2020 (3) TMI 892 - HC - GST

Provisional attachment of Petitioners' bank accounts - Section 83 of the Central Goods and Services Tax Act, 2017 read with Rule 159 of CGST Rules, 2017 - HELD THAT - Subject to the impugned orders being set aside, the time bound directions be issued to the Respondents to pass fresh orders in accordance with law, the Petitioners would ensure that no payments other than those set out in the 'tabular form' would be made from the accounts and that further receipts in the accounts till date of passing of fresh orders will remain untouched. He also states, again on instructions, that the Petitioners would furnish to the Respondents the receipts for the payments made to the vendors for completing the live residential and commercial projects of the Petitioners, accompanied by an affidavit explaining the details of such payments. Thirdly, the Petitioners will maintain status quo with regard to FDs, both which are under lien as well as the FDR which is free from encumbrances. The impugned order of provisional attachment of Petitioners' bank accounts are hereby set aside upon the condition that fresh orders would be passed by the Respondent No.2 in that regard, in accordance with law, taking into account the submissions made by the Petitioners in these petitions, not later than 10th April, 2020.

Summary

Issues:
1. Challenge to provisional attachment order under Section 83 of the Central Goods and Services Tax Act, 2017.
2. Lack of reasoning in the attachment order.
3. Request for fresh orders with specific conditions.
4. Details of essential business payments and frozen accounts.
5. Arguments regarding fixed deposits and other accounts.
6. Undertakings by the Petitioners.
7. Directions issued by the Court.
8. Continuation of interim order for OD account de-freezing.

Issue 1: Challenge to Provisional Attachment Order under Section 83 of the Central Goods and Services Tax Act, 2017

The batch of petitions involved companies from the same group challenging the provisional attachment orders issued by the Principal Commissioner, CGST Commissionerate, Gurugram under Section 83 of the Central Goods and Services Tax Act, 2017. The petitions questioned the necessity for protecting the government revenue and highlighted the lack of proper reasoning in the attachment orders.

Issue 2: Lack of Reasoning in the Attachment Order

The Court raised concerns about the absence of a valid opinion from the Commissioner regarding the protection of government revenue in the attachment orders. The Court emphasized the importance of providing reasons for such actions and directed the officer who passed the order to appear before the Court with the record to explain the decision-making process.

Issue 3: Request for Fresh Orders with Specific Conditions

The Petitioners requested for fresh orders to be passed by the Respondents, considering their submissions and ensuring compliance with the law. They were willing to abide by any terms and conditions set by the Court and provided details of essential business payments required from the provisionally attached accounts.

Issue 4: Details of Essential Business Payments and Frozen Accounts

An affidavit was submitted by the Petitioners outlining the essential business payments needed from the frozen accounts for statutory dues, utility charges, employee salaries, and vendor payments. The Court considered these details while issuing directions for the Respondents to pass fresh orders by a specified date.

Issue 5: Arguments Regarding Fixed Deposits and Other Accounts

The Senior Advocate highlighted the fixed deposits in various bank accounts under lien and emphasized that certain funds should not be attached by the Respondents. The Court took note of these arguments and directed the parties to maintain status quo regarding the fixed deposits until further orders were passed.

Issue 6: Undertakings by the Petitioners

The Petitioners undertook to comply with the directions of the Court, ensuring that only specified payments would be made from the accounts until fresh orders were issued. They also agreed to provide receipts for payments made to vendors and maintain the status quo regarding fixed deposits.

Issue 7: Directions Issued by the Court

The Court set aside the provisional attachment orders on the condition that fresh orders would be passed by the Respondents by a specified date, taking into account the submissions of the Petitioners. The Court clarified that parties could seek appropriate remedies if aggrieved by the new orders and reserved its opinion on the contentions raised.

Issue 8: Continuation of Interim Order for OD Account De-Freezing

The interim order de-freezing the OD account of one of the Petitioners was continued, including borrowings and other financial facilities. The Court disposed of the petitions based on the directions issued and maintained the interim relief granted earlier.

This detailed analysis summarizes the legal judgment involving challenges to provisional attachment orders, lack of reasoning, requests for fresh orders, essential business payments, fixed deposits, undertakings by the Petitioners, directions issued by the Court, and the continuation of interim relief.