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S.R Traders v. Additional Director General 

[2023] 154 taxmann.com 7, HIGH COURT OF KERALA

Background: 

1. A Writ Petition was filed contending that the orders were passed without application of mind and in flagrant violation of the certain provisions of law as the immovable properties and the bank accounts of the petitioner were attached. 

2.  The Writ Petition filed by the Petitioner was dismissed by a learned single Judge vide judgment dated 9-6-2023, on the grounds that the orders – 

• were legally passed and the 

• Petitioner had an effective alternate remedy available under the CGST Act‘ 2017

3. Aggrieved by the judgment dated 9-6-2023 of a Learned single Judge, the Petitioner has filed this particular Writ Appeal.

Arguments of Petitioner:

1. That if all the bank accounts pertaining to the Petitioner and its partners are attached by the respondents then it would be impossible for them to carry on their business during the pendency of the investigation.

2. Since the immovable properties of the appellant have already been provisionally attached by the respondents the same would offer sufficient security to protect the interests of the revenue pending the adjudication proceedings.

Arguments of Respondent:

1. The Show Cause Notice issued to the Petitioner presently quantifies the demand at a figure of Rs. 8.59 crores and one has also to factor in a  possible liability towards penalty once the adjudication proceedings are over. 

2. Furthermore, ongoing investigations into the appellant’s activities may lead to more show cause notices and increased liabilities for the appellant and its partners. 

3. Consequently, the learned counsel contends that there is no justification for overturning the judgment of the learned single Judge.

Judgement:

1. The Petitioner should not be financially crippled to the extent that it cannot carry out legitimate business activities while defending against the proceedings initiated by the respondents.

2. In the interest of justice, the judgment of the learned single Judge is modified to allow the appellant to operate two of its bank accounts during the ongoing adjudication proceedings by the respondents.

3. The appellant can operate these accounts until the adjudication proceedings are concluded. 

4. Except for the mentioned modification, no other interference with the judgment of the learned single Judge is made.