2022 (7) TMI 344 - HC - GST

Provisional Attachment of Bank Account Under GST Section 83 Quashed as Authorities Failed to Establish Section 74 Proceedings

Varun Gupta Versus Union of India And Another

HC examined provisional attachment of a bank account under Section 83 of CGST Act. The court found that after a previous attachment was quashed, ... Attachment of Bank Accounts of petitioner - amended provisions of Section 83 of the CGST Act were not available when the attachment order was passed - proceeding under Section 74 of CGST was pending as on the date of attachment or not - applicability of Section 83 of CGST Act as substituted by the Finance Act, 2021, which has come into force w.e.f. 01.01.2022 - HELD THAT:- In the impugned order dated 19.05.2022, the respondent no.2 has not mentioned at all that when proceeding under Section 74 of CGST Act has been initiated against the petitioner. Thus, prima facie the impugned order appears to be an abuse of the power by the respondent no.2 and an attempt to over reach the judgment of this Court in VARUN GUPTA VERSUS UNION OF INDIA AND ANOTHER [2022 (5) TMI 789 - ALLAHABAD HIGH COURT] where it was held that as on the date of attachment order dated 22.10.2021, there was no notice under Section 74 of the CGST Act. Consequently, the attachment order dated 22.10.2021 itself was without jurisdiction and consequently, it is not sustainable. Despite time granted by order dated 15.06.2022, the respondents have not filed counter affidavit - three more days granted and no more time will further be granted to the respondents to file counter affidavit annexing therewith proof of pendency of proceedings under Sections 67 and 74 of CGST Act - Put up as a fresh case on 08.07.2022 at 10:00 A.M. Issues involved:1. Provisional attachment of bank account under Section 83 of CGST Act, 2017.2. Abuse of power by the respondent in passing the impugned order.3. Failure of the respondents to file a counter affidavit.Analysis:Issue 1: Provisional attachment of bank account under Section 83 of CGST Act, 2017The petitioner's bank account was provisionally attached under Section 83 of the CGST Act, 2017 by the respondent. However, the petitioner had previously succeeded in a writ petition where it was held that no proceeding under Section 74 of CGST was pending at the time of attachment, and the amended provisions of Section 83 were not applicable then. The respondent subsequently quashed the attachment but issued a fresh order of attachment the very next day. The High Court noted that the impugned order did not mention the initiation of proceedings under Section 74, indicating potential abuse of power by the respondent. The Court highlighted the provisions of amended Section 83 of the CGST Act, which allow provisional attachment for the protection of government revenue in specific cases.Issue 2: Abuse of power by the respondent in passing the impugned orderThe High Court observed that the respondent's actions in passing the fresh attachment order immediately after the previous attachment was quashed raised concerns of an abuse of power. The Court noted that the impugned order did not establish the initiation of proceedings under Section 74 of the CGST Act against the petitioner, which was a crucial requirement for provisional attachment under Section 83. The Court deemed the respondent's actions as an attempt to circumvent the previous judgment in favor of the petitioner and emphasized the need for proper adherence to legal procedures and safeguards against misuse of power.Issue 3: Failure of the respondents to file a counter affidavitDespite being granted time to do so, the respondents failed to file a counter affidavit in response to the writ petition. The Court expressed dissatisfaction with this non-compliance and directed the respondents to file a counter affidavit within three days, along with evidence of the pending proceedings under Sections 67 and 74 of the CGST Act. The Court scheduled a fresh hearing for further review of the case, instructing the respondent to produce records related to the impugned attachment order and the ongoing proceedings under the relevant sections of the CGST Act.In conclusion, the High Court's detailed analysis of the issues surrounding the provisional attachment of the petitioner's bank account under Section 83 of the CGST Act highlighted concerns of abuse of power by the respondent and emphasized the importance of procedural fairness and adherence to legal requirements in such matters. The Court's directives for filing a counter affidavit and producing relevant records demonstrate a commitment to ensuring justice and upholding the rule of law in tax-related proceedings.