2023 (3) TMI 878 - HC - GST

Seeking unblocking of bank account in respect of the amount, which relates to the refund sanctioned and credited in the petitioner s bank account - HELD THAT - Section 73 and 74 of the Act also provide for recovery of refund where the same has been erroneously granted. Clearly, if the respondents are of the view that the refund has been erroneously granted, they would be required to take appropriate action under Section 73 or 74 of the Act. Recourse to Section 107(2) may be necessary only if the Adjudicating Authority has adjudicated any contentious issue, which in the opinion of the Commissioner requires to be reviewed. Insofar as the blocking of the bank account is concerned, the said action is taken under Section 83 of the Act. By virtue of sub-section (2) of Section 83 of the Act, the said order of attachment ceases to be operative on expiry of a period of one year from the date of the order. The respondents are required to adhere to the said discipline. Considering the averment that the auditor has already reviewed the petitioner s case and has directed refund for the sum of ₹38,786/-, it is considered apposite to direct the respondent to reconsider the petitioner s request for lifting of the block placed on the petitioner s bank account and continue the same only if it is satisfied that the conditions as specified in Section 83 of the Act continue to exist. Petition disposed off.

Summary

Issues involved:
The petitioner seeks to unblock a bank account containing a refund amount sanctioned and credited, which has been partially blocked due to an audit review. The petitioner argues that the respondent cannot indefinitely block the account without following proper procedures under the Central Goods and Services Tax Act, 2017.

Summary:
The petitioner filed a petition to unblock a bank account holding a refund of Rs. 34,48,080, which was partially blocked after an audit review. Despite complying with a directive to deposit Rs. 38,786, the remaining refund amount remains blocked. The petitioner contends that the respondent must follow Section 107(2) of the CGST Act if a refund review is needed.

In a previous case, the court noted the reasons for blocking the account included payment mismatches, doubts about goods procurement, and cancellation of a supplier's registration. The court ordered the freezing of the account up to Rs. 50 lakhs until further resolution. The respondent had released Rs. 15 lakhs earlier in addition to the blocked refund amount.

The court clarified that the respondent should take action under Sections 73 or 74 of the Act if they believe the refund was erroneously granted. The bank account block was made under Section 83 of the Act, which automatically ceases after one year. The court directed the respondent to reconsider lifting the block based on the audit review outcome.

The petition was disposed of with the directive for the respondent to reassess the bank account block based on the audit findings.