Gujarat High Court rejects provisional attachment of goods

Gujarat High Court rejects provisional attachment of goods

The applicant dealt in MS scrap used for manufacturing TMT bars

The Gujarat High Court has refused to approve provisional attachment of goods when the entire stock has been pledged and the floating charge has been created.

The division bench of Justice JB Pardiwala and Justice Nisha M Thakore did not approve of it particularly when the entire stock and receivables were pledged and a floating charge had been created in favor of the Kalupur Commercial Bank Limited. It had been done for the purpose of availing the cash credit facility with the provisional attachment of the goods, stock and receivables; else, the entire business would come to a standstill.

The writ applicant, Utkarsh Spat LLP is a limited liability partnership firm engaged in the business of procuring various types of mild steel (MS) scrap that is used for the manufacturing of the Thermo Mechanically Treated (TMT) bars. The writ applicant is registered under the (GST) Goods and Services Tax Act and its principal place of business is at Rajkot.

The officials of the GST department undertook the search proceedings at the registered premises of the applicant and also at the residential premises of one of the partners Niraj Jaydev Arya under the (CGST) Central Goods and Services Tax Act, 2017.

The proceedings were undertaken on the allegation that the applicant had availed Input Tax Credit (ITC) on the basis of fake invoices issued by fictitious firms without any movement of goods by the firms for the period of May 2019 till the date of the search proceedings.

During the pendency of the search proceedings, the respondent passed an order provisionally attaching multiple properties like the factory premises, plant and machinery and bank accounts including the fixed deposits.