Kerala HC stays orders of Provisional Attachments of Property as it lacked application of mind by GST Official [Read Order]

The Kerala High Court stayed the  orders of Provisional Attachments of Property as it lacked application of mind by GST Official.

The petitioner, Kerala Communication Cable Ltd. assailed the orders of the provisional attachments of property under Section 86 of the Central Goods and Service Tax Act, 2017. As per the impugned orders, as many as seven accounts of the petitioner have been provisionally attached in purported exercise of powers under Section 83 of CGST Act.

It was contended by the petitioners that the Single Judge of this Court wherein in a similar situation earlier, the respondent authority had invoked the powers under Section 83 of the CGST Act and ordered provisional attachment of the bank accounts of the petitioner. Subsequently, the said order was modified, permitting the petitioner to furnish a bank guarantee of Rs. 30 Crores in lieu of releasing the provisional attachment over the bank accounts. When the petitioner challenged the said order directing furnishing of bank guarantee, this Court stayed the condition of furnishing a bank guarantee however, directed the petitioner to furnish by way of an affidavit and undertaking that it shall not alienate any of its fixed assets, plant, property and equipment shown in the balance sheet.

The single judge bench of Justice Bechu Kurian Thomas was prima facie satisfied that there is non-application of mind to the purport of power exercisable by the second respondent under Section 83 of the CGST Act.

The Court also said that the crippling effect an order of provisional attachment, on the bank accounts of a running establishment can have. Petitioner asserts that it is a running establishment and the annual audited reports, which shows that the petitioner is a running establishment.

“In view of all the circumstances, mentioned above both legal and factual, I am prima facie satisfied that the orders impugned are liable to be stayed,” the court said.

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