2020 (12) TMI 267 - HC - GST

Provisional attachment of bank accounts - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT - Since as per the provisional attachment dated 9th November, 2020, claim of the respondents is to the tune of ₹ 2,71,40,055.00, we are of the view that without entering into other aspects of the matter at this stage, it would meet the ends of justice if the current account No.2511818181 having deposit of ₹ 2,69,16,462.51 remains frozen whereas the other accounts are unfrozen. This we feel will balance the interest of both the sides for the moment. The respondents are directed to unfreeze the other accounts of the petitioner lying with the Kotak Mahindra Bank except current account No.2511818181 which shall remain frozen till the next date - Stand over to 17th December,2020.

Summary

Issues:
Challenge to provisional attachment of bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017 - Compliance with conditions under Section 83 - Initiation of enquiry against the petitioner - Authority responsible for attachment - Freezing of accounts exceeding presumptive demand - Balance of interests.

Analysis:
The writ petition challenges the provisional attachment of bank accounts under Section 83 of the Central Goods and Services Tax Act, 2017. The petitioner contests the attachment made by the Assistant Commissioner, arguing that no enquiry has been initiated against them, and the conditions stipulated under Section 83 have not been met. The petitioner highlights that the enquiry is actually against a different company, not them. Additionally, the freezing of accounts exceeding the presumptive demand has severely impacted the petitioner's business operations, leading to a paralysis in their activities.

The petitioner points out that Kotak Mahindra Bank has frozen all accounts, totaling an amount far beyond the presumptive demand specified by the Assistant Commissioner. This drastic action has significantly disrupted the petitioner's business activities. The petitioner emphasizes that no adjudication of dues has taken place, and the initiation of an enquiry against them is crucial before any attachment can be justified under the law.

In response to the petitioner's arguments, the Court directs the unfreezing of all accounts of the petitioner except one specific current account with a deposit close to the presumptive demand amount. This interim measure aims to balance the interests of both parties temporarily. The Court schedules the matter for further consideration on a later date to delve into other aspects of the case. The order is set to be digitally signed and forwarded to the petitioner via email for immediate action by all concerned parties.

This judgment addresses the legality and procedural correctness of the provisional attachment of bank accounts under the Central Goods and Services Tax Act, emphasizing the necessity for proper initiation of enquiries and compliance with statutory conditions. The Court's interim decision reflects a balanced approach to safeguard both the interests of the revenue authorities and the affected party, pending a more detailed examination of the case.