2021 (10) TMI 633 - HC - GST

Court grants stay on provisional attachment orders of accounts under Section 86, citing lack of proper application of mind.

Kerala Communicators Cable Limited Versus The Commissioner Of Central Tax And Central Excise, Kochi, The Additional Director General, Directorate General Of Goods And Service Tax Intelligence, Kochi, Union Of India, (Represented By Secretary, Finance Department, Delhi), Department Of Revenue, Ministry Of Finance,

The court granted a stay of operation on the provisional attachment orders of seven accounts under Section 86 of the Central Goods and Service Tax Act. ... Provisional attachments of property - Section 83 of CGST Act - HELD THAT:- In the decision in Radha Krishan Industries v. State of Himachal Pradesh and Ors. [2021 (4) TMI 837 - SUPREME COURT], the Hon'ble Supreme Court had occasion to consider the exercise of powers under Section 83 of the CGST Act and after elaborate consideration, laid down the manner and mode in which the powers are to be exercised. None of the stipulations specified in the aforesaid judgment are evident in the orders impugned in this writ petition. Thus there is non-application of mind to the purport of power exercisable by the second respondent under Section 83 of the CGST Act. The order impugned are liable to be stayed - there will be a stay of operation of Exts.P9, P9(A) and P9(B) attachment order for a period of 8 weeks. Issues:Challenge to provisional attachment orders under Section 86 of CGST Act.Analysis:The petitioner challenged the provisional attachment orders of seven accounts under Section 86 of the Central Goods and Service Tax Act, 2017. The petitioner referred to a previous order where a bank guarantee was required but later modified to allow furnishing an undertaking not to alienate assets. The current orders were issued invoking powers under Section 83 of the CGST Act. The court noted that the conditions for a valid exercise of power must be strictly fulfilled. Reference was made to a Supreme Court decision outlining the conditions for ordering a provisional attachment, emphasizing the need to protect government revenue. The court found that the impugned orders did not fulfill the stipulations laid down in the judgment and indicated a lack of application of mind by the second respondent.The court acknowledged the significant impact of provisional attachment on the bank accounts of a running establishment. The petitioner claimed to be a running establishment supported by annual audited reports. Considering the legal and factual circumstances, the court was prima facie satisfied that the impugned orders should be stayed. Consequently, a stay of operation was granted on the attachment orders for eight weeks. It was clarified that the petitioner could operate the bank accounts during this period.