2022 (6) TMI 851 - HC - GST

Freezing of Bank Accounts of the petitioner - recovery of the amount of tax interest and penalty - infringement of the fundamental rights guaranteed to the petitioner under Article 14 and 19 (1)(g) and the constitutional right granted under Article 300A of the Constitution of India - non-constitution of GST council in the State of Bihar - remedy under Section 112 of the GST Act not available to petitioner - HELD THAT - This Court finds that in the prayer portion of the writ application in paragraph 1 (L), the petitioner has prayed for quashing of the order dated 16.12.2021 and summary of the demand issue in form GST APL-04 dated 21.12.2021, the petitioner has also challenged the order passed under Section 73 of the GST Act and the summary demand issued in Form GST DRC-07 dated 03.03.2020 but from the tone and tenor of the prayer itself it is clear that such reliefs are by way of consequential reliefs and unless the petitioner succeeds in challenging the vires of Section 16(4), perhaps he may not get the relief as prayed in paragraph 1 (L) of the writ application. In the opinion of this Court, staying the impugned order in the light of Sub Section (8) of Section 112 of the GST Act would in sum and substance amount to staying the effect of Section 16(4) of the GST Act which this Court would restrain from doing - Application disposed off.

Summary

Issues:
Challenge to vires of Section 16(4) of the GST Act for freezing bank accounts, availability of remedy under Section 112 of the GST Act for appeals, interim relief seeking defreezing of saving bank account, constitutional rights under Article 14, 19(1)(g), and 300A.

Analysis:
The petitioner sought interim relief to defreeze the saving bank account, challenging the coercive action taken by freezing the account as a recovery measure for tax, interest, and penalty. The challenge primarily focused on the vires of Section 16(4) of the GST Act, alleging infringement of fundamental rights under Article 14, 19(1)(g), and constitutional rights under Article 300A. The petitioner contended that due to the absence of the GST council in Bihar, the remedy under Section 112 for appeals to the appellate tribunal was unavailable. Section 112 mandates depositing 20% of the remaining tax amount in dispute for maintaining an appeal, with a stay on recovery proceedings until appeal disposal upon payment.

The respondent contested the prayer for interim relief, arguing that staying the impugned order would essentially suspend the operation of Section 16(4) of the GST Act, which courts typically avoid. Referring to a previous case, the respondent suggested that if the petitioner deposits the entire liability amount, the saving bank account could be de-attached. The court noted the prayer for quashing the order and challenging the demand issued, emphasizing that success in challenging Section 16(4) was crucial for obtaining the prayed reliefs. Staying the impugned order was deemed equivalent to staying the effect of Section 16(4), a step the court refrained from taking.

In line with a previous decision, the court directed that if the petitioner pays the full liability amount pending the writ application's outcome, the saving bank account of the proprietor would be de-attached. The matter was tagged with other relevant cases for further proceedings, maintaining consistency with the approach taken in similar situations.