2022 (12) TMI 41 - HC - GST

Recovery of dues - Validity of attachment notices - direction to bank to withhold the amount of upto a sum of Rs.74,52,943/- and pay the same forthwith to the Government - statement recorded can be a substitute of determination of liability under an order of assessment or any other order passed under the applicable provisions under the Act, or not - HELD THAT - It is an admitted position in this case that there has been no order of assessment or any other order passed under the applicable provisions making a determination of the aforesaid amount as being 'due' from the petitioner. Neither has the petitioner been assessed under Sections 73 or 74, nor has there been any order passed reversing the Input Tax Credit that is claimed by the petitioner. The impugned notice has no legs to stand. The respondent relies on the fact that there was a statement made by the petitioner in the course of an enquiry conducted by the Intelligence Officer under Section 70 of the Act. However, a statement recorded cannot substitute a determination of liability under an order of assessment or any other order passed under the applicable provisions under the Act. This Court was concerned with a similar factual and legal position in the case of M/S. V.N. MEHTA COMPANY VERSUS THE ASSISTANT COMMISSIONER, THE SUPERINTENDENT OF GST CENTRAL EXCISE, THE STATE TAX OFFICER, THE MANAGER 2019 (11) TMI 766 - MADRAS HIGH COURT , and that Writ Petiton came to be allowed, this Court holding that the impugned proceedings were not maintainable under law, so too in the present case. The Impugned Notice dated 27.12.2019 is set aside in light of there being no statutory santion for the issuance of the same in terms of Section 83 of the Act. Petition allowed.

Summary

Issues:
Challenge to attachment notice under Central Goods and Services Tax Act, 2017.

Analysis:
The petitioner, an assessee under the Central Goods and Services Tax Act, challenged an attachment notice issued to HDFC Bank, Korattur Branch. The notice directed the bank to withhold an amount of Rs.74,52,943 and pay it to the Government. The notice was based on the sum allegedly due from the petitioner under the CGST Act/TNGST Act, 2017. However, it was noted that there was no order of assessment or determination of the amount due from the petitioner under the relevant provisions. The absence of such an order rendered the notice legally unsustainable.

The respondent argued that the petitioner admitted liability by filing returns in GSTR 1 and 3B but set off the output tax liability against available credit. Despite the provisions for matching, reversal, and re-claiming of input tax credit under Section 42, the officer did not initiate this procedure. Therefore, resorting to coercive recovery without following due process was deemed unjustified.

The court referred to a previous case, VN Mehta & Company v. The Assistant Commissioner, where similar proceedings were held to be not maintainable under the law. Drawing a parallel, the court set aside the impugned notice dated 27.12.2019, stating that there was no statutory sanction for its issuance under Section 83 of the Act. Consequently, the writ petition was allowed, and no costs were imposed.

In summary, the judgment highlighted the importance of due process and statutory compliance in matters of tax recovery under the CGST Act. It emphasized the necessity of proper assessment orders before resorting to coercive measures like attachment notices. The court's decision to set aside the notice underscored the principle that legal procedures must be strictly adhered to in tax matters to safeguard the rights of the assessee.