2021 (3) TMI 495 - HC - GST

Provisional attachment of property of petitioner as well as of his family members - section 83 of Central Goods and Services Tax Act, 2017 - HELD THAT - Out of the nine bank accounts that have been attached by respondent No.1, only the accounts at Sr. Nos.2, 3 and 4 belong to the petitioner whereas the other accounts belong to the family members. In Siddhart Mandavia Vs. Union of India, 2020 (11) TMI 111 - BOMBAY HIGH COURT , this Court had examined a similar issue relating to attachment of bank account of not only the taxable person but also of his family members. In that context, this Court held that bank account of only the taxable person can be provisionally attached under section 83 of the CGST Act and therefore the provisional attachment of bank account of the family members was set aside. Some bank accounts were released - for others, petitioner may file objection before the Commissioner i.e. respondent No.2 within a period of seven days from today - petition disposed off.

Summary

Issues:
Petition seeking quashing of communication for provisional attachment of property under CGST Act, legality and validity of provisional attachment, attachment of bank accounts of family members, interpretation of section 83 of CGST Act, compliance with statutory requirements, examination of bank accounts belonging to taxable person.

Detailed Analysis:

1. Petition for Quashing Communication:
The petitioner filed a petition under Article 226 seeking to quash a communication dated 09.11.2020 for the provisional attachment of property under section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act). The principal grievance was the attachment of bank accounts belonging not only to the petitioner but also to family members.

2. Legality and Validity of Provisional Attachment:
The petitioner's counsel made submissions challenging the legality and validity of the provisional attachment. The respondents contended that the provisional attachment was justified and did not require interference. The Court examined the attachment of nine bank accounts, noting that only three accounts belonged to the petitioner, while the rest belonged to family members.

3. Interpretation of Section 83 of CGST Act:
Referring to a previous judgment, the Court highlighted that only the bank account of the taxable person could be provisionally attached under section 83 of the CGST Act. The Court emphasized the importance of due process and the need for the Commissioner to form an opinion for the provisional attachment of any property, including bank accounts.

4. Compliance with Statutory Requirements:
The Court analyzed the provisions of sub-rules (5) and (6) of Rule 159 of the CGST Rules, emphasizing the temporary nature of provisional attachment. It outlined the process for objection, hearing, and release of provisionally attached property, ensuring that the power to attach property was exercised after due consideration and in a reasonable manner.

5. Examination of Bank Accounts Belonging to Taxable Person:
The Court examined the list of bank accounts and determined that some accounts were jointly held with family members who were not the concerned taxpayers in the case. It was noted that there were no allegations against these family members, and the provisional attachment of their bank accounts was deemed unjustified. The Court granted liberty to the petitioner to file objections to the provisional attachment of certain bank accounts.

6. Final Orders:
Based on the above considerations, the Court issued specific orders: releasing certain bank accounts from provisional attachment, allowing the petitioner to file objections for his accounts, directing the competent authority to decide on objections within a specified period, and keeping all contentions open as no decision was made on merit.

7. Conclusion:
The writ petition was disposed of with the above directions, and no costs were awarded. The judgment provided a detailed analysis of the legal provisions, statutory requirements, and the rights of the taxable person regarding the provisional attachment of bank accounts under the CGST Act.