Case Law Details
Nova Publications & Printers Pvt. Ltd. Vs Union of India and others (Panjab And High Court)
In the case of Nova Publications & Printers Pvt. Ltd. vs Union of India, the Punjab and Haryana High Court addressed the legality of attachment proceedings initiated under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017 without prior notice under Section 74 of the Act.
The petitioner argued that their account was attached without receiving any notice under Section 74 of the CGST Act, which they claimed rendered the attachment illegal and unjustified. Section 83 of the CGST Act allows provisional attachment of property, including bank accounts, if the Commissioner deems it necessary to protect government revenue after initiating proceedings under Chapter XII, XIV, or XV of the Act.
The court acknowledged that search and seizure actions were indeed conducted against the petitioner under Chapter XIV of the CGST Act, leading to the provisional attachment of their property on March 15, 2024. Additionally, the petitioner’s Electronic Credit Ledger was locked by a subsequent order on March 18, 2024.
Despite not accepting the petitioner’s argument that the attachment was outright illegal, the court noted that no further proceedings had been initiated by the tax authorities after these initial orders were issued. The petitioner’s business operations were severely impacted due to the attachment, which the court recognized as a serious measure with significant implications.
The court emphasized that attachment proceedings should be a last resort, used only after search and seizure actions have been properly initiated under the CGST Act. Moreover, the court highlighted that no notice under Section 74, which pertains to the determination of tax evasion or fraud, was issued to the petitioner. This omission suggested that the tax authorities had not found evidence of fraudulent activities by the petitioner.
Based on these observations, the court deemed it inappropriate to allow the continued attachment of the petitioner’s account. Therefore, it allowed the writ petition and ordered the revocation of the attachment orders dated March 15, 2024, and March 18, 2024, which had locked the petitioner’s Electronic Credit Ledger. The court directed that the ledger should be released immediately.
The court’s decision clarified that revoking the attachment did not absolve the petitioner from any future actions that the tax authorities might undertake under the CGST Act. It emphasized that the tax authorities remained free to conclude their search and seizure proceedings or take any other appropriate actions as per the law.
In conclusion, the Punjab and Haryana High Court’s judgment in Nova Publications & Printers Pvt. Ltd. vs Union of India underscores the procedural requirements and the seriousness of attachment proceedings under the CGST Act.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
Learned counsel for the petitioner submits that the petitioner was not served with any notice under Section 74 of the Central GST Act, 2017 (for short, ‘the Act of 2017’) and the attachment proceedings initiated under Section 83 of the Act of 2017, therefore, is illegal and unjustified. The attachment of account should be revoked. Section 83 of the Act of 2017 provides as under:-
“Provisional attachment to protect revenue in certain cases Section 83
(1) Where after the imitation of any proceedings under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government Revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person or any person specified sub-section (1A) of section 122, in such manner as may be prescribed.
(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).
2. We find that search and seizure action was taken against the petitioner in terms of Chapter XIV of the Act of 2017 and provisional attachment was thereafter ordered on 15.03.2024. The Electronic Credit Ledger was locked by another order dated 18.03.2024.
3. While at this stage we do not subscribe to the submission of the petitioner that the attachment was illegal. We find that after the orders were passed on 15.03.2024 and 18.03.2024, no further proceedings have been undertaken by the respondents.
4. From the perusal of the reply, it is apparent that no notice under Section 74 of the Act of 2017 was issued to the petitioner and the account of the petitioner and his Electronic Credit Ledger have been locked which has resulted in that his entire business being affected. Attachment proceedings are of very serious nature and strong repercussions on the business of an individual.
5. In the opinion of this Court, the proceedings of attachment should only be taken as a last resort. While they may be required for the purpose of protecting the interest of the Revenue, the same needs to be taken to its logical end after search and seizure proceedings have been initiated under Chapter XIV of the Act of 2017. The Revenue was required to proceed further and issue notice under 74 of the Act of 2017 if anything was found of having committed any fraud or concealment. However, as has come on record from the pleadings, it is not a case where the petitioner has committed any such act.
6. As noticed under Section 74 of the Act of 2017 has not been issued, at this stage it would not be appropriate to allow to continue the attachment of the account. Therefore, we deem it appropriate to allow this writ petition and revoke the attachment order dated 15.03.2024 and 18.03.2024 locking the Electronic Credit Ledger. The same shall be released forthwith.
7. Passing of the aforesaid order would be in no manner be treated to absolve the petitioner from any of the proceedings which the respondents may deem appropriate to undertake in terms of the Act of 2017, if they so choose. The respondents would be also free to conclude their search and seizure proceedings.
8. The writ petition stands allowed in the aforesaid terms.
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