#3 $ * IN HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 3618/2020 WATERMELON MANAGEMENT SERVICES PRIVATE LIMITED ..... Petitioner Through: Mr. Sunil Upadhyay, Advocate versus COMMISSIONER, CENTRAL TAX, GST DELHI (EAST) & ANR. ..... Respondents Through: Mr. Harpreet Singh, Sr. Standing Counsel for respondent no. 1 and 2. % Date of Decision: 29th June, 2020 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE SANJEEV NARULA JUDGMENT MANMOHAN, J: (Oral) 1. petition has been heard by way of video conferencing. 2. Present writ petition has been filed challenging impugned order dated 03rd June, 2020 passed by respondent No.1 whereby it has kept provisional attachment orders dated 05th March, 2020 as well as corrigendum dated 01st June, 2020 alive after specifying that reason for attachment was that proceeding under Section 67 of Central Goods and Service Tax Act (hereinafter referred to as CGST Act ) was pending against petitioner. However, respondent No.1 accepted fact that it W.P. (C) 3618/2020 Page 1 of 7 should not conduct parallel investigation and accordingly, respondent No.1 handed over its investigation to Directorate General of Goods and Services Tax Intelligence (for short DGGI ) who had been investigating matter since 05th December, 2018. relevant portion of impugned order reads as under:- 1.3 Searches were also conducted in registered premises of 8 input suppliers of M/s WMSPL who were suspected of supplying only invoices without actually supply of goods/services. Details are as follows:- S. GSTIN Trade Name Address ITC availed ITC availed Total No. in 2017-18 in 2018-19 1 09FFPPS5 Adinath A-178, Second 2,38,09,880 2,38,09,880 335HIZR Enterprises Floor, Realtek Noida, UP- 201301 2 06DYYPK Sai VPO Bhonds, 1,75,15,219 1,75,15,219 0370J1ZX Enterprises Sohna, Haryana- 122015 3 07DVKPK Bhawani Kh.No.10/25, 1,30,66,113 1,30,66,113 st 2527Q1ZY Enterprises 1 Floor, Village Burari, Near Chetan Bihar Mandir Road, Delhi- 110084 4 07AVJPC3 Zetex Office No.12, 1,07,59,924 71,52,054 1,79,11,977 848C1ZT Enterprises Plot no.7/8, Madhu Vihar, Delhi-110092 5 09CLEPA7 Den 30-A, Devika 71,49,072 88,57,818 1,60,06,890 571F1Z4 Enterprises Tower, Ghaziabad, U.P.-201001 6 07EPFPK7 Evergreen Office No.5, 20,17,028 20,17,028 269D1ZO Enterprises Plot no.255, Ground floor, Karkakrdooma Delhi-110092 7 07AAEFU Ultra P.No.55 and 19,92,046 19,92,046 W.P. (C) 3618/2020 Page 2 of 7 6008QIZP Enterprises 56, First Floor, Office No.15, Madhu Vihar, Delhi- 110092 8 07BVLPG Citi 1047, 17,58,035 17,58,035 0932L1ZG Enterprises Ground Floor, G D Colony, Mayur Vihar, Delhi-110096 7,80,67,316 1,60,09,872 9,40,77,188 1.4 All 8 premises were either found to be non-existent and in case addresses were found, they were not being used by registered suppliers of M/s WMSPL. Hence, it is evidence that above mentioned 8 suppliers were created solely for purpose of passing on fake ITC. 1.5 Further, Shri Gulzar, Manager (IR & Compliance) at M/s Watermelon Management Services Private Limited in his statement recorded on 04.03.2020 under Section 70 of CGST Act, 2017 stated that company had never received any services from above mentioned firms. 1.6 During investigation it was also found that another company by name of M/s Watermelon HR Services Private Limited (Part of Watermelon group) also appeared to have availed fake ITC of approx. Rs.2,04,82,938/- from same non-existent suppliers that are suspected to have provided fake ITC to M/s Watermelon Management Services Private Limited. 1.7 Shri Gulzar, Manager (IR & Compliance) and Shri Kanhaiya Jha, Accountant, M/s Watermelon Management Services Private Limited in their voluntary statement dated 04.03.2020, stated that documents/records pertaining to period before April 2018 were not being maintained at any of offices of company. No financial/account records (not even in soft-copy form) were found during search of these premises. xxx xxx xxx 3.4 They submitted that as per letters dated 05.03.2020 sent to Banks for provisional attachment of company s bank accounts; proceedings have been launched against company W.P. (C) 3618/2020 Page 3 of 7 under Section 74 of CGST Act, 2017. To this they were informed that Section 83 of CGST Act, 2017, refers to only provisional attachment of property including bank accounts and that it is not final attachment. They were also informed that investigation is currently underway so there is no question of issuance of SCN at this juncture, SCN will be issued once investigation is concluded. They were also informed that corrigendum dated 01.06.2020 have already been sent to banks by department wherein they have been informed that investigation has been launched under Section 67 and not Section 74 of CGST Act, 2017. xxx xxx xxx 4.1 bank accounts of company were provisionally attached on 05.03.2020 under Section 83 of CGST Act, 2017 to safeguard Government revenue. This was done on basic of ample evidence that company h ad fraudulently availed ITC on basis of fake input invoices and that ITC had been used to discharge their tax liability. Section 83 (1) reads as follows: Where during pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, Commissioner is of opinion that for purpose of protecting interest of Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to taxable person in such manner as may be prescribed. Thus Section 83 of CGST, Act, 2017, clearly provides that provisional attachment can be done during pendency of proceedings for purpose of protecting interest of Government revenue. 4.2 Since 05.03.2020, company has been given multiple opportunities and sufficient time to submit relevant documents/.records to establish genuineness of ITC availed by them. Directors have also been given sufficient time to appear and joint investigation. However, even in multiple written submissions made company, no documents/details have been submitted to establish genuineness of ITC availed by W.P. (C) 3618/2020 Page 4 of 7 company, nor have they commented on confessions made by their employees, viz., Shri Gulzar, Manager (IR & Compliance) and Shri Kanhaiya Jha, Accountant. company has shown no intent to co-operate with investigation since 05.03.2020. They have also made no attempt to pay amount of tax fraudulently availed by them as ITC. 4.3 M/s WMSPL have submitted with same issue for same period is already being investigated by DGGI and that parallel investigation should not be carried out. In this respect it is noted that investigation has already been handed over to DGGI by this office and that further investigation in present case will be conducted by DGGI. 4.4. It is pertinent to note here that in recent investigation initiated by this office against M/s Orion Security Solutions Private Limited for wrong availment/mis-utilization of ITC and tax collected but not deposited, Bank accounts of company were provisionally attached by this office during course of investigation under Section 83 of CGST Act, 2017. M/s Orion Security Solutions Private Limited filed writ petition for de freezing of provisionally attached Bank accounts. Hon ble Delhi High Court via order dated 16.03.2020 disposed said writ petition and held that accounts be de-freezed only after party committed to deposit entire GST liability within specified time frame. This office was able to recover revenue of approx. Rs.28 crore in that particular case on orders of Hon;ble High Court. 4.5 company has been operating from unregistered premises in Delhi as well as Uttar Pradesh whereas only registered premises is closed and not in use which shows intent of company to hide its operations. Also, company has not maintained any records of any transactions undertaken during F.Y. 2017-18 which again showed intent to evade. Directors of company also failed to comply with summons issued to them and even though multiple letters were written by party to this office, party did not provide any evidence to establish genuineness of ITC availed by it. W.P. (C) 3618/2020 Page 5 of 7 3. Learned counsel for petitioner points out that though DGGI was investigating matter since 05th December, 2018, yet he had never passed any attachment/freezing order against petitioner. He submits that since no proceeding has been launched under Section 74 of CGST Act and raid and search of petitioner s premises had concluded on 04 th and 05th March, 2020, impugned provisional attachment order is without jurisdiction and illegal. 4. Learned senior standing counsel for respondent states that petitioner has maintained no record of transaction undertaken during Financial Years 2017-18 and 2018-19. He also states that petitioner has not provided any evidence of genuineness of Input Tax Credit (ITC) availed by it and/or eight other companies. He further states that Directors of petitioner have failed to comply with summons issued to them. 5. On last date of hearing, we had directed officers of DGGI and Commissioner of CGST, Delhi (East) to appear before this Court. 6. Today, both officers who appeared in person via video link in unison state that their investigations show that prima facie there has been wrongful availment of ITC by petitioner. Officer from DGGI office states that though fifteen summons had been issued to Director of petitioner, yet he had appeared only on three occasions and that too did not furnish documents as asked for. 7. In rejoinder, learned counsel for petitioner states that documents in three tempos have been filed by petitioner with DGGI. 8. Keeping in view serious allegations that have been levelled against petitioner by officers of DGGI as well as by Commissioner of CGST, Delhi (East), this Court is of view that ends of W.P. (C) 3618/2020 Page 6 of 7 justice would be met if DGGI is directed to conclude investigation in present case within period of three months. 9. Consequently, present writ petition is disposed of with direction to DGGI to conclude investigation within three months. Needless to say, petitioner including its Directors shall cooperate with respondents in investigation of present case. Further, if upon conclusion of investigation DGGI is satisfied with stand of petitioner, then it shall close proceeding and if not, issue appropriate show cause notice in accordance with law. All rights and contentions of parties are left open. 10. order be uploaded on website forthwith. Copy of order be also forwarded to learned counsel through e-mail. MANMOHAN, J SANJEEV NARULA, J JUNE 29, 2020 rn W.P. (C) 3618/2020 Page 7 of 7 Watermelon Management Services Private Limited v. Commissioner, Central Tax, GST Delhi (East) & Anr