2023 (8) TMI 239 - HC - GST

Power / Jurisdiction to attach bank accounts - Superintendent (Anti- Evasion) - Calling upon the bank to furnish certain documents pertaining to the petitioner - Provisional attachment - HELD THAT - It is well settled that the orders of provisional attachment of bank accounts or other assets of a tax payer has a serious adverse effect on the business of the tax payer. In M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH ORS. 2021 (4) TMI 837 - SUPREME COURT , the Supreme Court made observations to the effect that such drastic powers must be exercised only where it is necessary. Considering that the wide adverse ramifications such orders have, this Court, has in a number of decisions, held that the power under Section 83 of the CGST Act can be exercised only subject to the conditions, as specified therein, being fully satisfied. No order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue - In the present case, respondent no. 2 has, by a letter addressed to the bank seeking information, also directed freezing the petitioner s bank account. The impugned communication is without authority of law. It has been issued in complete disregard of the provisions of the CGST Act and the adverse effect of such orders. The impugned communication set aside to the extent that it seeks to place a debit freeze on the petitioner s account. The respondents are required to act in accordance with the statutory provisions - petition disposed off.

Summary

Issues involved:
The petitioner challenged a communication freezing their bank account issued by respondent no. 2, Superintendent (Anti-Evasion) Group 1, without proper authority under the Central Goods and Services Tax Act, 2017 (CGST Act).

Summary:

Issue 1: Authority to Freeze Bank Account
The petitioner contested a communication freezing their bank account, arguing that respondent no. 2 lacked the authority under the CGST Act to issue such a directive without an order from the Commissioner, as mandated by Section 83 of the CGST Act.

Issue 2: Adverse Effects of Freezing Orders
Citing precedents like Radha Krishan Industries v. State of Himachal Pradesh & Ors., the court highlighted the serious adverse impact of freezing bank accounts without proper authority. It emphasized that such powers must only be exercised when necessary to protect the interest of revenue, subject to strict conditions.

Issue 3: Lack of Consideration of Objections
The petitioner's objections under Rule 159(5) of the CGST Rules were not considered by the respondents, indicating a failure to follow due process and address the concerns raised by the petitioner regarding the freezing of the bank account.

Issue 4: Setting Aside the Impugned Communication
The court set aside the communication directing the freeze on the petitioner's bank account, emphasizing the need for respondents to adhere to statutory provisions and imposing a cost of Rs. 5,000 on respondent no. 2 for disregarding the law.

Conclusion:
The court ruled in favor of the petitioner, quashing the unauthorized communication freezing the bank account and directing the respondents to comply with the law. It also imposed a cost on the concerned officer for the non-compliance.