Bank accounts provisional attachment upheld in GST input tax credit case under Section 74

The Gujarat HC dismissed a petition challenging provisional attachment of bank accounts in a GST case involving wrongful input tax credit. The court held that the revenue authority's decision was based on material evidence and taken in the interest of revenue protection. Since show-cause notices under Section 74 were already issued and proceedings initiated, the court refused to exercise extraordinary jurisdiction under Article 226. The HC found no patent illegality or mala fides in the authority's satisfaction regarding revenue protection, emphasizing that courts should not usurp administrative discretion when proper procedures are followed.

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Issues Involved:
1. Legality of provisional attachment under Section 83 of the CGST Act, 2017.
2. Compliance with principles of natural justice.
3. Jurisdiction and authority to initiate proceedings under Section 83.
4. Exercise of extraordinary jurisdiction by the High Court.

Summary:

1. Legality of Provisional Attachment:
The petitioner challenged the provisional attachment of multiple bank accounts under Section 83 of the Gujarat Goods and Services Tax Act, 2017, arguing that the attachment was made without proper application of mind and without any pending proceedings under the Act. The petitioner contended that the attachment was cryptic, based on assumptions, and that no assessment or demand notice was issued as required under the Act.

2. Compliance with Principles of Natural Justice:
The petitioner argued that the attachment was made in conflict with the principles of natural justice, as it was done without providing an opportunity to be heard. The petitioner claimed that the attachment of the Cash Credit Account adversely affected its business activities.

3. Jurisdiction and Authority:
The respondents contended that the attachment was necessary to safeguard the interest of revenue and was done after the petitioner was found to have claimed wrongful input tax credit (ITC). They argued that the amendment to Section 83 of the CGST Act allows for such attachments even during pending proceedings under Section 70. The respondents maintained that the attachment was based on a satisfactory note prepared from the material provided by the petitioner.

4. Exercise of Extraordinary Jurisdiction:
The Court emphasized that it should not usurp the discretion of the statutory authority unless there is a clear case of mala fides or bias. The Court noted that the authority had initiated steps to protect the interest of revenue and that the petitioner had not provided any material evidence to counter the authority's findings. The Court also highlighted that the petitioner had already received partial relief when the attachment over one of the accounts was lifted.

Conclusion:
The Court found no merit in the petitioner's arguments and held that the provisional attachment was lawful and necessary to protect the interest of revenue. The Court dismissed the petition, stating that there was no case for interference under Article 226 of the Constitution of India, especially in the absence of any allegations of mala fides or bias against the authority. The Court also noted that the petitioner had not filed any affidavit-in-rejoinder to counter the respondents' claims.

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