GST – Bank account can be attached if proceedings u/s 62, 63, 64, 67, 73 and 74 are initiated

• The Petitioner-Kaish Impex Private Limited is a Company engaged in the export of perfumes and compound fragrance oil. The Petitioner is registered under the GST Act, 2017. The Petitioner, in pursuant of its activity of export, had carried out various transactions with different entities.

• The Respondent-Authorities initiated an inquiry against an export firm in Delhi – M/s.Maps Global. The Respondent-authorities suspected that M/s.Maps Global was involved in fraudulent availing of Input Tax Credit, and this Input Tax Credit was utilised for payment of export goods, and later a refund was sought. The Respondent-authorities scrutinized the bank account of M/s. Maps Global and noticed that an amount of Rs. 28,50,000/- was transferred to one M/s.Balajee Enterprises.

• The Respondent-authorities suspected these transactions were fictitious and no material was supplied to M/s.Maps Global. Further, according to Respondent-authorities. M/s.Balajee Enterprises transferred an amount of Rs.1,63,00,000/- to the account of the Petitioner on 17 October 2019

• Summons were issued under section 70 of the CGST Act to the Petitioner, referring to inquiry against M/s. Maps Global. On the same day, accounts were also attached. Challenging this action of attachment under Section 83 of the Act, the Petitioner has moved the present Petition.

• High Court held-

• Section 83 read with Rule 159(1), and the form GST DRC-22, lay down a scheme as to how provisional attachment in certain cases is to be levied. Section 83 though uses the phrase ‘pendency of any proceedings’, the proceedings are referable to section 62, 63, 64, 67, 73 and 74 of the Act and none other. The bank account of the taxable person can be attached against whom the proceedings under the sections mentioned above are initiated.

• Section 83 does not provide for an automatic extension to any other taxable person from an inquiry specifically launched against a taxable person under these provisions.

GST – Bank account can be attached if proceedings u/s 62, 63, 64, 67, 73 and 74 are initiated

• Section 83 read with section 159(2), and the form GST DRC-22 show that a proceeding has to be initiated against a specific taxable person, an opinion has to be formed that to protect the interest of Revenue an order of provisional attachment is necessary. The format of the order, i.e. the form GST DRC-22 also specifies the particulars of a registered taxable person and which proceedings have been launched against the aforesaid taxable person indicating a nexus between the proceedings to be initiated against a taxable person and provisional attachment of bank account of such taxable person.

• It is therefore not possible to accept the submission of the Respondents that even though specified proceedings have been launched against one taxable person, bank account of another taxable person can be provisionally attached merely based on the summons issued under section 70 to him.

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Tags : Judgement, GST, High Court