GST: Petition in Kerala High Court challenges Conditions imposed for lifting of Provisional Attachment of Bank Account [Read Petition]

KCCL - GST- Petition - Kerala High Court - challenges - Provisional Attachment - Bank Account - Taxscan

The Kerala High Court will hear the plea challenging the conditions imposed for lifting of provisional attachment of bank account.

The Petitioner, Kerala Communicators Cable Limited is aggrieved by the conditions imposed by the Respondent authority in letter for lifting the provisional attachment of its bank accounts.  The bank accounts of the Petitioner were attached by the Respondent authority invoking powers under Sec 83 of CGST Act 2017.

The Respondent had directed that the Petitioner has to furnish a bank guarantee for the amount equivalent to the credit balance available in its bank accounts and further that, the Petitioner has to furnish a bond binding it to pay any tax or interest or penalty that may become payable consequent to the issue of an order by the Proper officer in due course.   Since the available credit balance was INR 30,54,11,315.88, Petitioner was required to furnish bank guarantee for the amount of Rs.30,54,11,315.88.

The petition said that the purpose of provisional attachment under Section 83 is only to protect the interest of revenue and it is not similar to attachment proceedings during the course of recovery proceedings. In the case of the Petitioner, there is not even a Show Cause Notice issued. It is submitted that, even in the case of confirmed demand after adjudication process, the taxpayer has a statutory right of appeal under sec 107 of the CGST Act and on payment of pre-deposit of 10% of the disputed tax,  the recovery proceedings of the balance amount shall be deemed to be stayed. 

As per Section 107, the maximum pre-deposit cannot exceed INR 25,00,000. That being the case, there is absolutely no basis for furnishing Bank Guarantee for INR 30, 54,11,315.88, that too, when the 1st Respondent has not even issued a SCN till date.   

“By taking bond from the Petitioner with an undertaking  that, it shall pay all taxes payable consequent to the order that may be passed by the Proper Officer,  the Respondent  has deprived the benefit of statutory right of appeal and the benefit of ‘deemed stay’ under Sec 107 (7) of CGST Act on payment of pre-deposit,” the petitioner urged.

The petition further added, the Petitioner has a statutory right of appeal and once the pre-deposit of 10% of the disputed amount is paid, the recovery of balance amount is deemed to be stayed as per provisions of section 107 (7) of CGST Act.   The maximum pre-deposit payable is only INR 25,00,00,000 and therefore the condition to furnish bank guarantee for 30,54,11,315.88 is nothing but harsh which has seriously affected the continued operation of the Petitioner.

The petitioner pleaded before the Kerala High Court Court to direct the Respondent to release series bank guarantee and bond executed in pursuance of orders passed by the Respondent, as an interim relief.

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