2022 (10) TMI 952 - HC - GST

Provisional Bank Account Seizure Under CGST Act: Seven Accounts Released, Two Remain Under Fresh Scrutiny

HC ruled on provisional attachment of bank accounts under CGST Act. Seven out of nine accounts were automatically released after one-year period expired. ... Provisional attachment under Section 83 of CGST Act, 2017 - cessation of attachment after one year - intimation to banks to lift attachment - fresh provisional attachment - cause of action arising from fresh attachment ordersProvisional attachment under Section 83 of CGST Act, 2017 - cessation of attachment after one year - intimation to banks to lift attachment - Provisional attachment of seven bank accounts ceased to have effect after expiry of one year and authorities were directed to intimate banks to enable operation of accounts. - HELD THAT: - The Court recorded that the authorities conceded the one-year period contemplated by Section 83 had elapsed in respect of seven of the nine attached bank accounts and produced an e-mail from the Preventive Section confirming that provisional attachments issued on 08.10.2021 ceased to have effect after expiry of one year. Applying the statutory cessation under Section 83 and the CNB/CBIC guidance referred to in the communication, the Court held that the grievance as to those seven accounts no longer survived. The Court further noted the petitioners' complaint that banks had not been intimated and directed the respondents to inform the banks so as to enable operation of the accounts within one week. [Paras 4]The provisional attachment in respect of seven bank accounts has ceased to have effect; respondents to intimate banks and enable operation of those accounts within one week.Fresh provisional attachment - cause of action arising from fresh attachment orders - Provisional attachment in respect of the remaining two bank accounts was not finally decided and fresh attachment orders give rise to fresh cause of action to be litigated in accordance with law. - HELD THAT: - The Court recorded that fresh orders of provisional attachment were issued in respect of two bank accounts and observed that those attachments create a new cause of action. The Court did not adjudicate the validity of those fresh attachments; instead it left the parties free to seek redress and for the authorities to proceed in accordance with law. [Paras 4]The challenge to the two bank accounts subject to fresh attachment orders was not finally decided; fresh cause of action remains and must be addressed in accordance with law.Final Conclusion: All petitions disposed: attachments in seven accounts held to have ceased and banks to be intimated for restoration of operation within one week; disputes as to two accounts with fresh attachment orders remain open for adjudication. Issues:Provisional attachment of bank accounts under section 83 of the Central Goods and Services Tax Act, 2017.Analysis:The judgment dealt with multiple petitions concerning the provisional attachment of bank accounts by authorities under section 83 of the CGST Act. The petitions raised concerns about the orders dated 11.3.2021 and 12.10.2021, which attached bank accounts held by the petitioners with specific banks. The prayer in one of the petitions sought to set aside these orders and release the attached accounts. It was noted that representation to unfreeze the accounts had been rejected, leading to the challenge in court. The main issue revolved around the legality and validity of the provisional attachment orders.During the hearing, it was acknowledged that the one-year period for provisional attachment had lapsed for seven out of nine bank accounts, as per the provisions of section 83 of the CGST Act. Consequently, the provisional attachment for these seven accounts automatically ceased to have effect. The court took note of an email communication confirming the end of attachment for these accounts due to the expiry of the one-year period. However, there was a complaint from the petitioners that the concerned banks had not been informed about the release of the attachment, which the authorities assured would be done promptly.Regarding the two remaining bank accounts for which fresh attachment orders were issued, it was clarified that these fresh orders would provide a new cause of action in accordance with the law. The court disposed of all the petitions based on these observations and directions, with notices in each petition being discharged subject to the above determinations. The judgment emphasized the importance of complying with legal provisions and ensuring timely communication to affected parties regarding the status of provisional attachments on bank accounts.In conclusion, the judgment addressed the grievances raised by the petitioners regarding the provisional attachment of their bank accounts under the CGST Act. It clarified the legal implications of the one-year period for such attachments and highlighted the necessity of promptly informing banks about the release of provisional attachments. The court's decision provided clarity on the status of the bank accounts in question and underscored the importance of adherence to statutory provisions in such matters.