2022 (6) TMI 1257 - HC - GST

Validity of provisional attachment order - proceedings under Section 67 has already been concluded - Section 83 of the CGST Act - HELD THAT - The order of provisional attachment passed on 20th January, 2021 during the pendency of the proceedings under Section 67 of the CGST Act has worked out as admittedly the proceedings under Section 67 has already been concluded and the department is said to be in the process of proceeding to take action under Section 74 of the CGST Act. The respondents are directed to intimate the appellants banker within one week from the date of receipt of the server copy of this order to lift the attachment of the said bank account - Application allowed.

Summary

Issues:
Validity of provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act) and refusal of interim protection.

Detailed Analysis:

Issue 1: Validity of Provisional Attachment
The appeal challenged the order of provisional attachment passed under Section 83 of the CGST Act. The appellants contended that they sought to lift the attachment order, citing financial difficulties due to the Covid-19 pandemic. The respondent authorities provisionally attached the bank account of the appellants under Section 83 to protect the revenue's interest. The appellants made representations to revoke the attachment, emphasizing the genuine nature of their transactions. The respondent authorities rejected the request, citing payment discrepancies. The proceedings under Section 67 of the CGST Act had concluded, and the respondent argued that the attachment should continue until further action under Section 74. However, the appellants argued that the power of provisional attachment must be exercised judiciously, as per legal principles laid down by the Supreme Court.

Issue 2: Refusal of Interim Protection
The learned Single Bench refused to grant interim protection to the appellants and directed the filing of an affidavit-in-opposition by the respondents. The appellants sought appropriate interim orders to safeguard their business activities. The legal counsels for both sides agreed that the main writ petition should be disposed of at this stage, as the appeal was against the denial of interim protection. The High Court, after considering the arguments and legal precedents, concluded that the provisional attachment order ceased to have effect once the proceedings under Section 67 were concluded. The Court referred to decisions by various High Courts and the Supreme Court to support its decision. The order of attachment dated 20th January, 2021, was quashed, and the respondents were directed to lift the attachment of the bank account. The Court preserved the department's right to exercise powers under Section 83 if necessary.

In conclusion, the High Court allowed the writ appeal, quashed the attachment order, and directed the respondents to lift the attachment of the bank account. The Court emphasized the need for the proper exercise of power in ordering provisional attachments under the CGST Act, ensuring that citizens and their legitimate business activities are not subject to arbitrary power.