2019 (8) TMI 411 - HC - GST

Provisional attachment under GST - no SCN in respect of any alleged violation of the Act has been issued till date - non compliance of provisions of Section 83 of GST Act - HELD THAT - Given the drastic nature of this power, the Parliament has provided that such provisional attachment can only be done consequent to an order of the Commissioner. This ensures due application of mind by a senior officer to the facts of the case before an attachment of a bank account is ordered. Mr. Jetly, learned Counsel appearing for the Respondent, very fairly states that no order is available on file. This would indicate that there was no application of mind by the Commissioner before the Petitioner's bank accounts in Axis Bank, Tardeo Branch and Indusind Bank, Miraroad Branch were frozen/attached. The impugned action of attaching the Petitioner's bank accounts is without authority of law. Thus set aside - petition allowed.

Summary

Issues:
Challenging the freezing of bank accounts without a show cause notice or order from the Commissioner under the Goods & Service Tax Act, 2017.

Analysis:
The judgment by the High Court of Bombay involved two petitions challenging the Assistant Commissioner of Central Goods And Service Tax's action in directing the freezing of the Petitioner's bank accounts without issuing a show cause notice or obtaining an order from the Commissioner as required by Section 83 of the Act. The Petitioner argued that the freezing of the accounts was arbitrary and against the law since no formal notice of any alleged violation had been provided. The Court emphasized that the power to provisionally attach bank accounts is a drastic measure and can only be exercised following an order from the Commissioner, ensuring a careful consideration of the circumstances before such action is taken.

The Court noted that the Respondent's counsel admitted that no order from the Commissioner was available on file, indicating a lack of proper assessment before freezing the accounts. Consequently, the Court held that the action of attaching the Petitioner's bank accounts was unauthorized and ordered the Respondent to immediately release the freezing/attachment and inform the banks to lift the restrictions. Both petitions were allowed in favor of the Petitioner based on the absence of a valid order from the Commissioner and the failure to follow the due process outlined in the Act.

In conclusion, the judgment highlighted the importance of following the legal procedures and requirements set out in the Goods & Service Tax Act, 2017, particularly regarding the provisional attachment of bank accounts to safeguard the rights of taxpayers and ensure the proper application of the law. The Court's decision to set aside the freezing of the accounts underscored the necessity for authorities to adhere to the statutory provisions and exercise their powers judiciously in accordance with the law.