Provisionally attachment under GST cannot extend after One Year: Delhi HC

Sh. Nitin Singhania Vs Commissioner of Central Tax GST (Delhi High Court)

The Hon’ble High Court, Delhi in the matter of M/s SH. NITIN SINGHANIA v. COMMISSIONER OF CENTRAL TAX GST, DELHI (EAST)[W.P.(C) 10389/2022 & CM No.29962/2022 dated July 29, 2022]  set aside the order passed by the department in order to attach the bank account of the assessee for more than one year and held that as per section 83 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) the prescribed time limit for provisional attachment is one year.

Facts:

The Central Goods and Services Tax, Delhi East (“the Respondent”) vide order dated March 31,2021 (“the Impugned Order”) provisionally attached the bank accounts and immovable property of M/s SH. Nitin Singhania (“the Petitioner”). Being aggrieved by the Impugned Order, the Petitioner, filed present writ petition with a prayer to direction the Respondent to quash and set-aside the Impugned Order issued by the Respondent in the interest of justice.

Petitioner’s Contention:

• As per Section 83 of the CGST Act, the maximum time frame available to the Respondent for keeping the attachment alive is one year.

Issue:

• Whether the provisional attachment after the prescribed period under Section 83 of the CGST Act be reviewed or extended?

Held:

The Hon’ble High Court, Delhi in W.P.(C) 10389/2022 & CM No.29962/2022 dated July 29, 2022 has held as under:

• On a plain reading of Section 83 of the CGST Act, the attachment order cannot continue beyond one year.
• Held that, accordingly, the Respondent is directed to lift the attachment and convey the information in this behalf, to the concerned bank, within three days of the receipt of a copy of the order passed today.
• Accordingly, the prayer made by the Petitioner are allowed.

Relevant Provision:

Section 83 of the CGST Act:

Provisional attachment to protect revenue in certain cases.

(1) Where, after the initiation of any proceeding 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 in 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).

FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT

1. The substantive prayers made in the writ petition read as follows:

“(a) issue a writ of mandamus or any other appropriate writ or direction to direct the respondent to release/defreeze/allow the operation of the following bank accounts and property:

(i) HDFC Bank Ltd., M-36, Outer Circle, Connaught Place, New Delhi-110001 (Bank A/c No.12201530000590).

(ii) HDFC Bank Ltd., 11/69, Sector-3, Rajender Nagar, Ghaziabad-201005 (Bank A/c No. 50100288245115).

(iii) DFC Bank Ltd., 11/69, Sector-3, Rajender Nagar,Ghaziabad-201005 (Bank A/c No. 59220042017201).

(iv P roperty bearing no. Flat No. A-1902, Country One ‘O Seven, Plot No. GH 01 A/B, Alfa Noida, Sector 107, UP.

(b) issue a writ of; certiorari or any other appropriate writ or direction to quash and set-aside the provisional attachment orders dated 31.03.2021 issued by the respondent in the interest of

(c) issue a writ of certiorari or any other appropriate writ or direction to quash and set aside Order No. 01/2022 dated 01.2022 issued by the respondent in the interest of justice.”

2. At the outset, Mr R.P. Singh, who appears on behalf of the petitioner, says that he does not wish to press the prayer made in prayer clause (c) of the writ petition.

3. This matter was listed before the Court, in the first instance, on 11.07.2022, when, after hearing the learned counsel for the parties, the following was recorded:

“W.P.(C) 10389/2022 and CM APPL. 29962/2022[Application filed on behalf of the petitioner seeking interim relief]

2. The principal grievance of the petitioner is that provisional attachment of the bank accounts and immovable property in issue was ordered, as far back as on 31.03.2021.

3. It is the contention of Mr Rakesh Prasad Singh, who appears on behalf of the petitioner, that as per Section 83 of Central Goods and Service Tax Act, 2017, the maximum timeframe available to the respondent for keeping the attachment alive is one year.

4. Ms Anushree Narain, who appears on behalf of the respondent, says that she cannot but agree with the said position.

4. 1. It is, however, the submission of Ms Narain, that she would like to return with instructions.

5. List the matter on 26.07.2022.

6. In case instructions are received to resist the petition, counter-affidavit will be filed before the next date of hearing.”

4. Thereafter, the matter was listed on 26.07.2022, when instead of Ms Anushree Narain, Advocate, Ms Arunima Dwivedi entered appearance on behalf of the respondent.

5. Since there was a change in counsel, Ms Dwivedi sought a short accommodation to take instructions concerning the issue that was flagged by us on 11.07.2022.

6. To be noted, no counter-affidavit has been filed; leave in that behalf was given on 11.07.2022.

7. We had queried Ms Dwivedi as to whether the provisional attachment order dated 31.03.2021 has been reviewed and/or extended.

7.1. Ms Dwivedi says that as per instructions received by her, no fresh attachment order has been passed.

8. In these circumstances, on a plain reading of Section 83 of the Central Goods and Service Tax Act, 2017, the attachment order cannot continue.

8.1 Accordingly, the respondent is directed to lift the attachment.

9. The respondent will convey the information in this behalf, to the concerned bank, within three days of the receipt of a copy of the order passed today.

10. Accordingly, the prayer made in clause (a) (i) to (iv) and prayer (b) are allowed.

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

12. Consequently, the pending application shall stand closed.

13. It is however, made clear that this will not come in the way of the respondent carrying out investigation(s), if any,  against the petitioner or take next steps in the matter albeit as per law.

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