Court quashes premature attachment orders, emphasizes procedural compliance under GST Act. Petitioner allowed installment payments.

The court ruled in favor of the petitioner, quashing the provisional attachment orders due to premature issuance without proper proceedings under the Central Goods and Services Tax Act, 2017. The court emphasized the necessity of following procedural requirements and directed authorities to promptly conclude the assessment proceedings. Additionally, the petitioner's proposal to pay outstanding dues in installments was accepted, with the court ordering monthly payments towards the GST dues.

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Issues Involved:
1. Legality of the provisional attachment orders.
2. Compliance with procedural requirements under the Central Goods and Services Tax Act, 2017.
3. Undertaking by the petitioner to pay outstanding dues.

Detailed Analysis:

1. Legality of the Provisional Attachment Orders:

The petitioner, a company registered under the Companies Act, 1956, challenged the provisional attachment orders dated 30/10/2018, 26/11/2018, and 27/11/2018 issued by the Assistant Commissioner of Sales Tax (Unit-33), Kadi, District Mehsana. These orders directed the attachment of the petitioner’s bank accounts and stock worth substantial amounts. The petitioner contended that these orders were "illegal, highhanded, unjust, arbitrary and premature."

2. Compliance with Procedural Requirements under the Central Goods and Services Tax Act, 2017:

The petitioner argued that the provisional attachment orders were issued without following the due process as outlined in Sections 46, 62, and 83 of the Central Goods and Services Tax Act, 2017. Specifically, the petitioner pointed out that:

- Section 46 mandates that a notice be issued to a registered person who fails to furnish a return, requiring them to do so within fifteen days.
- Section 62 allows the proper officer to assess the tax liability if the registered person fails to furnish the return even after the notice under Section 46.
- Section 83 permits provisional attachment of property or bank accounts only during the pendency of proceedings under Sections 62, 63, 64, 67, 73, or 74.

The petitioner highlighted that the notice under Section 46 was issued on 27/11/2018, while the provisional attachment orders were passed before this date, on 30/10/2018 and 26/11/2018. Thus, the petitioner argued that the provisional attachment orders were issued without any pending proceedings under Section 62, making them unlawful.

3. Undertaking by the Petitioner to Pay Outstanding Dues:

The petitioner expressed readiness to pay the outstanding Goods and Services Tax (GST) dues in installments. The petitioner proposed to start making payments as soon as the attached stock was disposed of, with an initial payment of Rs. 1,50,00,000 by 31/01/2019, followed by monthly payments of the same amount until the total estimated dues were cleared. The court accepted this proposal and stayed the impugned provisional attachment orders, subject to the petitioner’s compliance with the payment schedule and the filing of an undertaking.

Court’s Findings and Judgment:

The court examined the provisions of Sections 46, 62, and 83 of the Act and concluded that the provisional attachment orders were issued prematurely and without the necessary proceedings under Section 62 being initiated. The court stated:

- "Section 83 would come into play only after the necessary action is taken under section 62 of the Act."
- "The authority straightway proceeded to pass orders of provisional attachment of the goods as well as two Bank Accounts, referred to above. Such action, in our opinion, cannot be said to be in accordance with law."

Consequently, the court quashed the provisional attachment orders and directed the authorities to finalize the proceedings under Section 62 expeditiously. The court also acknowledged the petitioner’s undertaking to continue depositing Rs. 1.50 Crore every month towards the current and outstanding GST dues.

Conclusion:

The court ruled in favor of the petitioner, quashing the provisional attachment orders and emphasizing the need for adherence to procedural requirements under the Central Goods and Services Tax Act, 2017. The petitioner’s commitment to pay the outstanding dues in installments was accepted, and the court directed the authorities to expedite the assessment proceedings.

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