2020 (2) TMI 216 - HC - GST

Provisional attachment of bank account of petitioner - no proceedings U/Ss 62, 63, 64, 67, 73 and 74 against the Petitioner as mentioned under Section 83 of CGST Act are pending - HELD THAT - The issue decided in the case of KAISH IMPEX PRIVATE LIMITED VERSUS THE UNION OF INDIA, THE PRINCIPAL CHIEF COMMISSIONER CGST CENTRAL EXCISE, ASSISTANT COMMISSIONER OF CGST RANGE (IV) , 2020 (1) TMI 933 - BOMBAY HIGH COURT where it was held that The bank account of the taxable person can be attached against whom the proceedings under the sections mentioned above are initiated. Section 83 does not provide for an automatic extension to any other taxable person from an inquiry specifically launched against a taxable person under these provisions. Only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power. Order of attachment set aside - petition allowed.

Summary

Issues:
Challenge to provisional attachment of bank account under Section 83 of the CGST Act, 2017.

Analysis:
The judgment dealt with the challenge against the provisional attachment of a bank account under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017. The Petitioner contested the action of the Respondents in attaching the bank account based on proceedings against another taxable person. The Deputy Commissioner of CGST had directed the bank to prevent any debit from the account due to suspicions of fund transfers to the Petitioner from the said taxable person. The Petitioner argued that the power for provisional attachment lies under Section 83 of the CGST Act and requires specific proceedings against the Petitioner under Sections 62, 63, 64, 67, 73, and 74, which were absent in this case. Reference was made to a previous judgment by the Bombay High Court to support this argument.

The Court analyzed the provisions of Section 83 along with Rule 159(1) and Form GST DRC-22 to interpret the scope of provisional attachment. It emphasized that the power to provisionally attach bank accounts is a drastic measure and should not be routinely exercised. The Court clarified that Section 83 allows attachment only in specific circumstances related to proceedings under Sections 62, 63, 64, 67, 73, and 74. The judgment highlighted that the power is not an omnibus one and must be used judiciously to safeguard government revenue. The Court rejected the Respondents' argument that summoning one taxable person automatically extends the proceedings to another taxable person for provisional attachment, stating that such an interpretation is not supported by the legislative framework of Section 83.

In line with the analysis and considering the similarities with a previous case, the Court ruled in favor of the Petitioner. The Writ Petition was allowed, quashing and setting aside the order of the Respondents that attached the bank account of the Petitioner. The judgment underscored the importance of adhering to the specific provisions and limitations outlined in Section 83 while exercising the power to provisionally attach bank accounts under the CGST Act.