2020 (7) TMI 650 - HC - GST

Attachment of Bank Account of petitioner - Jurisdiction to issue the order - violation of principles of natural justice - HELD THAT - The learned counsel for petitioner had stated that the petitioner was willing to offer a bank guarantee to the respondent No.3 of a nationalised bank of the amount in dispute claimed to be fraudulent availment of ITC i.e. ₹ 60,08,750/- in terms of communication dated 10.06.2020 issued by the Respodent, placed on record as annexure P5 to the petition. Direction issued to provisionally release/ lift the debit freeze instructions subject to conditions and bank guarantee. List on 10th September, 2020.

Summary

Issues:
Challenge to attachment orders under CGST Act, jurisdictional conflict, offer of bank guarantee, refusal to accept bank guarantee, provisional release of funds, retention of security, impact of debit freeze on business operations.

Analysis:
The judgment pertains to a writ petition challenging attachment orders issued by respondent no. 3 under the CGST Act. The petitioner contests the jurisdiction of the officers from CGST, Delhi (East) to initiate proceedings as the petitioner's jurisdictional office is in Range 10, CGST, Noida, Uttar Pradesh. The petitioner argues that the attachment orders lack jurisdiction, authority of law, and violate principles of natural justice. The petitioner offers a bank guarantee to the respondent no. 3 as a resolution to the dispute regarding the claimed fraudulent availment of ITC.

During the proceedings, the respondent no. 3 insists on cash payment of the disputed amount, rejecting the offer of a bank guarantee. The respondent no. 3 claims that the amount in question is tentative and subject to further investigation. The court grants four weeks for the respondents to file counter-affidavits and schedules the next hearing for September 10, 2020.

Considering the impact of the attachment on the petitioner's business operations, the court directs the respondent no. 3 to retain a specific amount from the petitioner's bank account as security. The court orders the retention of ?45 lacs from the current bank account as security and provisionally releases the debit freeze instructions, allowing the petitioner to continue business operations. The petitioner is directed to deposit a bank guarantee for the balance amount, subject to renewal and further orders. The security amount and the bank guarantee will be retained by respondent no. 3 pending adjudication of the final demand, with rights and contentions of both parties left open.

The judgment emphasizes the need to safeguard the interests of both parties while ensuring the continuation of business activities for the petitioner. The court's decision strikes a balance by providing a provisional resolution to the dispute, allowing the petitioner to operate while securing the disputed amount for further adjudication.