Attachment Notice Under CGST Act Invalidated Due to Lack of Formal Assessment Order, Procedural Compliance Emphasized

HC found the attachment notice under CGST Act invalid due to absence of a formal assessment order. Despite the respondent's argument about tax returns, the court ruled that coercive recovery without following due statutory process was unjustified. The notice was set aside, emphasizing the importance of procedural compliance in tax recovery proceedings.

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Issues:
Challenge to attachment notice under Central Goods and Services Tax Act, 2017.

Analysis:
The petitioner, an assessee under the Central Goods and Services Tax Act, challenged an attachment notice issued to HDFC Bank, Korattur Branch. The notice directed the bank to withhold an amount of Rs.74,52,943 and pay it to the Government. The notice was based on the sum allegedly due from the petitioner under the CGST Act/TNGST Act, 2017. However, it was noted that there was no order of assessment or determination of the amount due from the petitioner under the relevant provisions. The absence of such an order rendered the notice legally unsustainable.

The respondent argued that the petitioner admitted liability by filing returns in GSTR 1 and 3B but set off the output tax liability against available credit. Despite the provisions for matching, reversal, and re-claiming of input tax credit under Section 42, the officer did not initiate this procedure. Therefore, resorting to coercive recovery without following due process was deemed unjustified.

The court referred to a previous case, VN Mehta & Company v. The Assistant Commissioner, where similar proceedings were held to be not maintainable under the law. Drawing a parallel, the court set aside the impugned notice dated 27.12.2019, stating that there was no statutory sanction for its issuance under Section 83 of the Act. Consequently, the writ petition was allowed, and no costs were imposed.

In summary, the judgment highlighted the importance of due process and statutory compliance in matters of tax recovery under the CGST Act. It emphasized the necessity of proper assessment orders before resorting to coercive measures like attachment notices. The court's decision to set aside the notice underscored the principle that legal procedures must be strictly adhered to in tax matters to safeguard the rights of the assessee.

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