The Delhi High Court while setting aside the GST Authority’s order of Provincial Attachment held that the power to attach a Bank Account can be used in limited circumstances.
The petitioner, Proex Fashion Pvt. Ltd. challenged a communication by which the bank account of the petitioner in the respondent Bank has been attached by respondent authority, purportedly under Section 83 of the Central Goods and Services Tax Act, 2017.
Mr. Govind Rishi, counsel for the petitioner, contended that the respondent authorities have taken action against the petitioner under Section 83 of the Act, pursuant to proceedings initiated under Section 71 of the Act, whereas Section 83 of the Act, on its terms, cannot be invoked in such a situation.
On the other hand, Mr. Harpreet Singh, learned counsel for respondent authority contended that The petitioner was declared as a „risky exporter‟, and an attempt was made to elicit certain information and documents from the petitioner. However, according to respondent authority, several communications addressed to the petitioner at its registered office were returned undelivered. Proceedings under Section 71 of the Act were therefore initiated against the petitioner, and the attachment of the bank account under Section 83 of the Act is pursuant to those proceedings.
The single-judge bench of Justice Prateek Jalan clarified that the attachment of a bank account entails serious consequences to the assessee, particularly in the case of a running concern such as the petitioner herein. The power to attach the bank account must therefore be exercised only in strict compliance with the statutory power, and cannot be extended to cover situations that are not expressly contemplated by the section. Absent the statutory precondition for the exercise of the power of attachment, any order under Section 83 is wholly illegal and unsustainable.
Therefore, the court while quashing the order held that the impugned order was ultra vires the statutory powers of the respondent authority.
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