Court invalidates provisional attachment orders under GST Acts, releases bank accounts

The court held that the provisional attachment orders were illegal as no pending proceedings under the relevant sections of the GST Acts existed. Consequently, the court quashed the orders, directing the release of the attachment over the petitioners' bank accounts. The issue of the validity of input tax credit claims was deemed beyond the scope of the present petition.

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Issues Involved:
1. Legality of provisional attachment orders under section 83 of the GST Acts.
2. Pendency of proceedings under section 67 of the GST Acts.
3. Compliance with procedural requirements for provisional attachment.
4. Validity of input tax credit claims by the petitioners.

Detailed Analysis:

1. Legality of Provisional Attachment Orders Under Section 83 of the GST Acts:
The petitioners challenged the provisional attachment orders dated 18.10.2019 under section 83 of the GST Acts, which provisionally attached their bank accounts. The petitioners argued that the provisional attachment was "wholly without jurisdiction and illegal" as no proceedings were pending under sections 62, 63, 64, 67, 73, or 74 of the GST Acts, which is a sine qua non for exercising powers under section 83. The court noted that the basic requirement for exercising powers under section 83 was not satisfied, rendering the provisional attachment orders unsustainable.

2. Pendency of Proceedings Under Section 67 of the GST Acts:
The respondents contended that proceedings under section 67 were still ongoing, justifying the provisional attachment. However, the court found that the search at the petitioners' premises on 27.9.2018 and subsequent visit on 1.4.2019 did not constitute ongoing proceedings under section 67. The court stated, "it cannot be said that any proceedings are pending under section 67 of the GST Acts," thus invalidating the basis for the provisional attachment.

3. Compliance with Procedural Requirements for Provisional Attachment:
The petitioners argued that the drastic provision of section 83 should be invoked only if authorities form an opinion based on "tangible material on objective facts" that attachment is necessary to protect the revenue. The court observed that the respondents had not recorded any such satisfaction in the impugned orders. The court referenced the case of Vishwanath Realtor Vs. State of Gujarat, emphasizing that provisional attachment is permissible only if the dealer's past conduct suggests they might defeat the revenue's claim.

4. Validity of Input Tax Credit Claims by the Petitioners:
The petitioners claimed input tax credit for tax paid on purchases, which was utilized towards payment of output tax liability. They argued that their suppliers were registered vendors who had deposited tax into the Government treasury, as reflected in Form GSTR-2A. The respondents alleged that the petitioners availed input tax credit based on invoices without actual receipt of goods, causing a loss to the Government revenue. The court noted that these contentions were beyond the scope of the present petition, which focused on the legality of the provisional attachment orders.

Conclusion:
The court concluded that the provisional attachment orders dated 18.10.2019 were "without authority of law" due to the absence of pending proceedings under the relevant sections of the GST Acts. The petition succeeded, and the court quashed the impugned orders, directing the respondents to release the attachment over the petitioners' bank accounts. The court left the petitioners' contentions regarding input tax credit claims to be addressed in appropriate proceedings before the relevant forum.

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