2023 (8) TMI 777 - HC - GST

High Court Validates GST Property Attachment, Grants Limited Bank Account Access for Continued Business Operations Under Section 83

M/s S.R TRADERS Versus THE ADDITIONAL DIRECTOR GENERAL, DIRECTORATE GENERAL OF GST INTELLIGENCE, THE STATE TAX OFFICER, SQUAD NO. VI, OFFICE OF THE DEPUTY COMMISSIONER OF STATE TAX (INTELLIGENCE)

HC upheld provisional attachment of properties under GST Act, allowing partial relief by permitting operation of two bank accounts during ongoing ... Provisional attachment of Immovable properties and bank accounts - non-application application of mind and in flagrant violation of the certain provisions of law under the Central Goods and Service Tax Act and Rules - HELD THAT:- While it may be a fact that the value of the immovable properties attached is not sufficient to meet the demand contained in the show cause notices, it must be necessarily reminded that the appellant cannot be financially choked to the extent of preventing it from carrying on legitimate business activities while simultaneously defending the proceedings initiated by the respondents against him. The ends of justice would require to modify the judgment of the learned single Judge and to permit the appellant to operate two of its bank account pending finalisation of the adjudication proceedings by the respondents so that the appellant can carry on its legitimate business activities even while defending the proceedings initiated against him by the respondents. Lifting of the attachment in respect of the two accounts allowed - appellant shall be permitted to operate the said accounts during the pendency of the adjudication proceedings initiated at the instance of the respondents and until the culmination thereof - appeal disposed off. Issues Involved:1. Provisional attachment of immovable properties and bank accounts under the Central Goods and Service Tax Act and Rules without application of mind.2. Availability of an alternate remedy for challenging the orders before the appellate authority.Summary:Issue 1:The writ appeal was filed challenging the provisional attachment of immovable properties and bank accounts under the Central Goods and Service Tax Act and Rules. The learned single Judge dismissed the writ petition, stating that the orders were passed by the first respondent within legal authority and that the appellant had an effective alternate remedy to challenge the orders before the appellate authority. The appellant contended that if all bank accounts were attached, it would hinder business operations during the investigation. The respondents argued that the show cause notice quantified a demand of Rs.8.59 crores, with potential additional liabilities. The Court acknowledged the need to balance financial restrictions on the appellant while allowing legitimate business activities. Consequently, the Court directed the lifting of attachment on two specific bank accounts to enable the appellant to operate them during the adjudication proceedings.Issue 2:The Court found that the appellant should be allowed to operate two bank accounts during the pendency of the adjudication proceedings initiated by the respondents. The Court emphasized the importance of enabling the appellant to conduct legitimate business activities while defending against the proceedings. Apart from this modification, the Court refrained from interfering with the judgment of the learned single Judge on all other aspects. The writ appeal was closed with the above directive.