Introduction
A recent petition challenging the provisional attachment of a bank account by Yes Bank, Mumbai, under Section 83 of the CGST Act, 2017 has been heard by the court. The petitioner objected to the provisional attachment, which was retained despite the objections being disposed of by the respondents. The court considered the jurisdiction of the respondents, the legality of the provisional attachment, and the communication dated 19th April 2023. This article summarizes the key points and outcome of the petition.
Background
The petitioner filed a petition challenging the provisional attachment of their bank account by Yes Bank, Mumbai, under Section 83 of the CGST Act, 2017. The provisional attachment was initially made on 21st April 2022, and a communication dated 19th April 2023 extended the attachment. The petitioner had previously raised objections to the attachment, which were disposed of under Rule 159(5) of the CGST Rules by the respondents.
Jurisdiction of the Court
The respondents argued that the order disposing of the objections under Rule 159(5) is appealable, and therefore, the court should not entertain the petition. However, the petitioner relied on a Supreme Court decision that stated the order disposing of objections to provisional attachment is not appealable. The court held that the respondents cannot take a position contrary to the Supreme Court's decision. Thus, the court concluded that the petition should be entertained under Article 226 of the Constitution of India.
Provisions Relating to Attachment under Section 83 of the CGST Act
The court examined Section 83 of the CGST Act, which empowers the Commissioner to provisionally attach any property, including a bank account, belonging to a taxable person, for the purpose of protecting the government revenue. The court noted that according to Section 83(2), a provisional attachment ceases to have effect after one year from the date of the order. In this case, the provisional attachment order made on 21st April 2022 expired on 21st April 2023. The court referred to a previous case where it was held that the provisional attachment ceases to exist after the expiration of one year.
Validity of the Communication and Fresh Order
The respondents argued that the communication dated 19th April 2023 was a fresh order provisionally attaching the petitioner's bank account. However, the court examined the order sheet referred to by the respondents and found that it did not constitute a fresh order. The court emphasized that a mere noting in a file cannot be considered an order without a formal order being passed and communicated to the affected person. The court concluded that there was no fresh order attaching the bank account after 21st April 2023. Therefore, after that date, there was no provisional attachment of the petitioner's bank account.
Jurisdiction of the Respondents
The court addressed the petitioner's argument that the respondents lacked jurisdiction to pass the provisional attachment order since the petitioner was located in Chennai and the bank account was also in Chennai. The court referred to Section 83(1) and Section 122(1-A) of the CGST Act and concluded that the respondents had jurisdiction to exercise powers under Section 83 even if the person was located outside their jurisdiction. The court emphasized that the Act is operational throughout the country, and interpreting the provisions in any other way would defeat the legislative intention.
Court's Decision
Based on the above analysis, the court held that the provisional attachment communication dated 21st April 2022 was rendered illegal and invalid by the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment communicated on 19th April 2023 was quashed and set aside
Title-Bharat Parihar, Kishan Lal Bunkar, Sunbright Designers Pvt. Ltd. Versus State of Maharashtra Thr. Pp Office and Ors.
BOMBAY HIGH COURT
Date of order:30/06/2023
Team Taxonation
Comment: