2022 (2) TMI 241 - HC - GST

Provisional attachment - Banks accounts - input tax credit - seizure of goods - statutory life of the attachment order, expired - Rule-86A of CGST Rules, 2017 - HELD THAT - The orders of provisional attachment under challenge could be said to have been outlived statutory right considering the fact that the orders impugned are dated 23.07.2019 and it would cease to operate on expiry of period of one year as prescribed under Section-83. The same is the position with regard to the Rule-86A of the CGST Rules, 2017. The attention of this Court is drawn to the draft amendment, whereby, the writ-applicant has referred to the communication dated 28.07.2020 issued by the respondent no.5 as received from the respondent no.2, who seems to have passed the fresh order of attachment. On bare perusal of the said order dated 24.07.2020 produced at Annexure-R and the order dated 27.07.2020 produced at Annexure-Q, even those orders have outlived their statutory life in view of Section-83 of the CGST Act as well as Rule-86A(3) of the CGST Rules, 2017 - as on date, it could be said that there are no orders of attachment of all the four current accounts running in the name of writ-applicant maintained with the respective banks as well as there is no attachment of the Input Tax Credit. Thus, after the goods are seized under sub-section (2) to Section 67 and no notice in respect thereof is issued within six months of the seizure, the authority concerned is obliged to return to the person from whose possession such goods were seized. The proviso enables the authority concerned upon showing sufficient cause to extend the period further not exceeding six months. In the case on hand indisputably no notice has been issued and the time period of six months has also expired - application disposed off.

Summary

Issues:
1. Challenge to provisional attachment orders under Section-83 of the CGST Act and Rule-86A of the CGST Rules.
2. Statutory validity and expiry of the provisional attachment orders.
3. Seizure of goods and the obligation to return them within a specified period.

Analysis:

Issue 1: The petitioner challenged the provisional attachment orders under Section-83 of the CGST Act and Rule-86A of the CGST Rules, concerning the attachment of bank accounts and Input Tax Credit.

Issue 2: The Court noted that the provisional attachment orders challenged had outlived their statutory life as per Section-83 of the CGST Act and Rule-86A(3) of the CGST Rules, as they were dated 23.07.2019 and would cease to operate after one year.

Issue 3: The Court highlighted the obligation to return seized goods within a specified period under Section-67(7) of the Act. As no notice was issued within six months of seizure, the authority must return the goods to the owner. The proviso allows for an extension of up to six months on showing sufficient cause.

The Court disposed of the writ-application, noting that as of the current date, there were no attachment orders in force for the petitioner's accounts or Input Tax Credit. The Court emphasized that if the Department wished to take further action, it must do so in accordance with the law. Additionally, the Court directed the authority to address the issue of seized goods, specifically a laptop and a mobile phone, as per the provisions of Section-67(7) of the Act. This order was made without prejudice to the Department's right to initiate further legal actions.