2023 (5) TMI 423 - HC - GST

Removal of provisional attachment of the bank accounts of the petitioner - return of the electronic devices seized - whether Section 83 contemplates a continued attachment of bank accounts for several years as has happened in the present case? - HELD THAT - No doubt, the provisional attachment envisaged is for the protection of revenue and in light of the proceedings under Chapters XII, XIV and XV of the Act - The above chapters encompass all proceedings from inspection till assessment. However, the question that would arise is as to whether the proceedings may be kept pending endlessly such that attachments of bank accounts traverse three to four years seamlessly. It is the case of the respondents that the delay is on account of the non-response of the petitioner to show-cause notices. However, the respondents are well aware of the procedure set out under statute, and have to adhere to the same in a timely fashion, in accordance with law. In the present case, the show-cause notice has been issued only on 08.10.2022 in respect of an inspection that had transpired in January, 2019. The time lines as seen aforesaid would persuade me to arrive at a conclusion that the purpose of Section 83 which is stated to be provisional attachment to protect revenue in certain cases cannot be deployed so as to work against the assessee continuously for several years as has happened in the present case. The inspection in this case is January, 2019 whereas the show-cause notice is issued only in October, 2022. This delay of nearly four years in issuing show-cause notice cannot be a reason to continue an attachment under Section 83 of the Act, which itself is provisional in nature - Undeniably, Section 83 must be resorted to in appropriate cases, ensuring with equal vigour that the Department is proceeding in a timely manner, by issuing notice and finalizing proceedings in a time bound fashion. Petition allowed.

Summary

Issues Involved:
The issues involved in the judgment are the legality of the provisional attachment of bank accounts and seizure of electronic devices under the Central Goods and Services Tax Act, 2017.

Provisional Attachment of Bank Accounts:
The petitioner sought a mandamus to direct the removal of the provisional attachment of bank accounts and return of seized electronic devices following an inspection for alleged bill trading in violation of the CGST Act. The provisional attachment under Section 83 of the Act ceased to have effect after one year from the date of attachment, which occurred in January 2019. The attachment was re-imposed twice thereafter, valid until January 2023. The court found that the continued attachment of bank accounts for several years was not justified, especially considering the delay in issuing a show-cause notice in October 2022, almost four years after the inspection. The court held that the purpose of Section 83, which is to protect revenue in certain cases, cannot be used to the detriment of the assessee for an extended period.

Legal Considerations and Precedents:
The court considered the provisions of Section 83 of the CGST Act, which allows for provisional attachment to protect government revenue during certain proceedings. The court also referenced a decision of the Calcutta High Court and a previous decision of the Madras High Court in similar cases. The court highlighted that the purpose of Section 83 is to ensure timely proceedings and not to unduly burden the assessee with prolonged attachments.

Conclusion and Order:
The court ruled in favor of the petitioner, directing the respondents to remove the attachment on the bank accounts and allow operation of the accounts. The court emphasized the importance of timely proceedings and the need for the department to proceed in a time-bound manner. The writ petition was allowed, and the respondents were instructed to take necessary actions within one week from the date of the judgment. No costs were awarded in the matter.