2023 (2) TMI 725 - HC - GST

Seeking defreezing of provisionally attached bank account of petitioner - Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act) - HELD THAT - It is not disputed that the provisional attachment order dated 06.02.2020 was passed in exercise of powers under Section 83 of the CGST Act. In terms of Sub-section (2) of Section 83 of the CGST Act, the provisional attachment would cease to have any effect after the expiry of the period of one year from the date of the said order. Thus, in terms of Section 83(2) of the CGST Act, the provisional attachment order dated 06.02.2020 ceased to be operative after 06.02.2021. After the provisional order dated 06.02.2020 was passed, a show cause notice dated 30.07.2021 was issued to the petitioner. Admittedly, the said show cause notice has not been adjudicated till date. Since the petitioner s relief is limited to the de-freezing of its Bank Account, we are refraining from examining whether the proceedings in relation to the said show cause notice can now continue. The petition is allowed.

Summary

Issues:
- Provisional attachment of bank account under Section 83 of the CGST Act
- Validity and duration of provisional attachment order
- Extension of provisional attachment
- Adjudication of show cause notice
- Relief sought for de-freezing the bank account

Analysis:
The petitioner filed a petition seeking a writ of Mandamus to direct the respondent to set aside the order dated 06.02.2020 and defreeze the petitioner's Axis Bank Account. The respondent had attached the bank account provisionally under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act). Section 83 allows for provisional attachment of assets, including bank accounts, to protect government revenue during certain proceedings. The provisional attachment order ceased to have effect after one year from the date of issuance, as per Section 83(2) of the CGST Act.

The court noted that no further orders extending the provisional attachment were passed beyond the initial order dated 06.02.2020. The judges emphasized that provisional attachment cannot be extended unless a specific order is issued to that effect. Additionally, the court highlighted that a show cause notice issued to the petitioner in July 2021 had not been adjudicated yet. However, since the relief sought by the petitioner was limited to de-freezing the bank account, the court refrained from delving into the ongoing proceedings related to the show cause notice.

Ultimately, the court allowed the petition, declaring that the order dated 06.02.2020 was no longer operational. The court directed Axis Bank to permit the petitioner to operate the bank account unless there was another freezing order in place by any other authority. This judgment provided the necessary relief to the petitioner by lifting the provisional attachment on the bank account and allowing normal operations to resume, in line with the provisions of the CGST Act.