Case Law Details
Rd Enterprises Vs Union of India (Allahabad High Court)
The case of RD Enterprises vs. Union of India, adjudicated by the Allahabad High Court, revolves around the issue of provisional attachment of bank accounts under the GST Act. The petitioner, RD Enterprises, sought relief from the court to release their provisionally attached bank account, arguing that the attachment had expired according to Section 83(2) of the CGST Act, 2017.
The court initially heard arguments from both the petitioner’s counsel and the counsel representing the revenue authorities. After deliberation, the court issued an order on April 29, 2024, granting three days to the revenue counsel to provide further instructions. The case was scheduled for a fresh hearing on May 6, 2024.
On the latter date, the revenue counsel presented written instructions received from the Additional Director General of the Directorate General of Goods & Services Tax Intelligence Meerut Zonal Unit. These instructions acknowledged that the provisional attachment of RD Enterprises’ bank account, issued on February 16, 2023, had expired as per the provisions of Section 83(2) of the CGST Act, 2017, which states that such attachments cease to have effect after one year from the date of the order.
Based on these instructions, the revenue counsel conceded that the provisional attachment order should be lifted, allowing RD Enterprises to utilize their bank account as before. The court observed that similar instances of provisional attachment orders extending beyond the statutory one-year limit were becoming common, leading to unnecessary litigation. It noted that revenue authorities often rectify these errors only when challenged in court.
The court expressed dissatisfaction with this recurring issue and emphasized the need for revenue authorities to adhere to statutory provisions without requiring intervention from the judiciary. Consequently, the court issued the following directives:
- A copy of the court’s order should be communicated to the Central Board of Indirect Taxes and Customs for corrective action.
- The order should also be forwarded to the Commissioner, Commercial Tax, U.P., through the state’s Additional Chief Standing Counsel, for necessary notice and remedial action.
In conclusion, the Allahabad High Court’s ruling in the case of RD Enterprises vs. Union of India underscores the importance of adherence to statutory provisions regarding provisional attachment under the GST Act. It highlights the need for revenue authorities to rectify errors proactively to avoid unnecessary litigation and judicial intervention.
FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT
1. Heard Shri Swetashwa Agarwal, learned counsel for the petitioner and Shri Parv Agarwal, learned counsel for the revenue.
2. Present petition has been pressed primarily for the following relief :
“Issue an appropriate writ, order or direction in the nature of Mandamus commanding the Respondent no. 2 – Additional Director, Directorate General of Goods and Services Tax Intelligence, Zonal Unit Meerut to release/restore the provisionally attached bank account no. 069363300003066 of the Petitioner Firm maintained at the Karol Bagh Branch, YES Bank, New Delhi, in view of provision of Section 83(2) CGST Act.”
3. On 29.4.2024, we passed the below quoted order :
“1. The provisional attachment of the bank account of the petitioner firm is described to have expired on 15.02.2024 in view of the provisions of Section 83(2) of the CGST Act, 2017. Yet, the provisional attachment continues.
2. Shri Parv Agarwal, learned counsel for the revenue prays for and is granted three days’ time to complete his instructions.
3. Put up as fresh on 6.5.2024.”
4. Today, Shri Parv Agarwal, learned counsel for the revenue has produced written instructions received by him. Copy of the same has been marked as ‘X’ and retained on record.
5. The said instructions issued by the Additional Director General, Directorate General of Goods & Services Tax Intelligence Meerut Zonal Unit reads as below :
“F. No. DGGI/INT/INTL/226/2023/249(SIL)
Date: 01.05.2024
DIN- 202405 DNN 40000 611136.
To,
The Branch Manager,
YES Bank, Ground Floor & Basement,
3380, Christian Colony,
D. B. Gupta Road, Karol Bagh, New Delhi-110005
Sub: Provisional attachment of property under section 83 of CGST Act, 2017-m/r
Please refer to DRC-22 dated 16-02-2023 (CBIC-DIN:: 202302DNN40000278282) issued by this office. As per said DRC-22 (copy enclosed herewith for ready reference), the bank account no. 069363300003066 belonging to M/s RD Enterprises, 5131/2, Krishna Nagar, Delhi-05 bearing GSTIN: 07ABRFM0225B1ZM, PANABRFM0225B, was attached provisionally.
2. Now, in this connection, your kind attention is invited toward Section 83(2) of CGST Act 2017; which is reproduced as below: –
83(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 subsection (1).”
3. Since one year has passed, the provisional attachment of the said account has ceased. Necessary action in this regard may please be taken.
Encl: As above
(Satyendra Mathuria)
Additional Director General”
6. Thus, the cause of action does not appear to exist, insofar as the revenue authorities have realised that provisional attachment order dated 16.2.2023 does not survive.
7. On the strength of such instructions, Shri Parv Agarwal further states that provisional attachment order would stand lifted allowing the petitioner to utilise the bank account, as before. We find such occurrences are becoming common. Frequently, petitions are being filed for similar relief. It appears to be a common mistake being caused by revenue authorities where provisional attachment orders may never continue for more than one year are allowed to exist beyond that end date. Such error on the part of the revenue authorities leaves the assessee with no option but to approach this Court for effective direction on the revenue authorities to actually lift the provisional attachment.
8. In face of the statutory provision being unequivocally clear, the revenue authorities when called upon by this Court, take a stand as has been noted in the present facts. Thus, the provisional attachment orders are actually lifted only upon the revenue authorities being questioned about the illegality of their action, by this Court.
9. Such a course is wholly undesirable. Once the statutory law admits of no doubt and the revenue authorities do offer correction to the error committed by them upon being pointed out by this Court, we find such litigation whenever it arises to be wholly avoidable.
10. Without reaching any further conclusion as to the intent and purpose of the individual revenue officers in committing such errors, we dispose of the writ petition with the following directions:
(i) Let a copy of this order be communicated to the Central Board of Indirect Taxes and Customs for taking corrective and necessary action.
(ii) Since the provisions of the Act and the litigation arising therefrom are similar, both under the Central Act and the State Act, we also require, a copy of this order be made available to Shri Nimai Dass, learned Additional Chief Standing Counsel for the State for its onward communication to the Commissioner, Commercial Tax, U.P. for his notice and also remedial action.
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