2020 (2) TMI 1106 - HC - GST

Provisional release of bank accounts - Section 83 of the CGST Act - time limitation for filing objections - HELD THAT - The period of 7 days prescribed in Rule 159(5) is a directory and not a mandatory period. Therefore, on account of delay on the part of the objector, if he prefers his objections beyond the period of 7 days, the objections cannot be rejected on the ground of limitation. No consequence is prescribed either in the Act or in the Rules to say that if the objections are not preferred within 7 days, they shall not be entertained. The decision in Sambhaji (2008 (11) TMI 393 - SUPREME COURT) is clearly attracted to the present case. Moreover, it is the objector who would suffer adverse consequence on account of delay on his part in raising the objections. The respondents do not suffer any adverse consequence on account of delay, if any, in moving the objections, thus, the period of 7 days prescribed in Rule 159(5) of the CGST Rules for moving the objections to the provisional attachment is merely directory and not mandatory. Objections raised by the petitioner, therefore, could not be rejected on that ground alone. The proceedings are remanded back to the concerned authority for passing a fresh order on the merits of the objections - petition allowed by way of remand.

Summary

Issues:
Challenge to impugned orders dated 6.2.2020, 2.12.2019 & 3.12.2019; Validity of Rule 159(5) of the Rules in relation to Section 83(1) of the Act; Provisional attachment of bank accounts under Section 83 of the Act; Rejection of objections to attachment based on Rule 159(5); Interpretation of time limits for filing objections; Comparison with Supreme Court decision on time limits in a different context.

Analysis:
The petitioner sought to quash impugned orders dated 6.2.2020, 2.12.2019 & 3.12.2019 and challenged the validity of Rule 159(5) of the Rules concerning Section 83(1) of the Act. The petitioner's grievance stemmed from provisional attachment orders issued post a search operation under Section 67(2) of the CGST Act. Bank accounts were attached under Section 83, leading to objections by the petitioner, which were rejected based on Rule 159(5) requiring objections within seven days of attachment.

The petitioner relied on a Supreme Court decision regarding time limits in a different context, arguing that the time limit for filing objections could be extended beyond the stipulated seven days. The Court noted that the language of Rule 159(5) did not mandate rejection of objections filed beyond seven days. The Court held the seven-day period as directory, not mandatory, as no adverse consequences were specified for delayed objections in the Act or Rules.

In contrast, the respondents argued for strict compliance with the seven-day limit under Rule 159(5). However, the Court determined that the period was directory, not mandatory, emphasizing that the objector, not the respondents, would face adverse consequences for delayed objections. Citing the Supreme Court precedent, the Court concluded that objections could not be rejected solely based on exceeding the seven-day timeframe.

Consequently, the Court set aside the order rejecting objections and remanded the proceedings for a fresh decision on the merits of the objections within two weeks. The judgment clarified that the seven-day period for objections under Rule 159(5) was directory, ensuring objections could not be dismissed solely for being filed beyond the stipulated time.

In conclusion, the Court's ruling provided clarity on the interpretation of time limits for filing objections to provisional attachments under the CGST Act, emphasizing the directory nature of the seven-day period under Rule 159(5) and ensuring fair consideration of objections beyond the specified timeframe.