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

HC examined provisional attachment of a bank account under Section 83 of CGST Act. The court found that after a previous attachment was quashed, authorities immediately issued a fresh order without properly establishing proceedings under Section 74, which is required for such attachment. The court determined this constituted potential abuse of power, as the respondent appeared to be circumventing a previous judgment favoring the petitioner. The HC directed respondents to file a counter affidavit within three days with evidence of pending proceedings under Sections 67 and 74.

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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, 2017
The 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 order
The 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 affidavit
Despite 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.

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