Property Attachment within 3 Months Following Original GST Order Cannot be Sustained : Madras HC directs to Release property [Read Order]

In a recent ruling, the Madras High Court directed the release of immovable properties which were attached within three months following an original GST (Goods and Services Tax) order. The High Court also set aside the demand order.

The bench of Justice Senthilkumar Ramamoorthy observed that “In this case, without waiting for the statutory period of three months, an attachment was effected of the petitioner's immovable property. Such attachment is contrary to the statutory prescription and cannot be sustained.”

The Petitioner, Tvl. Maxtile AAC Block sought this direction through a writ petition. The background of the case involves an order dated 30.05.2023, issued against the petitioner, which confirmed a tax discrepancy between the petitioner's GSTR 3B returns and the auto-populated GSTR 2A.

The petitioner appealed this order on 24.08.2023, making the requisite pre-deposit under Section 107 of the GST Act. Despite this, the attachment of the properties was executed on 22.08.2023, prompting the petitioner to file the present writ petition seeking the release of the attached properties.

The petitioner's counsel submitted that recovery measures should not be undertaken within three months of the original order to allow the taxpayer to file a statutory appeal. Highlighting that the original order was dated 30.05.2023 and the appeal was lodged within the three-month period, the counsel contended that the attachment order issued within this period was unsustainable.

The court observed that once the pre-deposit is made, recovery proceedings for the balance amount should be stayed as per sub-section (7) of Section 107 of GST Act. The attachment of the petitioner's immovable property, executed without waiting for the statutory three-month period, was deemed contrary to statutory prescriptions and unsustainable.

Consequently, the writ petition was allowed, directing the first respondent to release the attachment over the properties in question. The second respondent-State Tax Officer was instructed to delete the attachment entry from the encumbrance certificate of the property within 1 week. G.Derrick Sam for Adithya Reddy appeared for the petitioner and T.N.C. Kaushik, the Additional Government Pleader and Mr. P. Anantha Kumar Govt. advocate appeared for the respondents.

To Read the full text of the Order CLICK HERE

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