GST: Gujarat High Court orders further Investigation on Provisional Release of Goods, an alleged wrongful availment of ITC

GST: Gujarat High Court orders further Investigation on Provisional Release of Goods, an alleged wrongful availment of ITC

The Gujarat High Court claimed for further enquiry regarding provisional release of goods, an assumed unlawful availment of Input Tax Credit (ITC).

The petitioner, Madhav Copper Ltd., a company incorporated in 2012, is the leading manufacturer of various copper products like Copper Rod, Copper Wire, Fiberglass Conductor and so on. The Petitioner No.1 also imports raw-materials/ scraps for manufacturing these products and export final copper products. It has its own Certificate of Importer-Exporter Code (IEC). The petitioner also supplies to the reputed private and government entities respectively across India. The petitioner has all the requisite licences for manufacturing products at their factory at Bhavnagar.

The allegations made are of such a nature that the respondents have collected the material from the business premise during the investigation. It reveals that the company has availed the Input Tax Credit by engaging in billing transactions for wrongful availment of the ITC. The huge amount of ITC of Rs 137 crores is alleged to be fraudulently claimed by the petitioner. According to the petitioner, the cancellation of registration number of the companies with which it was dealing would not be in various ways putting responsibility on the petitioner's company. It's a public limited company and the allegation of wrongful availment of Rs. 137 crores and attachment order is without any credible material on record.

According to the petitioner, unless the show cause notices are decided, it will be wrong to say on the part of the respondent that 36 registered dealers who had the GSTN and were active on the date of supply of the goods and also filed the regular returns under the GST, for any default on their part, liability cannot be shifted on the petitioner. This version is already before the concerned authority for him to consider.

Advocate Mangukiya appearing for the petitioners has advised that the directors of the petitioner company have been cooperating with the Investigating Agency. Their exhaustive statements have been recorded, hence there is no need for them to be called by the officer concerned once again, except for the purpose of their arrest in wake of the refusal of the anticipatory bail, according to him, which is impermissible.

The division bench of Justice Sonia Gokani and Justice Nisha M.Thakore held that as far as the operating of the current account in Bank of Baroda is concerned, the credit of the ITC worth Rs 3 crores and unlocking it, no order is presently needed to be passed. The same is already advised before the respondent and be considered by the concerned authority during adjudication.

"The company shall provide the details of every transaction physically as well as through e-mode to the Revenue Authority without fail. As ensured before this Court, all the transactions of the supply shall be monitored by the Deputy Commissioner of State Tax Department, Bhavnagar," the court ordered.