HC Quashes second Provisional attachment order which was passed 4 days after Quashing of First order

Global Enterprises Vs Commissioner Central Goods and Service Tax (Delhi High Court)

A division bench of the Delhi High Court has quashed a provisional attachment order as the validity of the same is expired after one year.

The petitioner’s account was frozen for the first time via provisional attachment order dated 19.05.2020, which was, concededly, quashed by this Court via order dated 22.03.2021, passed in W.P.(C) 5344/2020. The appellant contended that immediately after the Court had quashed the earlier provisional attachment order on 22.03.2021, a fresh order was passed on 26.03.2021. It was also contended that the petitioner has preferred an appeal, against the order dated 08.09.2021, and deposited 10 per cent of the tax demanded by the respondent.

As per the assertions made in the rejoinder filed by the petitioner, the proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 are no longer pending, as an adjudication order has been passed on 08.09.2021.

The division bench comprising Mr. Justice Rajiv Shakdher and Ms. Justice Poonam A. Bamba observed that the impugned order dated 26.03.2021, which has been issued, concededly, under Section 83 of the CGST Act, cannot remain efficacious, beyond the period of one year commencing from the date of the order.

Section 83 provides for the Provisional attachment to protect revenue in certain cases, “Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, 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 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).”

“Having regard to the foregoing, according to us, the impugned order dated 26.03.2021 has lost its efficacy, and, therefore, the attachment should stand lifted,” the Court said.

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. There is no representation on behalf of the petitioner.

2. This writ petition is directed against order dated 26.03.2021, passed by the Commissioner, Central Goods and Service Tax and Central Excise (CGST and CX), Delhi East.

2.1. Via the impugned order, the petitioner’s current account maintained with Axis Bank Limited, F-2/25 at Krishna Nagar, Delhi-110051, stands frozen.

3. To be noted, this is the second round of litigation for the petitioner.

3.1. The petitioner’s account was frozen for the first time via provisional attachment order dated 19.05.2020, which was, concededly, quashed by this ourt via order dated 22.03.2021, passed in W.P.(C) 5344/2020.

4. The petitioner’s grievance, as noted above, is that immediately, after this Court had quashed the earlier provisional attachment order on 22.03.2021, a fresh order was passed on 26.03.2021.

5. As per the assertions made in the rejoinder filed by the petitioner, the proceedings under Section 74 of the Central Goods and Services Tax Act, 2017 [in short “CGST Act”] are no longer pending, as an adjudication order has been passed on 08.09.2021.

5.1. It is averred that the petitioner has preferred an appeal, against the order dated 08.09.2021, and deposited 10 per cent of the tax demanded by the respondent.

6. Given the aforesaid position, the impugned order dated 26.03.2021, which has been issued, concededly, under Section 83 of the CGST Act, cannot remain efficacious, beyond the period of one year commencing from the date of the order. The relevant provision reads as follows-

“83. Provisional attachment to protect revenue in certain cases.—

(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, 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 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).”

[Emphasis is ours.]

7. Having regard to the foregoing, according to us, the impugned order dated 26.03.2021 has lost its efficacy, and, therefore, the attachment should stand lifted.

7.1. It is ordered accordingly.

8. The writ petition is disposed of in the aforesaid terms.

9. The Registry will dispatch a copy of this order to the petitioner, via all permissible modes, including e-mail.

10. Mr Harpreet Singh, who appears on behalf of the respondents, will also ensure that a copy of this order is served on the aforementioned bank i.e., Axis Bank Limited, F-2/25 at Krishna Nagar, Delhi-110051.

11. Parties will act, based on the digitally signed copy of this order.