Tax Authority's Provisional Attachment Under GST Section 83 Limited to 25,000 Per Account While Properties Released

The HC addressed a writ petition challenging provisional attachment of bank accounts and properties under Section 83 of CGST Act. Following issuance of show cause notices under Section 74 proposing penalties, and DRC-22 notices debiting 25,000 from each petitioner's account under Section 122(3), the court ordered: (1) bank accounts to remain frozen only to the extent of 25,000 each, (2) petitioners permitted to utilize amounts exceeding the frozen sum, and (3) release/de-freeze of the attached immovable properties within three days. The petition was disposed of with these directions.

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Issues:
Challenge to provisional attachment of bank accounts and immovable properties under Section 83 of the CGST Act, 2017; Release/de-freeze of personal bank accounts and immovable properties; Imposition of penalty under Section 74 of the CGST Act; Debit freezing of bank accounts under Section 122(3) of the CGST Act; Withdrawal/utilization of amounts over and above the frozen sum; Compliance with show cause notices.

Analysis:

The judgment by the Delhi High Court, delivered by Hon'ble Mr. Justice Manmohan, addressed a writ petition challenging the letter dated 07th December, 2020, issued under Section 83 of the CGST Act, 2017, directing the provisional attachment of bank accounts and immovable properties of three Petitioners. The Petitioners sought directions for the release/de-freeze of their assets provisionally attached. On the last hearing date, the Respondent's counsel sought time for instructions. In the recent hearing, it was revealed that a show cause notice dated 15th July, 2021, under Section 74 of the CGST Act, proposing a penalty, had been issued to all Petitioners. Additionally, fresh DRC-22 notices were issued, debiting &8377; 25,000/- each from the Petitioners' bank accounts to secure the penalty under Section 122(3) of the CGST Act.

The Respondent's counsel informed the court about the issuance of show cause notices and the freezing of accounts, while the Petitioners' counsel expressed no objection to the debit freezing of &8377; 25,000/- each, subject to the final determination of the show cause notices. The Petitioners requested permission to withdraw/utilize amounts exceeding &8377; 25,000/- in their bank accounts. Consequently, the court directed the Petitioners' bankers to freeze the accounts for &8377; 25,000/- each and ordered the release/de-freeze of the immovable properties within three days. Moreover, the Petitioners were allowed to utilize the excess amounts in their bank accounts. The judgment disposed of the writ petition and related applications in light of the provided directions, ensuring compliance with the legal provisions and safeguarding the rights of the parties involved.

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