Asset Freezing Challenge Resolved: Procedural Gaps Exposed in CGST Act Section 83 Communications Dispute

The HC examined a case involving Section 83 of the CGST Act concerning asset freezing and customer communications. The court found no valid order was issued to the petitioner, and respondents withdrew communications restraining customer payments. With no operative orders against the petitioner and assurances of future procedural compliance, the HC disposed of the petition without additional directives.

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Issues involved:
The issues involved in this case include the impugning of a communication/order under Section 83 of the Central Goods & Service Tax Act, 2017, freezing of the petitioner's bank account, communication sent to various customers of the petitioner directing them not to make payments, and the provisional attachment of assets.

Impugning Communication/Order:
The petitioner challenged a communication/order dated 29.04.2019 issued under Section 83 of the CGST Act, which was not served on the petitioner. The petitioner learned about its bank account being frozen through a subsequent communication from Canara Bank. The Court noted that no order in the requisite Form GST DRC-22 was issued to the petitioner.

Communication to Customers:
The petitioner also contested the communication sent to its customers directing them not to make payments for goods supplied. The respondents informed the Court that the communication to customers was withdrawn, and the competent authority requested the petitioner's customers to make payments directly into the petitioner's bank account.

Provisional Attachment of Assets:
The Court observed that no orders of provisional attachment were issued to the petitioner under Section 83 of the CGST Act. It was highlighted that there was no specific recording of satisfaction by the Commissioner that provisional attachment was necessary to safeguard the interests of Revenue, despite ongoing investigations into alleged wrongful availment of Input Tax Credit.

Operative Orders:
The respondents confirmed that no order under Section 83 of the CGST Act was currently operational against the petitioner, and the communications issued to various suppliers had been withdrawn. Even if such an order was issued, it would have lapsed as per Section 83(2) of the CGST Act. The communications restraining the petitioner's customers from making payments were deemed unauthorized.

Assurances and Disposal of Petition:
The learned counsel for the respondents assured the Court of being more cautious in issuing orders like attachment of bank accounts in compliance with the CGST Act. Consequently, since the freezing of the petitioner's bank account and the communications to customers were no longer in effect, the Court disposed of the petition without further orders.

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