2023 (2) TMI 977 - HC - GST

Blocking of sanctioned refund of Input Tax Credit of the Petitioner - petitioner has filed the present petition being aggrieved by the blocking of the petitioner s bank account, which this Court has been informed, is the refund of the input tax credited to the bank account of the petitioner - HELD THAT - It appears that the said action has been taken on essentially three grounds. First, that there has been a mismatch in the payment made by the petitioner to the supplier in respect of the goods that are stated to have been exported. Second, it is stated that there are serious doubts as to whether any goods were procured from the supplier in question. The respondent s claim that the investigation has revealed that the vehicles in which the goods were transported, had not entered Delhi and the petitioner did not have the necessary space to store the goods in question. Third, the petitioner had also procured goods from another supplier whose registration has been suo motu cancelled. The order issued under Section 83 of the CGST Act, 2017 would be confined to freezing the petitioner s bank account to the extent of ₹50 lacs. In another words, the petitioner would not be entitled to withdraw any amount from the bank account till a credit balance of ₹50 lacs is achieved. The petitioner would be entitled to operate the bank account and withdraw any amount in excess of a credit balance of ₹50 lacs. The petitioner had approached this court as its bank account was blocked by issuing a letter to the concerned bank and without passing any order under the CGST. The respondents have now passed an order under Section 83 of the CGST Act - petition disposed off.

Summary

Issues:
1. Blocking of sanctioned refund of Input Tax Credit
2. Mismatch in payment to supplier for exported goods
3. Doubts on procurement of goods from suppliers
4. Freezing of bank account under Section 83 of CGST Act
5. Petitioner's entitlement to withdraw from bank account

Analysis:
The petitioner filed a petition seeking a Writ of Mandamus or Certiorari to challenge the blocking of a sanctioned refund of Input Tax Credit amounting to Rs. 34,48,080. The respondent blocked the bank account based on three grounds: a mismatch in payment to the supplier for exported goods, doubts on the procurement of goods, and procurement from a supplier with cancelled registration. The respondent released Rs. 15 lakhs earlier, and under Section 83 of the CGST Act, the bank account was frozen up to Rs. 50 lakhs, allowing withdrawals only above this balance.

The respondent's action under Section 83 of the CGST Act was justified based on the counter-affidavit filed in court, providing reasons for the bank account freeze. The petitioner initially approached the court as the bank account was blocked without a CGST order, but now that an order has been passed, the petition is disposed of, with the petitioner retaining the right to pursue statutory remedies.