2021 (7) TMI 430 - HC - GST

Provisional Attachment of Bank Account - Section 83 of the Central GST Act - provisions of sub-rule (5) of Rule 159 of the Central GST Rules not taken into account - HELD THAT - It is clear that sub-rule (5) of Rule 159 of the Central GST Rules provides a remedy if any particular order of attachment under sub-rule (1) leaves a party, subject to tax, aggrieved. Such a remedy, as made available by the said Rules, is not an ineffective remedy but on the contrary, if sufficient case is set up, substantial relief can be granted to the objector. It is for the petitioner to satisfy the Additional Director General that for the reasons urged, the property ought to be released from attachment by making an appropriate order in Form GST DRC-23. The position as to whether the impugned order, in fact, seeks to protect the interest of the revenue or is otherwise, including the balance in the current account as submitted by the petitioner, would require a factual examination and determination. Since the petitioner has not taken to recourse to sub-rule (5) of Rule 159 of the said Rules, interference is denied at this stage - However, the petitioner is granted a week s time to approach the Additional Director General under the said provision and if such an approach is made, a reasoned order shall be passed after extending an opportunity of hearing. Writ petition disposed off.

Summary

Issues:
Proceedings under Section 67 of the Central Goods and Services Tax Act, 2017 pending; Challenge to attachment of bank account by Additional Director General; Jurisdiction of attachment of cash credit account; Non-recourse to Rule 159(5) of the Central GST Rules; Effectiveness of the remedy provided by Rule 159(5); Requirement for factual examination before releasing property from attachment; Granting time to approach Additional Director General under Rule 159(5); Merits of rival claims left open.

Detailed Analysis:

1. Proceedings under Section 67: The petitioner's bank account was attached by the Additional Director General during pending proceedings under Section 67 of the Central Goods and Services Tax Act, 2017. The order of attachment is being challenged in the writ petition.

2. Jurisdiction of Attachment: The petitioner argued that the attachment order is without jurisdiction, contending that a cash credit account cannot be attached. Reference was made to Division Bench decisions of other High Courts to support this argument.

3. Non-recourse to Rule 159(5): The petitioner filed the writ petition without utilizing Rule 159(5) of the Central GST Rules, which allows a person to file an objection within seven days of attachment. The respondents objected to the maintainability of the writ petition citing this provision.

4. Effectiveness of Remedy under Rule 159(5): The Court emphasized the importance of Rule 159(5) as a remedy for parties aggrieved by an attachment order. It stated that substantial relief can be granted through this remedy if a sufficient case is presented.

5. Factual Examination for Releasing Property: The Court highlighted the need for a factual examination to determine whether the attachment order aims to protect revenue or for other reasons. It emphasized the importance of exhausting the remedy provided by Rule 159(5) before seeking judicial intervention.

6. Granting Time to Approach Additional Director General: The Court declined to interfere at that stage due to non-recourse to Rule 159(5) but granted the petitioner a week's time to approach the Additional Director General under the said provision. It specified that a reasoned order must be passed after a hearing.

7. Leaving Merits of Rival Claims Open: The Court kept all contentions regarding the merits of the rival claims open for future consideration, indicating that the judgment did not conclusively decide on the substantive issues involved.

This comprehensive analysis covers the key issues addressed in the judgment, highlighting the legal arguments, procedural requirements, and the Court's directions for the parties involved.