3. A statement was recorded from the petitioner at the time of investigation

and a letter filed thereafter, dated 22.07.2020, admitting to the position that the total

GST shortfall for the period 2017-18 to 2019-20 would be a sum of

Rs.28,58,90,794/-. Post remittance of a sum of Rs.9,38,52,849/-, the shortfall stood

determined at an amount of Rs.19,20,37,945/-. As against the admitted dues of GST,

the petitioner has furnished a tabulation giving a scheme of installment stretching

upto December 2021.

4. As far as the service tax dues are concerned, the petitioner has approached

the revenue by way of an application under the Sabka Viswas (Legacy Dispute

Resolution) Scheme, 2019. We are however, not concerned with the arrears of

service tax in this matter. Learned Senior Counsel appearing for the learned counsel

for the petitioner would confirm that up and until May 2021, an amount in the region

of around six (6) crores has been remitted. Admittedly, however, the petitioner has

not been able to adhere to the scheme of installments, as agreed upon, in light of the

difficulties faced on account of the on-going pandemic.

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5. The thrust of this writ petition is a challenge to a provisional attachment

made under Section 83 of the Act, of the bank account of the petitioner bearing

No.0912083000000023 with the South Indian Bank, Ambattur Branch. Learned

Senior Counsel for the learned counsel for the petitioner would, while not disputing

the fact that the petitioner is in arrears of revenue, point out that there is nothing to

be gained by virtue of the impugned provisional attachment since the attachment

only stands in the way of the petitioner carrying on business and making efforts to

settle the arrears due. Quite apart from the fact that there are manifold difficulties

being faced by businesses on account of the pandemic, the petitioner has, he says,

been making and is continuing to make, an earnest attempt to repay the dues to the

revenue.

6. Per contra, Mr.V.Sundareswaran would state that in light of the admitted

arrears, the department has no other option, but to recover the arrears by any means

at its disposal.

7. Having regard to the rival contentions that have been advanced, I am of

the view that the petitioner must be permitted to approch the revenue by way of a

representation seeking lifting of the bank attachment, conditional upon her

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furnishing an undertaking therein to made earnest efforts to repay the admitted dues

in line with a scheme of installment to be arrived at, and I do so. The revenue will

consider the representation, take into account the amounts remitted by the petitioner,

till date, arrive at a new scheme of installment and thereafter, consider lifting the

bank attachment.

8. I agree with Mr.Kumar that there is nothing to be gained by thwarting the

attempt of an assessee to engage in legitimate business. In fact, this would be in the

best interests of both the petitioner as well as the revenue, subject of course to there

being scrupulous monitoring of the inflow and outflow in the account itself and

bonafide attempts by the petitioner to remit the outstanding dues to the revenue. To

this effect, I would also direct the South Indian Bank through Mr.V.Sundareswaran,

since the bank is not arrayed before me, to circulate a statement of inflow and

outflow/debit and credit to the respondents on a monthly basis, should the revenue

be inclined to lift the attachment.

9. I draw support in this regard from a judgment of a three Judge Bench of

the Supreme Court in Internet and Mobile Association of India v. Reserve Bank of

India (2020 (10) Supreme Court Cases 274) that considered a challenge to a circular

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issued by the Reserve Bank of India placing an embargo on dealings in virtual

currency/cryptocurrency. The Bench considers the test of proportionality as

enunciated in the case of Modern Dental College and Research Centre v. State of

Madhya Pradesh & Ors. (2016 7 SCC 353), to the effect that the remedy must not be

worse than the evil that it seeks to protect from. By attaching the bank account and

preventing fruitful productivity, nobody stands to gain. Thus, it is in the best interest

of both parties to permit the petitioner to continue in business operations subject to

the caveats laid by me above and any further that the revenue may choose to impose.

10. In the case of Nokia India Private Limited v. Additional Commissioner

of Income Tax and others (2015 13 Supreme Court Cases 729), an order under

Section 281(B) of the Income Tax Act, provisionally attaching the bank accounts of

that assessee under the Income Tax Act for arrears of income tax, was considered by

the Hon'ble Supreme Court and noticing the position that the petitioner was

managing a running concern, the bank account was ordered to be lifted, upon

condition that a monthly statement of account is filed in hard copy, to ensure proper

monitoring of the receipts and payments from that account.

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11. If a representation is filed by this petitioner, let it be disposed within a

period of three (3) weeks from date of receipt thereof, after hearing the petitioner.

12. This writ petition stands disposed. Connected miscellaneous petitions are

closed. No costs.

12.07.2021 vs Index: Yes Speaking order

To

1.The Principal Addl. Director General, DGGI, Chennai Zonal Unit, No.16, BSNL Building, Tower II, 5th and 8th floor, Greams Road, Nungambakkam, Chennai-600 006.

2.The Senior Intelligence Officer, Zonal Unit, No.16, BSNL Building, Tower II, 5th and 8th floor, Greams Road, Nungambakkam, Chennai-600 006.

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DR. ANITA SUMANTH, J.

vs

W.P. No.12965 of 2021 and WMP Nos.13766 & 13767 of 2021

12.07.2021

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