Court sets aside bank account attachment order under CGST Act for lack of jurisdiction.

The Court set aside the order of provisional attachment of the petitioner's bank account under the CGST Act, emphasizing the necessity for strict compliance with statutory conditions before exercising the power to attach property. It found that as no proceedings were pending against the petitioner under specified sections of the CGST Act, the attachment order was jurisdictionally flawed. The Court ruled in favor of the petitioner, directing the respondent to unfreeze the bank account and allowed the writ petition without costs.

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Issues:
Challenge to order of provisional attachment of bank account under CGST Act.

Analysis:
The writ petition challenged an order of provisional attachment of the petitioner's bank account under the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioner argued that no proceedings were pending against them under specific sections of the CGST Act, rendering the attachment order jurisdictionally flawed. Citing legal precedents, the petitioner contended that the power to provisionally attach property, including a bank account, must strictly adhere to statutory conditions. The petitioner requested the quashing of the attachment order and the unfreezing of the bank account.

The respondents justified the attachment order by alleging that the petitioner had engaged in fraudulent practices related to Input Tax Credit, causing revenue loss. They argued that fraud vitiates proceedings, justifying the maintenance of the provisional attachment.

The Court analyzed the legal arguments presented. It referred to a Supreme Court decision and a Gujarat High Court decision related to provisional attachment under the CGST Act. The Court noted that the Supreme Court's decision clarified that unless proceedings were pending against a taxable person under specified sections of the CGST Act, no provisional attachment order could be made. The Court emphasized the need for strict compliance with statutory conditions for exercising the power to order provisional attachment.

The Court found that the respondent had failed to address the petitioner's contention regarding the absence of pending proceedings under relevant sections of the CGST Act. It concluded that the respondent lacked the authority to invoke the power conferred by the CGST Act for provisional attachment due to the absence of pending proceedings. The Court highlighted that the power to attach property must not be exercised without fulfilling the necessary conditions precedent.

Consequently, the Court set aside the impugned order of provisional attachment and directed the respondent to defreeze the petitioner's bank account. The writ petition was allowed, with no order as to costs.

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