2021 (1) TMI 798 - HC - GST

Court quashes bank account attachment under GST Act due to lack of notice

The Court set aside the order attaching the petitioner's bank account under Section 83 of the Central Goods and Services Tax Act, 2017, due to lack of ... Provisional attachment to protect revenue - Requirement of a written order of the Commissioner and communication of reasons for attachment - Right to file objections against provisional attachment - Refund of voluntarily deposited amount where no demand or show cause notice was pending - Retention of a portion of claimed duty while directing refund - Binding effect of a Division Bench decision of the same High Court over decisions of other High CourtsProvisional attachment to protect revenue - Requirement of a written order of the Commissioner and communication of reasons for attachment - Right to file objections against provisional attachment - Validity of provisional attachment of the petitioner's bank account under the Act in absence of a communicated written order of the Commissioner and the consequential right to file objections. - HELD THAT: - The Court examined Section 83 (provisional attachment to protect revenue) and the procedure under the Rules which permit a person whose property is provisionally attached to file objections. The order of attachment in the present case was passed by the Assistant Commissioner allegedly with the consent of the Commissioner. The Court held that if the written order of the Commissioner, containing the reasons for concluding that attachment was necessary to protect revenue, is not communicated to the affected person, that person cannot effectively exercise the statutory right to object. Accepting the respondents' contention that the Commissioner merely 'consented' would, in effect, deprive the person of the benefit of the Commissioner's reasons and of a meaningful opportunity to file objections. For these reasons the Court concluded that the attachment could not be sustained and set aside the order of attachment. [Paras 3, 4]The provisional attachment of the petitioner's bank account was set aside for want of communication of the Commissioner's written order and reasons, thereby denying effective opportunity to file objections.Refund of voluntarily deposited amount where no demand or show cause notice was pending - Retention of a portion of claimed duty while directing refund - Binding effect of a Division Bench decision of the same High Court over decisions of other High Courts - Entitlement to refund of amounts deposited by the petitioner prior to issuance of any demand or show cause notice, and the relief to be granted in view of binding precedent of this Court's Division Bench. - HELD THAT: - The Court noted that the petitioner had deposited certain amounts at a time when no show cause notice or demand was pending; subsequently a show cause notice was issued. A Division Bench decision of this Court in Concepts Global Impex (supra) dealing with an identical factual situation directed refund of the amount while retaining 10% of the duty demanded. Counsel for the respondents conceded applicability of that decision but relied on a contrary decision of another High Court. The Court held that the Division Bench decision of this High Court is binding on the present Bench and, accordingly, disposed of the refund prayer in the same terms as Concepts Global Impex, directing refund subject to the retention ordered therein. [Paras 5, 7, 8]The petitioner is entitled to refund of the deposited amount in accordance with the Division Bench decision of this Court, with the limited retention of a portion of the duty as directed in that precedent.Final Conclusion: The Court set aside the provisional attachment of the petitioner's bank account for failure to communicate the Commissioner's written order and reasons, and directed refund of the voluntarily deposited amount in terms of the Division Bench decision of this Court (retaining the portion of duty as ordered therein); miscellaneous applications stand disposed of. Issues:1. Challenge to the order attaching the petitioner's bank account.2. Prayer for refund of a deposited amount without a Show Cause Notice or demand.Analysis:Issue 1: Challenge to the order attaching the petitioner's bank accountThe petitioner challenged the order attaching his bank account, invoking Section 83 of the Central Goods and Services Tax Act, 2017. The petitioner contended that the order was passed by the Assistant Commissioner. However, the respondents argued that the order was passed with the consent of the Commissioner. The Court noted that under Rule 159, a person whose property has been provisionally attached can file objections. If the written order of the Commissioner is not communicated to the person, they would not have the opportunity to understand the reasons for the attachment and file effective objections. Consequently, the Court set aside the order of attachment.Issue 2: Prayer for refund of a deposited amountThe petitioner sought a refund of an amount deposited without a Show Cause Notice or demand. The respondents claimed that the amount was voluntarily deposited by the petitioner, and a Show Cause Notice had been subsequently issued demanding more duty. The petitioner relied on a Division Bench Judgment of the Court in a similar case, where a refund was directed after retaining 10% of the duty demanded. The respondents cited a judgment of the Delhi High Court, suggesting that the aggrieved person could file a suit for recovery. The Court held that the Division Bench Judgment of the Court would prevail over the judgment of another High Court. Accordingly, the Court disposed of the prayer for refund in line with the earlier Division Bench Judgment.In conclusion, the Court set aside the order attaching the petitioner's bank account and directed the refund of the deposited amount following the precedent established in a previous Division Bench Judgment. The miscellaneous application, if any, was also disposed of in light of the main case decision.