Provisional bank account attachments under Section 83 CGST upheld; petitioner must deposit Rs 2 crore to lift attachments

HC upheld provisional attachment of multiple bank accounts under Section 83 CGST, finding a prima facie basis from a preliminary probe indicating 14 supplier entities were fictitious and ITC claims questionable. The petitioner failed to establish entitlement to interim relief; an earlier overdraft account attachment was lifted and no irreparable harm was shown. The petitioner offered but did not reverse the contested ITC. The court ordered that provisional attachment will be lifted if the petitioner deposits Rs. 2 crore with respondents, and directed issuance of a show-cause notice and listed the petition for final hearing on 29 Sept 2023.

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Issues involved:
The judgment involves a challenge to the provisional attachment of bank accounts under Section 83 of the Central Goods and Service Tax Act, 2017 (CGST Act) based on alleged fictitious/non-existent suppliers, and the issue of whether the petitioner has made out a prima facie case for grant of interim relief.

Provisional Attachment of Bank Accounts:
The petitioner challenged the provisional attachment of three bank accounts, particularly focusing on the overdraft account with Kotak Mahindra Bank. The Court noted that the petitioner was able to operate the overdraft account after contacting the concerned officer and the attachment was lifted. The Respondents had communicated with the bank to de-freeze the account. The Court emphasized that the only remaining concern was the interim prayer for stay of further coercive measures, as there was no prayer to de-freeze the other accounts.

Claimed Input Tax Credit and Provisional Attachment:
The Respondents provisionally attached the bank accounts based on the petitioner's claim of input tax credit on purchases from alleged fictitious/non-existent suppliers. The petitioner contended that all details had been submitted to prove the purchases, and therefore, the attachment was unjustified.

Legal Analysis and Decision:
The Court considered the petitioner's admission of wrongly availing Input Tax Credit and failure to reverse it by the specified date. It was noted that the Respondents' preliminary investigation revealed that the suppliers from whom the goods were purportedly purchased did not exist, raising doubts about the actual receipt of goods or services. The Court found that the petitioner had not made out a prima facie case for interim relief. However, in a unique circumstance, the Court ordered the provisional attachment to be lifted if the petitioner deposited a specified sum with the Respondents.

Final Hearing and Future Proceedings:
The Court determined that the legal issues raised in the petition necessitated a final hearing, scheduling it for a later date. Further pleadings on the petition were to be completed before the final hearing.

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