2023 (3) TMI 625 - HC - GST

Provisional attachment of property - power to issue a direction to stop payment by the summoning party to the assessee - Section 70 (1) of G.S.T Act - HELD THAT - The impugned notice was issued under Section 70(1) of GST Act but not under Section 83 of GST Act. Section 70 (1) of GST act only says that the proper officer shall have the power to summon any person whose attendance is considered necessary either to give evidence or to produce a document or any other thing in the enquiry and nothing more. Therefore, it is obvious that under Section 70 (1) of GST Act the proper officer cannot exercise powers to direct the summoning party to stop payment to the assessee which is beyond the scope of 70 (1) of GST Act. Of course, under Section 83 of GST Act, if the Commissioner is of the opinion that for the purpose of protecting the government revenue, he may by order provisional attachment of any property including bank account belonging to the taxed person or any person specified in Sub Section 1 (A) of Section 122 in such manner as prescribed. The impugned notice was issued under Section 70 (1) of GST Act but not in exercise of powers conferred under Section 83 of GST Act. This writ petition is allowed and the impugned portion of the notice issued under Section 70 (1) of GST Act i.e., in view of the above explanation you are hereby requested stop all further payments from here onwards until clearance is given by the undersigned is set aside and liberty is given to the 3rd respondent to proceed in accordance with law so far as the other part of the notice issued by him under section 70 (1) of GST Act is concerned.

Summary

Issues: Challenge to notice under Section 70(1) of GST Act

Analysis:
The writ petition challenged a notice issued under Section 70(1) of the GST Act to a company, which was a customer of the petitioner. The petitioner contended that the notice contained a direction for the customer to stop all further payments to the petitioner, which was beyond the jurisdiction of the issuing authority.

Legal Arguments:
The petitioner's counsel argued that while Section 70(1) of the GST Act empowers the proper officer to summon individuals for evidence or document production, it does not authorize directing a party to stop payments. On the other hand, the Government Pleader acknowledged that the officer issuing the notice may not have the power to stop payments under Section 70(1) but argued that such power exists under Section 83 of the GST Act, which deals with provisional attachment of property or bank accounts.

Judgment:
The High Court held that the impugned notice was issued under Section 70(1) of the GST Act and not under Section 83. Section 70(1) specifically grants the power to summon individuals for evidence or document production and nothing more. The Court emphasized that under Section 70(1), the officer cannot direct a party to stop payments to the assessee. The Court clarified that the power to stop payments exists under Section 83 for protecting government revenue, but since the notice was issued under Section 70(1), the direction to stop payments was beyond the officer's jurisdiction.

Decision:
Consequently, the Court allowed the writ petition, setting aside the portion of the notice directing the customer to stop payments to the petitioner. The Court granted liberty to the officer to proceed in accordance with the law regarding the other parts of the notice issued under Section 70(1) of the GST Act. No costs were awarded, and any pending interlocutory applications were closed as a result of the judgment.