Delhi HC upholds provisional attachment of bank accounts under Section 83(1) CGST Act for GST liability on liquor sales

Delhi HC upheld provisional attachment of petitioner's bank accounts under Section 83(1) of CGST Act concerning GST liability on liquor sales. Court held that pre-condition for provisional attachment was satisfied as proceedings under Section 67 had commenced prior to the attachment order dated 10.05.2024. Court rejected petitioner's contention that attachment order's validity was limited to Section 67 proceedings, noting continuing proceedings and subsequent show cause notice under Section 74. Court dismissed argument that attachment was improper due to legal controversy involved, emphasizing that provisional attachment aims to protect government revenue regardless of whether dispute involves questions of law or fact. Petition dismissed.

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Issues:
Challenge to provisional attachment order under Section 83(1) of the CGST Act/DGST Act and liability to pay GST on sale of liquor.

Analysis:
The petitioner challenged the order dated 25.06.2024 upholding the provisional attachment of their bank accounts under Section 83(1) of the CGST Act/DGST Act. The petitioner operated a night club and was accused of evading taxes by not disclosing actual liquor sales in GST returns. A search revealed suppressed liquor sales, leading to a provisional attachment due to an estimated primary GST liability of approximately &8377;4.7 Crores. The petitioner objected to the order, arguing that it should be lifted once related proceedings concluded. The court found the order valid as it was issued after initiating proceedings under Chapter XII, XIV, or XV of the Act, meeting the statutory requirement.

The petitioner contended that the legal issue of GST liability on liquor sales negated the need for the Commissioner to use powers under Section 83(1) of the Acts. However, the court held that the purpose of provisional attachment is to safeguard government revenue, irrespective of legal or factual controversies. The order was justified to protect revenue, especially as the Commissioner estimated unpaid GST and passed the order for that reason.

The court dismissed the petition, allowing the petitioner to offer alternative unencumbered assets for provisional attachment instead of bank accounts. It clarified that dismissal does not prevent the petitioner from claiming amounts due, with all rights and contentions reserved for future proceedings. Additionally, all pending applications were disposed of, concluding the judgment.

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