Title: Power to provisionally attach bank accounts is a drastic power, says Delhi High Court

Last updated: 27 January 2021

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Quick Summary

The Delhi High Court is reviewing a case where a company's bank account was provisionally attached under Section 83 of the Central Goods and Services Tax Act, 2017. The petitioner argues that this action was taken improperly, as Section 83 cannot be invoked in the specific circumstances of their case, which involves proceedings under Section 71 of the Act. The court has issued notice to the respondents and is considering the validity of the attachment.

Court :
High Court of Delhi

Brief :
By way of the present petition, the petitioner seeks to challenge a communication dated 25.11.2020/01.12.2020 (Annexure-9 to the writ petition), by which the bank account of the petitioner in the respondent no.3-Bank (“the Bank”) has been attached by respondent no. 2, purportedly under Section 83 of the Central Goods and Services Tax Act, 2017 (“the Act”)

Citation :
W.P.(C) 11245/2020 & CM APPL. 35053/2020

IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 6th January, 2021
+ W.P.(C) 11245/2020 & CM APPL. 35053/2020

PROEX FASHION PRIVATE LIMITED ..... Petitioner
Through: Mr.Govind Rishi, Advocate

versus

       GOVERNMENT OF INDIA & ORS.         ..... Respondents
                   Through: Mr.Harpreet Singh, Adv. for R-2
                             Mr.S.K.Tanwar, Adv. for R-3

CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN

PRATEEK JALAN, J. (ORAL)

% The proceedings in the matter have been conducted through video conferencing.

1. By way of the present petition, the petitioner seeks to challenge a communication dated 25.11.2020/01.12.2020 (Annexure-9 to the writ petition), by which the bank account of the petitioner in the respondent no.3-Bank ("the Bank") has been attached by respondent no. 2, purportedly under Section 83 of the Central Goods and Services Tax Act, 2017 ("the Act").

2. The contention of Mr. Govind Rishi, learned counsel for the petitioner, is that the respondent authorities have taken action against the petitioner under Section 83 of the Act, pursuant to proceedings initiated under Section 71 of the Act, whereas Section 83 of the Act, on its terms, cannot be invoked in such a situation.

3. By an order passed on 30.12.2020, notice was issued to the respondents and they were directed to file a counter affidavit. Although time was extended for the said purpose yesterday, Mr. Harpreet Singh, learned counsel for respondent no.2, states that the counter affidavit has been filed only this morning and is thus not on record. However, a copy of the counter affidavit has been supplied to learned counsel for the petitioner and has also been made available to me electronically. Mr. Singh is directed to ensure that the counter affidavit is brought on record during the course of the day.

Please refer to the attached file for full judgement.

FAQ :

The case concerns the provisional attachment of a company's bank account by GST authorities, with the company arguing the action was not legally justified under the relevant section of the GST Act.

The discussion revolves around Section 83 of the Central Goods and Services Tax Act, 2017, concerning the power to provisionally attach property, and Section 71, which pertains to the audit of registered persons.

The petitioner contends that the authorities have misused their power under Section 83 of the GST Act, as it cannot be invoked in the context of proceedings initiated under Section 71 of the Act.

The Delhi High Court has issued notice to the respondents (Government of India and others) and is examining the counter-affidavit filed by the authorities regarding the attachment.

By describing the power as 'drastic', the court highlights that it is a significant and potentially severe measure that must be exercised with caution and strict adherence to legal provisions.