2020 (9) TMI 879 - HC - GST

Court Invalidates Attachments & Credit Blocking, Orders Release. Clarifies Section 83 Inapplicability.

The Court found the provisional attachment of stock of goods and current account to be without legal authority as it was initiated under a section that ... Provisional attachment under Section 83 of the CGST Act - proceedings under Section 71(1) (access to business premises) - power to attach during pendency of specified proceedings - absence of power to attach in access proceedings - quashing of attachment as without authority of lawProvisional attachment under Section 83 of the CGST Act - proceedings under Section 71(1) (access to business premises) - absence of power to attach in access proceedings - Validity of the order of provisional attachment of the petitioner's goods under Section 83 where proceedings were instituted under Section 71(1). - HELD THAT: - The court examined the scope of the attachment power conferred by Section 83 and noted that it may be invoked only during the pendency of proceedings specified in the statute (namely under Sections 62, 63, 64, 67, 73 and 74). Proceedings under Section 71(1) relate to access to business premises and do not constitute any of the specified proceedings during which Section 83 can be validly exercised. Consequently, the invocation of Section 83 in relation to proceedings under Section 71(1) is without jurisdiction and contrary to the statutory scheme. Applying this legal construction, the impugned order of provisional attachment of the goods was held to be without authority of law and liable to be set aside. [Paras 5, 6, 7]Impugned attachment of the petitioner's goods under Section 83 quashed and set aside.Final Conclusion: The provisional attachment of the goods under Section 83, made in relation to proceedings under Section 71(1), was quashed as beyond the authority conferred by the statute; the writ petition is disposed of, with liberty that the appeal against the assessment be decided in accordance with law. Issues:1. Validity of order of provisional attachment of stock of goods and current account2. Blocking of input tax credit3. Jurisdiction to pass order of attachment under Section 83 of the ActAnalysis:1. The writ applicant sought relief against the order of provisional attachment of stock of goods and current account, challenging the authority of Respondent No. 2 to pass such orders. The Court noted that the power to invoke Section 83 of the Act for attachment is limited to specific proceedings under Sections 62, 63, 64, 67, 73, or 74 of the Act. As the proceedings were initiated under Section 71(1) of the Act, the Court found the attachment without legal authority. The Court quashed and set aside the impugned orders of attachment.2. The respondents had also blocked the input tax credit of the petitioner, which was challenged on the grounds of lack of statutory provision empowering such action. The Court observed that there was no provision in the State Goods and Services Tax Act or Central Goods and Services Tax Act allowing the blocking of input tax credit by the respondents. Consequently, the Court directed the immediate release of the blocked credit available in the electronic credit ledger.3. The Court clarified that Section 71 of the Act relates to access to business premises and does not provide for the institution of proceedings. Therefore, the Court held that there could be no proceedings initiated under Section 71 of the Act. As a result, the order of attachment under Section 83 of the Act was deemed invalid and was quashed. The Court further directed that any appeal against the final assessment order should be decided by the Appellate Authority in accordance with the law. The writ application was disposed of accordingly, with direct service permitted.