Mujahar Ali Sarkar Vs State of Assam And 5 Ors (Gauhati High Court)
Any action of debit freeze of the bank account by GST authorities, being without support of any prescribed provision of law, is without jurisdiction: Gauhati High Court
The Gauhati High Court recently addressed a petition filed by Mujahar Ali Sarkar challenging a summary show-cause notice and a GST demand of Rs. 58,45,431, along with a debit freeze on his bank account. The demand was based on alleged refunds related to the period from April 2021 to August 2022. While the petitioner initially challenged the GST demand, his counsel later sought liberty to pursue this aspect in an appropriate forum, leading the court to not delve into the merits of the demand itself. The court clarified that the time spent in the High Court would be excluded from the limitation period for any future legal action by the petitioner regarding the GST demand.
The primary focus of the High Court’s judgment was the debit freeze of the petitioner’s bank account. The bank confirmed it froze the account following a request from the Deputy Commissioner of State Tax, Dhubri. The GST authorities, however, contended that the debit freeze was not carried out under Section 83 of the Assam Goods and Service Tax (AGST) Act, which governs provisional attachment of property. Instead, they claimed it was done due to an apprehension of fraud to safeguard public funds. The court, after reviewing the AGST Act, determined that attachment of property, including bank accounts, should be carried out under Section 83, which also provides for an appeal mechanism under Rule 159(5) of the Assam GST Rules. The court concluded that the debit freeze, lacking support from any prescribed legal provision, was an exercise of power without jurisdiction and therefore interfered with it.
