2018 (3) TMI 1914 - HC - GST

Attachment of Bank Accounts of petitioner - period for issuance of notice under sub-section(1) of section 74 of CGST Act - HELD THAT - Notice returnable on 12.4.2018. By way of ad interim relief, the above attachment is suspended of both the bank accounts on the condition that 1) The balance as on today in both the bank accounts shall be maintained. 2) The petitioners shall maintain a minimum stock balance of ₹ 50 lacs

Summary

Issues: Attachment of bank accounts under CGST Act, validity of notices issued by GST authorities, challenge against coercive tax collection, jurisdiction of authorities in issuing subsequent notices.

Analysis:
The petitioners, registered dealers under the Central Goods and Services Tax Act, were engaged in the business of manufacturing and supplying various types of flour. Following a search at their premises, GST authorities suspected the sale of branded goods without proper tax payment. An Assistant Commissioner issued a notice estimating the petitioners' tax liabilities at ?30.88 lacs and provisionally attached their bank accounts on 27.2.2018. Subsequently, on 19.3.2018, another notice was issued estimating their dues at ?1.29 crores. The petitioners challenged the attachment of bank accounts and the second notice, arguing that the actions were coercive and beyond the authority's jurisdiction. They contended that the subsequent notice covered the same period as the previous one, making it invalid under section 74 of the CGST Act.

The petitioners' counsel argued that coercive tax collection of ?19,74,886 was impermissible and that attaching bank accounts was an extreme measure, citing a previous court decision. They emphasized that the subsequent notice was without jurisdiction as it overlapped with the period covered by the initial notice. The counsel expressed concern that such actions could harm the petitioners' business before a final assessment was made. The petitioners had approximately ?4 lacs in one bank account and ?44 lacs in another, along with goods worth around ?90 lacs. To provide interim relief, the court suspended the bank account attachments on the condition that the current balances were maintained and a minimum stock balance of ?50 lacs was retained.

In conclusion, the court granted temporary relief to the petitioners by suspending the attachment of their bank accounts under certain conditions. The validity of the notices issued by the GST authorities was questioned, with the petitioners arguing against coercive tax collection and jurisdictional issues regarding subsequent notices. The court scheduled the next hearing for further proceedings on the matter.