2022 (9) TMI 1043 - HC - GST

Attachment of current bank account of petitioner - petitioner was ready to give the bank guarantee of the tax amount - HELD THAT - The arrears of tax is of Rs. 6,10,511/- plus the interest amount of Rs. 91,526/- and penalty of an amount of Rs. 91,577/- - The court does not find any reasonableness in the submission of learned Assistant Government Pleader that the bank guarantee amount should cover the interest and penalty also, more particularly when the adjudicatory process against the petitioner is yet to complete. It would be just and proper to require the petitioner to submit the bank guarantee in respect of the tax amount of Rs. 6,10,511/-. This would adequately secure the tax amount for the department and further take care the interests of the revenue at this stage. This petition is allowed by setting aside the communication dated 7.5.2022 and the satisfactory note/order dated 6.5.2022 whereby the current the Current Account No. 920020067484110 of the petitioner with the Axis Bank, Shahibaug Branch, Ahmedabad has been attached. The attachment shall be lifted on the condition that the petitioner furnishes to the competent authority of the respondent authority the bank guarantee for the amount equivalent to Rs. 6,10,511/- - Petition allowed.

Summary

Issues:
Challenge to attachment of bank account under Article 226 of the Constitution.

Analysis:
The petitioner, a trading firm, sought to set aside the communication and order attaching their bank account with Axis Bank. The firm holds valid registration under the Central Goods and Services Tax Act and the Gujarat Goods and Services Tax Act. The respondent, Commissioner of State Tax, alleged that the firm wrongfully availed input tax credit from a firm engaged in bogus billing activities. The petitioner contended that powers under section 83 of the Act for provisional attachment must be exercised cautiously, especially when no demand was raised post-assessment, denying the petitioner a chance to present their case.

The respondents argued that despite ample time given, the petitioner failed to prove the genuineness of transactions, justifying the attachment to protect the government's interest. The petitioner, in response, claimed ignorance of the other firm's intentions and expressed readiness to provide a bank guarantee for the tax amount. The court noted the tax arrears, interest, and penalty, but found the demand for a bank guarantee covering interest and penalty premature, as the adjudicatory process was ongoing.

The court allowed the petition, setting aside the attachment on the condition that the petitioner furnishes a bank guarantee equivalent to the tax amount only. The judgment emphasized that this decision did not reflect on the underlying controversy subject to future adjudication. The ruling aimed to balance securing the tax amount with safeguarding the revenue's interests, allowing the petitioner to continue business operations while the matter undergoes further legal scrutiny.