2024 (2) TMI 1120 - HC - GST

Seeking release of provisionally attached bank accounts - 13 provisional orders - Petition was dismissed on the ground of disputed questions of fact - HELD THAT - Considering the fact that the show cause notice dated 06.12.2023 is yet to be adjudicated, an order of provisional attachment that too 13 in number by attaching all the bank accounts of the appellant is very harsh, more particularly, when there is no material on record to indicate that there is an attempt made by the appellant to evade the payment of tax. That apart, the tax and interest which is payable is yet to be adjudicated as the matter is still in the stage of the show cause notice. Therefore, at this juncture, the orders of provisional attachment of all the bank accounts of the appellant cannot be sustained. The order passed in the writ petition is set aside and the writ petition stands allowed.

Summary

Issues Involved:
The judgment involves the issue of provisional attachment of bank accounts u/s 74(1) of the WBGST Act, 2019 read with Rule 142(1) of the WBGST Rules, 2017, and the legality of such attachment without adjudication of tax liability.

Issue 1 - Provisional Attachment of Bank Accounts:
The appellant received a show cause notice u/s 74(1) of the WBGST Act, 2019, with a computed tax payable of Rs. 92,44,628. Subsequently, 13 provisional orders were issued in FORM GST DRC 22 attaching all bank accounts, halting business activities. The appellant sought relief to operate the bank accounts.

Judgment on Issue 1:
The Court found the provisional attachment of all bank accounts to be excessively harsh, especially since the tax liability was still pending adjudication. The Court noted the absence of evidence suggesting tax evasion by the appellant. Consequently, the orders of provisional attachment were set aside, allowing the appellant to resume operating bank accounts and conducting business activities.

Issue 2 - Adjudication of Tax Liability:
The Court emphasized that the tax and interest payable by the appellant were yet to be determined as the matter was at the show cause notice stage. The appellant was granted relief to continue business operations and pay requisite taxes, with a directive for the authorities to complete the adjudication of the show cause notice within three weeks.

Judgment on Issue 2:
The appeal was allowed, the order in the writ petition was set aside, and the appellant was permitted to operate bank accounts, conduct business activities, and pay taxes. The authorities were instructed to expedite the adjudication process within the stipulated time frame. The Court clarified that it had not delved into the merits of the case, leaving it to the adjudicating authority to consider all facts and legal aspects.

Conclusion:
The High Court of Calcutta ruled in favor of the appellant, overturning the provisional attachment orders and granting permission to resume business operations. The judgment highlighted the importance of due process in tax matters and directed the swift resolution of the pending tax liability adjudication.