Revenue authorities' blocking order quashed for failing Section 83 jurisdictional prerequisites and limitation requirements

Delhi HC quashed a blocking order issued by revenue authorities, holding it failed to comply with jurisdictional prerequisites under Section 83 of the 2017 Act. The court found the impugned communication was not issued under Section 83, no proceedings were pending against the petitioner under relevant provisions, and the Supreme Court's extension of limitation order would not extend Section 83's timeframe. The revenue's argument regarding one-year limitation period expiring in August 2022 was rejected as flawed, making the communication unsustainable in law.

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Issues:
Blocking of bank account under Section 83 of the Central Goods and Services Tax Act, 2017 without compliance with jurisdictional prerequisites; Violation of principles of natural justice; Tenability of the impugned communication; Compliance with Rule 159(5) of the CGST Rules, 2017; Possibility of recovery proceedings for wrongly availed IGST refund.

Analysis:
The petitioner's principal grievance arose from a communication dated 25.02.2020, where the respondents/revenue directed the bank to block the petitioner's account until the credentials of M/s. Zuric Traders are established. The petitioner contended that the communication did not mention Section 83 of the 2017 Act, denying the petitioner the right to file objections as per Rule 159(5) of the 2017 Rules. The respondents argued that the impugned action was justified under Section 83, citing an extension due to a Supreme Court order in another case.

The Court noted that the impugned communication lacked reference to Section 83 and was issued without jurisdictional facts. It emphasized that provisional attachment under Section 83 requires specific prerequisites and cannot be triggered without pending proceedings under relevant sections of the Act. The Court also highlighted the need for the respondents to form an opinion that attachment was necessary to protect revenue interests.

The respondents claimed investigations revealed discrepancies in foreign remittances against IGST refunds credited to the petitioner's account. However, the Court found no evidence that this information was communicated to the petitioner despite multiple representations. The Court quashed the impugned communication, ordering the unblocking of the bank account and disposing of the writ petition accordingly.

The judgment clarified that the impugned action was unsustainable in law and did not comply with the statutory requirements of Section 83. It rejected the argument for extending the blocking order based on a pending appeal under a different statute, emphasizing the Supreme Court's ruling on the provisions of Section 83. The Court concluded that the impugned communication was quashed, allowing for any other available remedies to the respondents/revenue for alleged legal infractions by the petitioner.

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