The Gujarat High Court (HC) chaired by Justice Sonia Gokani and Justice Sandeep N. Bhat quashed the attachment order issued by the authorities. Also, ruled that the provisional attachment of the bank account should not hamper daily operations.
The petitioner contested the provisional bank account attachment order issued by the authorities in FORM No.GST DRC-22 pursuant to Section 83 of the Gujarat Goods and Services Tax Act (GGST), 2017, on the grounds that it violates the law.
The petitioner is a private limited company engaged in the business of trading in coal. It also has a valid registration number under the GGST Act.
The petitioner company purchased iron and steel waste scrap from M/s. Arsh Enterprise between 2018 and 2019, and the company was properly registered for the Goods and Services Tax (GST) at the time of the acquisition. The products were acquired for Rs. 37,31,420, where the total cost of the goods was Rs. 31,53,746, and the GST was Rs. 5,67,674.
The goods purchased from M/s.Arsh Enterprise also had been sold by the petitioner to various other purchasers and the sale proceeds were received in his Bank account. Further,the GST registration of M/s.Arsh Enterprise had been cancelled on 31.10.2020.
The bench observed that the inquiry had revealed that it was involved in bogus billing.
The summons was issued to produce records of statement and production of sales and purchase registers; however it was silent regarding specific subject matter about the inquiry.
The petitioner asserted that the respondent took extremely forceful actions, bringing his entire business to a halt by seizing the bank account without any open cases. In accordance with section 83 of the GGST Act, the Bank was issued FORM GST DRC-22 with communication on May 18, 2022.
If the taxpayer didn’t pay the tax, the GGST and CGST Act’s section 83 confers the power to attach the properties. In this instance, the bank account was frozen by the authorities.
The proper official must always make sure that any action taken by the provisional attachment does not interfere with the taxable person’s regular business operations, the court noted in the present set of circumstances.
The bench reasons that because the Central Board of Excise and Customs (CBEC) guidelines make it abundantly clear that the remedy of attachment, which is by itself very extraordinary, must be used with the utmost caution, care, and caution, none of which appear to have been used in the instant case, that order must be quashed and reversed.
The HC ordered that the tax money that the Bank has been told not to part with be released once there is a direction, subject to the crystallisation of the petitioner’s liability and subject to the decision of the Appellate Authority if an appeal is filed within the statute’s allotted window of time.
Further directed that the remaining amount of penalty and interest, the petitioner shall furnish the bond before the authority concerned.
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