High Court upholds tax account freeze due to expiring deadline; directs timely refund inquiry for Zero Rated Supplies.

The High Court declined to intervene in the provisional attachment of the bank account under Section-83 of the CGST Act, 2017, as the statutory time period for attachment was expiring soon, leading to automatic defreezing. Regarding the withholding of IGST refund for 'Zero Rated Supplies,' the court directed the authorities to conclude the inquiry within eight weeks and provide the writ-applicant with a fair hearing if adverse evidence emerged before making a final decision. The court stressed the importance of timely decisions and fair procedures.

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Issues Involved:
1. Provisional attachment of bank account under Section-83 of the Central Goods and Services Tax Act, 2017.
2. Withholding of the refund of IGST paid for goods exported, known as 'Zero Rated Supplies.'

Analysis:

Provisional Attachment of Bank Account:
The writ-applicant challenged the provisional attachment of their bank account under Section-83 of the CGST Act, 2017. The High Court noted that the statutory time period for the attachment was set to expire soon. Consequently, the bank account would be defreezed automatically. The court acknowledged this fact and did not find it necessary to intervene in the attachment matter, given the imminent defreezing of the account.

Withholding of IGST Refund:
The second issue pertained to the withholding of the refund of IGST paid for goods exported as 'Zero Rated Supplies.' The respondent authorities cited the writ-applicant as a 'risky exporter' based on a preliminary inquiry. They informed the court that the inquiry was ongoing, and a decision regarding the refund would be made after its completion. The High Court directed the concerned department to conclude the inquiry within eight weeks and make a decision based on the findings. The court emphasized that the inquiry should not be prolonged indefinitely. Additionally, if any inculpatory evidence emerged against the writ-applicant, they must be given an opportunity to be heard before a final decision on withholding the refund was reached.

In conclusion, the High Court disposed of the writ-application, allowing the inquiry to continue but setting a timeframe for its completion. The court emphasized the importance of a timely decision based on the inquiry's outcome and highlighted the necessity of providing the writ-applicant with a fair hearing if adverse findings were made.

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