Landmark Ruling: Provisional Bank Account Attachment Under CGST Act Requires Swift Resolution of Taxpayer Objections

HC ruled on provisional attachment of bank account under CGST Act. Court directed respondents to decide objections within one month, setting a three-month outer limit for resolving such challenges. The judgment emphasized the need for timely resolution of attachment objections and recommended issuing a circular to clarify procedural timelines, ensuring administrative efficiency and protecting taxpayer rights.

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Issues:
Provisional attachment of bank account under Section 83 of the CGST Act, 2017 and Rule 159 of the CGST Rules, 2017. Delay in deciding objections to provisional attachment.

Analysis:
The petitioner filed a petition against the provisional attachment of their bank account by the respondents under Section 83 of the Central Goods and Services Tax Act, 2017, and Rule 159 of the Central Goods and Services Tax Rules, 2017. The petitioner claimed that they were not directly communicated the order but learned about it through the bank. Subsequently, the petitioner submitted an objection under Section 159 (5) of the CGST Rules, 2017, on 05.07.2024, which remained pending without a decision. The petitioner argued that objections to provisional attachment must be decided within a reasonable time and cannot be left pending indefinitely.

The respondent's counsel assured that the objection submitted by the petitioner would be decided promptly. The court noted that the petitioner had followed the procedure by submitting an objection in FORM GST DRC-22A, as per Rule 159 (5) of the CGST Rules, 2017. The rule allows the person whose property is attached to file an objection stating that the property is not liable for attachment. The Commissioner is then required to decide on the objection after providing an opportunity for a hearing.

The court emphasized that while there is no specific time limit mentioned in the rule for deciding objections, they must be resolved within a reasonable time to fulfill the purpose of considering objections. In this case, two months had passed since the objection was filed, and the court set an outer limit of three months for deciding such objections. Respondent No. 2 was directed to decide on the petitioner's objection within one month.

Furthermore, the court recommended that the respondents issue a circular specifying the time limit for deciding objections to avoid rendering the provisions of Rule 159 (5) of the CGST Rules, 2017 meaningless. It was highlighted that the maximum period for provisional attachment under Section 83 of the CGST Act, 2017, is one year. The writ petition was disposed of with these directions, emphasizing the importance of timely resolution of objections to provisional attachment.

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