Provisional attachment of third-party savings accounts over alleged bogus ITC via fake firms struck down u/s83 CGST

Provisional attachment of petitioners' savings bank accounts under s.83 CGST Act was challenged on jurisdiction, the petitioners asserting they were neither "taxable persons" nor persons covered by s.122(1A) despite allegations of fake firms facilitating bogus ITC. The HC held that s.83 permits provisional attachment only of assets/bank accounts of taxable persons or persons specified in s.122(1A), and does not authorise attachment of third-party accounts on an assumption that the funds belong to a taxable person; given the draconian nature of attachment, statutory conditions must be strictly met. The impugned order, insofar as it attached petitioners' bank accounts, was set aside and the petition was allowed.

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Issues Involved:
The petitioners challenged an order for provisional attachment of their savings bank accounts by the respondent, alleging lack of jurisdiction and wrongful assumption of ownership of funds.

Jurisdictional Challenge:
The petitioners contended that they were not taxable persons nor covered under Section 122(1A) of the Central Goods and Services Tax Act, 2017, making the impugned order without jurisdiction.

Factual Background:
The respondent attached the petitioners' bank accounts based on statements made by individuals during an investigation into fake firms involved in fraudulent activities related to Input Tax Credit.

Legal Analysis:
The court examined Section 83 of the Act, which allows provisional attachment of assets of taxable persons, noting that the petitioners were not taxable persons as per the Act. The petitioners claimed the funds were returns of advances and loans extended by them, supported by detailed account statements.

Court's Decision:
The court found the impugned order unsustainable, emphasizing that the power to attach assets or bank accounts under Section 83 is limited to taxable persons or those specified under Section 122(1A) of the Act. The court set aside the order attaching the petitioners' bank accounts, highlighting that such actions must strictly adhere to the provisions of the Act.

Final Order:
The petition was allowed, and the order attaching the bank accounts was annulled, with a clarification that the respondents could take lawful steps to protect revenue interests.

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