2024 (6) TMI 287 - HC - GST

Violation of principles of natural justice - non-service of SCN - legality of attachment proceedings under Section 83 of the Central GST Act, 2017 without serving notice under Section 74 - HELD THAT - From the perusal of the reply, it is apparent that no notice under Section 74 of the Act of 2017 was issued to the petitioner and the account of the petitioner and his Electronic Credit Ledger have been locked which has resulted in that his entire business being affected. Attachment proceedings are of very serious nature and strong repercussions on the business of an individual. In the opinion of this Court, the proceedings of attachment should only be taken as a last resort. While they may be required for the purpose of protecting the interest of the Revenue, the same needs to be taken to its logical end after search and seizure proceedings have been initiated under Chapter XIV of the Act of 2017. As noticed under Section 74 of the Act of 2017 has not been issued, at this stage it would not be appropriate to allow to continue the attachment of the account. Therefore, it is deemed appropriate to allow this writ petition and revoke the attachment order dated 15.03.2024 and 18.03.2024 locking the Electronic Credit Ledger. The same shall be released forthwith. Petition allowed.

Summary

Issues involved:
The legality of attachment proceedings under Section 83 of the Central GST Act, 2017 without serving notice under Section 74.

The judgment addresses the issue of the legality of attachment proceedings initiated under Section 83 of the Central GST Act, 2017 without serving notice under Section 74. The petitioner argued that the attachment of the account was unjustified as they were not served with any notice under Section 74. The court noted that the search and seizure action was taken against the petitioner, and provisional attachment was ordered. However, no further proceedings were undertaken by the respondents after the initial orders were passed. The court emphasized that attachment proceedings have serious repercussions on an individual's business and should only be taken as a last resort. It was observed that no notice under Section 74 was issued to the petitioner, and as such, it was deemed inappropriate to continue the attachment of the account. Therefore, the court allowed the writ petition and revoked the attachment order, releasing the Electronic Credit Ledger. The court clarified that the order does not absolve the petitioner from any future proceedings that the respondents may undertake under the Act of 2017.