2019 (2) TMI 741 - HC - GST

Validity of provisional attachment - section 83 of the Central Goods and Services Tax Act, 2017 - various hardships were caused to the petitioner - Held that - Section 83 of the CGST Act provides for provisional attachment to protect revenue in certain cases and inter-alia, provides that where during the pendency of any proceeding under section 67, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing, attach provisionally any property, including bank account belonging to the taxable person in such manner as may be prescribed. Thus, the object of the provision is to protect the interest of the Government revenue. In the facts of the present case, attachment of the bank accounts of the petitioner has resulted into various hardships to the petitioner which would adversely affect its business and which may result in loss of revenue to the Government, instead if the petitioner provides for some security towards its outstanding dues, the interest of the petitioner as well as the revenue can be protected. The court is of the view that the interest of justice would be served if the petitioner is permitted to pay the amount of ₹ 55,00,000/- outstanding towards excise dues by way of equal monthly installments within a period of eight months, subject to the petitioner furnishing a bank guarantee for an equal amount towards security of such amount within a period of one month from today - petition allowed in part.

Summary

Issues:
Challenge to provisional attachment order under CGST Act.

Analysis:

Issue 1: Challenge to Provisional Attachment Order
The petitioner challenged the provisional attachment order dated 15.5.2018 passed by the respondent under section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner's bank accounts were attached, affecting its ability to conduct business smoothly. The petitioner argued that despite the attachment, it continued to deposit GST and CGST dues, showing willingness to clear outstanding dues. The petitioner requested permission to pay central excise dues in installments, citing financial hardships. The respondents argued that the attachment was to safeguard government revenue and that the petitioner, being a habitual defaulter, was not entitled to installment benefits. The court noted that the attachment caused hardships to the petitioner and could result in revenue loss. It ordered the release of certain bank accounts and allowed the petitioner to pay the outstanding excise dues of ?55,00,000 in equal monthly installments over eight months, subject to furnishing a bank guarantee for the same amount within a month.

This judgment highlights the balance between protecting government revenue and addressing financial hardships faced by taxpayers. It emphasizes the importance of allowing installment payments to facilitate compliance while ensuring the security of revenue. The court's decision to release certain bank accounts and permit installment payments reflects a pragmatic approach to resolving disputes under the CGST Act, aiming to protect both the interests of the taxpayer and the government.