Department should not have attached bank account once it came to know of appeal with mandatory pre-deposit

J.S. Grover Autos Pvt. Ltd. Vs Commissioner of Central Goods & Services Tax (Punjab & Haryana High Court)

It is undisputed fact that petitioner has filed an appeal before First Appellate Authority against the assessment order, whereby demand was created. It is also undisputed that Board Circulars are binding on department and as per Circular coercive measures for recovery of balance liability are not permissible if appeal is filed alongwith mandatory predeposit of 7.5%.

Hon’ble Bombay High Court in Ramchandra’ case (supra) relying upon Board Circular (supra), set aside attachment of bank account on the ground that Appellant has already filed an appeal before Tribunal alongwith mandatory pre-deposit.

The contention of the respondent that petitioner must file appeal before Appellate Authority seems to be highly technical, in view of the fact that petitioner has already filed an appeal against the assessment order whereby demand was created and tax liability intended to be recovered stands stayed in view of Board Circular and judgment of Hon’ble Bombay High Court. As the liability to be recovered stands stayed, there seems no logic to file appeal against the recovery proceedings. The respondent-Department should not have attached bank account once it came to know of appeal with mandatory pre-deposit. Thus, contention of the respondent is not sustainable and accordingly rejected.

The impugned order dated 23.03.2021 is hereby set aside and the respondents are directed to permit the petitioner to operate its bank account.

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