CWP No.4144 of 2020 & four connected petitions [1] 237 IN HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH **** Date of Decision: 18th March, 2020 1. CWP No.4144 of 2020 M/s Ireo Hospitality Company Private Limited Petitioner Versus Union of India and others Respondents 2. CWP No.4506 of 2020 Ireo Victory Valley Private Limited Petitioner Versus Union of India and others Respondents 3. CWP No.4507 of 2020 Ireo Grace Realtech Private Limited Petitioner Versus Union of India and others Respondents 4. CWP No.4512 of 2020 Ireo Residences Company Private Limited Petitioner Versus Union of India and others Respondents 5. CWP No.4513 of 2020 Ireo Private Limited Petitioner Versus Union of India and others Respondents For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 1 of 9 ::: Downloaded on - 01-07-2021 09:25:20 ::: CWP No.4144 of 2020 & four connected petitions [2] CORAM: JUSTICE S. MURALIDHAR JUSTICE AVNEESH JHINGAN Present: Mr. Balbir Singh, Senior Advocate with Mr. Gajendra Maheshwari, Advocate for Petitioners. Mr. Sourabh Goel, Senior Panel Counsel for Union of India. Ms. Amrita Garg, Advocate for Mr. Arjun Sheoran, Advocate for Non-Applicants/Intervenors [in CWP No.4507 & 4513 of 2020]. **** Dr. S. Muralidhar, J. 1. This is batch of five petitions, by companies belonging to same group. first of these petitions i.e. CWP No.4144 of 2020 is filed by M/s Ireo Hospitality Company Private Limited ('IHCPL') where principal challenge is to provisional attachment order dated 7th February, 2020 issued by Principal Commissioner, CGST Commissionerate, Gurugram attaching bank accounts of Petitioner. 2. When CWP No.4144 of 2020 was listed for hearing before this Court on 14th February, 2020, notice of motion was issued and petition was adjourned to 18th February, 2020 at request of learned standing counsel for Respondents. 3. On following date i.e. 18th February, 2020 while further adjourning For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 2 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: CWP No.4144 of 2020 & four connected petitions [3] case to 25th February, 2020 again at request of learned counsel for Respondents, Court directed that in meanwhile Over Draft (OD) account(s) of Petitioner shall be de-freezed forthwith. 4. On next date i.e. on 25th February, 2020 following order was passed in CWP No.4144 of 2020. By this petition, petitioner has challenged order of attachment of its bank account under Section 83 of Central Goods and Services Tax Act, 2017 [read with Rule 159 of Central Goods and Services Tax (CGST) Rules, 2017]. Reply on behalf of respondents has been filed and same is taken on record. Copy of reply is handed over to learned counsel for Petitioners. principal argument is that necessary concomitant for exercising powers under Section 83 of Act is 'opinion of Commissioner that it is necessary for protecting interest of Government revenue'. On other hand, impugned order only mentions that since proceedings have been launched against petitioner under Section 67 of Act, order has been passed. We have asked learned counsel for respondents as to what were reasons for coming to opinion that interest of revenue may be prejudicially affected when there is no demand, because even in written statement nothing is forthcoming. Learned counsel has requested us to permit officer who has passed order to appear before this Court with record and explain reasons which weighed with him. Even though request is hardly reasonable, we accede to it. Adjourned to 27.02.2020. Copy of order be handed over to learned counsel for Revenue under signatures of Bench Secretary of this Court. Photocopy of this order be placed on file of each connected case. For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 3 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: CWP No.4144 of 2020 & four connected petitions [4] 5. In meanwhile, companion petitions had been filed and above order was common to first petition i.e. CWP No.4144 of 2020 and other four petitions by other group companies viz., Ireo Victory Valley Private Limited (CWP No.4506 of 2020), Ireo Grace Realtech Private Limited (CWP No.4507 of 2020), Ireo Residences Company Private Limited (CWP No.4512 of 2020) and Ireo Private Limited (CWP No.4513 of 2020). challenge in those petitions inter alia was to attachment of bank accounts of concerned entities. 6. Thereafter, petitions were again considered, after completion of pleadings, on 3rd March, 2020 when following order was passed by this Court:- Learned counsel for Petitioners has filed rejoinder to reply of respondents and same is taken on record. Copy of rejoinder is supplied to learned counsel for respondents. Today, Mr. Vivek Ranjan, I.R.S., Director General of GST Intelligence, Gurugram is present in Court and has apprised Court that order which has been passed under Section 83 of Central Goods and Services Tax Act, 2017 read with rule 159(1) of Central Goods and Services Tax (CGST) Rules, 2017 and in consonance with Form GST-DRC-22 and as per that form, there is no requirement for recording reasons. In our opinion, this argument may not stand scrutiny of law because enabling section is section 83 which requires that 'Commissioner is of opinion that for purpose of protecting interest of Government revenue.....'. To our mind, tentatively sine qua non for Commissioner to arrive at 'opinion' would be material and and once Rule 159(5) permits effected person to file objections, it would normally go without saying that he would know reasons because if he does not know reasons, he does not what objections to file. For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 4 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: CWP No.4144 of 2020 & four connected petitions [5] Adjourned to 17.03.2020 for further consideration. While recording our appreciation for appearance of Officer, we declare that he need not be present on next date. photocopy of this order be placed on file of each connected case. 7. Further submissions were heard by this Court on 17th March, 2020 when it was urged by Mr. Balbir Singh, learned Senior counsel for Petitioner that as long as Petitioners' principal grievance that provisional attachment orders were non-reasoned orders is entertained and time bound direction is issued to respondent to pass those orders afresh in accordance with law taking into account submissions of Petitioners in these petitions, petitioners were willing to abide by any terms and conditions as may be deemed appropriate by Court. 8. Mr.Singh, inter-alia, stated on instructions that affidavit would be filed by petitioners setting out what balance in frozen accounts was, as on date, and also set out proposed withdrawals to be made from those accounts in event of lifting of freezing orders by Respondents till 10th April, 2020, tentative date by which it was proposed that fresh orders would be passed by Respondents. 9. Today, Mr. Balbir Singh, Senior Advocate has handed over affidavit dated 17th March, 2020 of Petitioners setting out in tabulated form payments that were required to be made by Petitioners as essential business payments upto 10th April, 2020 from provisionally attached For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 5 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: CWP No.4144 of 2020 & four connected petitions [6] accounts for running their day to day operations and for no other purpose . proposed payments have been depicted as under:- S. No. Particulars Approximate Expense a. Payment to Government and Local Rs.8.75 Crore Authorities for statutory dues and utility charges; b. Payments to Banks and Financial Rs.9.25 Crore Institutions against borrowings; c. Payments on account of employee Rs.4.75 Crore salary d. Payments to existing vendors for Rs.4.75 Crore completing live residential and commercial projects Total Rs.27.50 Crore 10. It is further stated in paragraph 4 of affidavit that Petitioner companies expect further receipts of Rs.7 crores upto 10th April, 2020 on account of customer payments. It is further urged by Mr. Balbir Singh that money received by IHCPL by way of borrowings, loans, OD facility and CC limit ought not to be attached by Respondents and that interim order already passed in this regard by this Court on 18th February, 2020 should be made absolute. 11. Mr. Balbir Singh, Senior Advocate has further highlighted what is stated in paragraph 6 of affidavit, that Petitioners' have fixed deposits (FD) in various bank accounts to tune of Rs.52,23,71,188/- which are under lien on account of security except FDR of Rs.1,43,31,817/- which is free from encumbrances. For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 6 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: CWP No.4144 of 2020 & four connected petitions [7] 12. Mr. Sourabh Goel, learned senior panel counsel for Union of India submitted that affidavit was not explicit whether there was any other account of Petitioners and whether any sums have been received by Petitioners between 7th February, 2020 to till date. 13. Mr. Balbir Singh, Senior Advocate, further on instructions, undertakes that subject to impugned orders being set aside, time bound directions be issued to respondents to pass fresh orders in accordance with law, Petitioners would ensure that no payments other than those set out in tabular form (in para 9 above) would be made from accounts till date of passing of fresh orders will remain untouched. He also states that again on instructions, that petitioner would furnish to respondents receipts for payments made to vendors for completing live residential and commercial projects of Petitioners, accompanied by affidavit explaining details of such payment. Thirdly, Petitioners will maintain status quo with regard to FDs, both which are under lien as well as FDR which is free from incumbrances. 14. Mr. Balbir Singh, Senior Advocate, further on instructions, undertakes that subject to impugned orders being set aside, time bound directions be issued to Respondents to pass fresh orders in accordance with law, Petitioners would ensure that no payments other than those set out in 'tabular form' would be made from accounts and that further receipts in accounts till date of passing of fresh orders will remain For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 7 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: CWP No.4144 of 2020 & four connected petitions [8] untouched. He also states, again on instructions, that Petitioners would furnish to Respondents receipts for payments made to vendors for completing live residential and commercial projects of Petitioners, accompanied by affidavit explaining details of such payments. Thirdly, Petitioners will maintain status quo with regard to FDs, both which are under lien as well as FDR which is free from encumbrances. 15. Binding down Petitioners to aforementioned statement made before Court as recorded in paras 13 and 14 above, following directions are issued:- (i) impugned order of provisional attachment of Petitioners' bank accounts are hereby set aside upon condition that fresh orders would be passed by Respondent No.2 in that regard, in accordance with law, taking into account submissions made by Petitioners in these petitions, not later than 10th April, 2020. (ii) said orders will be communicated to each of Petitioners not later than 12th April, 2020. (iii) It will be open to Petitioners, if aggrieved by such orders, to seek appropriate remedies in accordance with law. For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 8 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: CWP No.4144 of 2020 & four connected petitions [9] 16. It is made clear that Court has not expressed any opinion on contentions of Petitioners or of response of Respondents thereto. These are left open to be urged by parties at appropriate stage. 17. It is clarified that interim order already passed by this Court on 18 th February, 2020, viz., de-freezing OD account of IHCPL, including any borrowings, terms loans, CC limits will continue. 18. petitions are disposed of in above terms. 19. Order dasti. [S. MURALIDHAR] JUDGE [AVNEESH JHINGAN] JUDGE March 18, 2020 pankaj baweja 1. Whether speaking/ reasoned : Yes 2. Whether reportable : Yes For Subsequent orders see CM-5189-CWP-2020 Decided by HON'BLE DR. JUSTICE S. MURALIDHAR; HON'BLE MR. JUSTICE AVNEESH JHINGAN 9 of 9 ::: Downloaded on - 01-07-2021 09:25:21 ::: Ireo Hospitality Company Private Limited v. Union of India and other