2021 (11) TMI 863 - HC - GST

Provisional attachment of accounts - initiation of proceedings by Respondent against the Petitioner - Section 67 of the CGST Act - HELD THAT - At Court s direction, learned counsel for respondent no.1 has obtained instructions. He admits that every provisional attachment shall cease to have effect after the expiry of period of one year from the date the order had been passed under Section 83(1) of the Act. The present writ petition is allowed and the Respondents are directed to de-freeze the Petitioner s Current Account with Respondent no.2-Bank, within three working days of uploading of the present order - petition disposed off.

Summary

Issues:
1. Direction sought to defreeze petitioner's current account.
2. Provisional attachment under Section 67 of the CGST Act.
3. Interpretation of Section 83(2) of the CGST Act.
4. Compliance with time limit for provisional attachment.
5. Issuance of show cause notice for tax liability.

Analysis:

The petitioner filed a writ petition seeking directions to defreeze their current account, which had been frozen by Respondent No.1 under Section 67 of the CGST Act. The petitioner argued that as per Section 83(2) of the CGST Act, a provisional attachment ceases to have effect after one year from the date of the order under Section 83(1). Despite the expiry of one year from the freezing of the account, the petitioner's account had not been de-frozen, and no show cause notice had been issued regarding any tax liability. The court issued notice to the respondents, and upon admission by respondent no.1 that the provisional attachment should have ceased after one year, the court allowed the writ petition. The respondents were directed to defreeze the petitioner's account within three working days of the court's order.

This judgment primarily dealt with the interpretation and application of Section 83(2) of the CGST Act regarding the time limit for provisional attachment of accounts. The court emphasized the importance of complying with statutory provisions and timelines, ensuring that provisional attachments are not extended beyond the prescribed period without valid reasons. The judgment reaffirmed the principle that legal procedures must be followed diligently, and individuals must be given the opportunity to address any alleged liabilities through proper channels, such as the issuance of show cause notices.

Furthermore, the court's decision highlighted the significance of upholding the rights of individuals and ensuring that their assets are not unduly restrained without sufficient cause or legal basis. By directing the respondents to defreeze the petitioner's account promptly, the court upheld the principles of natural justice and fairness in administrative actions, preventing arbitrary exercise of power by authorities. The judgment underscored the importance of procedural regularity and adherence to legal provisions to safeguard the interests of individuals affected by administrative actions, such as account attachments under tax laws.

Overall, the judgment provided a clear and decisive resolution to the petitioner's grievance, emphasizing the need for authorities to act within the bounds of the law and respect the prescribed timelines for provisional attachments. The court's directive to defreeze the account promptly demonstrated a commitment to upholding the rule of law and ensuring that individuals are not subjected to undue hardship or inconvenience due to administrative lapses or delays in compliance with statutory provisions.