Delhi HC directs to lift block placed on Assessee’s Bank A/c since Refund was sanctioned by Auditor [Read Order]

The Delhi High Court (HC) directed to lift the block placed on the assessee’s bank a/c since the refund was sanctioned by the auditor.

Eunike General Trading, the petitioner prayed that a writ, order, or direction be issued to unblock the bank account in respect of the amount of ₹34,48,080/-, which relates to the refund sanctioned and credited in the petitioner’s Bank Account.

It was stated that the said refund has been granted by an order dated 05.08.2022. Thereafter, the said order was subject to an audit and a review, under which the petitioner was directed to deposit a sum of ₹38,786/- as an amount erroneously refunded.

Further stated that it has voluntarily deposited the said amount of ₹38,786/- as directed. However, notwithstanding that the petitioner has complied with the said direction, the balance amount of the refund granted by the respondent continues to be blocked. It is not open for the respondents to indefinitely block the petitioner’s bank account and in the event, the respondent finds that the order of refund is erroneous or requires review, it would be necessary for the respondent to take recourse to Section 107(2) of the Central Goods and Services Tax Act, 2017 (the Act).

It was observed that the action for blocking the petitioner’s bank account had been taken on three grounds. First, there had been a mismatch in the payment made by the petitioner to the supplier in respect of the goods that are stated to have been exported. Second, there was doubt as to whether any goods were procured from the supplier in question. And third, the petitioner had also procured goods from another supplier whose registration was suo motu cancelled.

A two-member bench comprising Justice Vibhu Bakhru and Justice Amit Mahajanif the respondents are of the view that the refund has been erroneously granted, they would be required to take appropriate action under Section 73 or 74 of the Act. Recourse to Section 107(2) may be necessary only if the Adjudicating Authority has adjudicated any contentious issue, which in the opinion of the Commissioner requires to be reviewed.

The Court observed that the blocking of the bank account is taken under Section 83 of the Act. By sub-section (2) of Section 83 of the Act, the said order of attachment ceases to be operative on the expiry of a period of one year from the date of the order.

Considering the averment that the auditor has already reviewed the petitioner’s case, the Court directed a refund for the sum of ₹38,786/-. It was further directed to reconsider the petitioner’s request for lifting of the block placed on the petitioner’s bank account and continue the same only if it is satisfied that the conditions as specified in Section 83 of the Act continue to exist.

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