Mr B S Rajashekhar vs. The Commissioner-Central GST

Held

The Court held that the appeal must succeed. The Court noted that the appellant had tendered an affidavit evidencing the payment of CGST from August 2018 to March 2019, amounting to Rs. 3,93,81,214.00. The learned counsel for the first respondent did not dispute that the entire amount due and payable, for which the provisional attachment under Section 83 of the CGST Act was issued, had been paid by the appellant. In light of this factual position, the Court quashed and set aside the impugned communication dated April 3, 2019. Consequently, the impugned order passed in the writ petition, which had imposed the condition of depositing 50% of the balance demand, was rendered inoperative. The ratio decidendi is that once the entire tax liability that formed the basis of a provisional attachment under Section 83 of the CGST Act is paid, the attachment order and any consequential conditions requiring further security become unsustainable and liable to be quashed.

Facts

The appellant, Mr. B.S. Rajashekar, proprietor of M/s. Gemini Security and Allied Service, filed a writ petition challenging a communication dated April 3, 2019, which provisionally attached his bank account under the CGST Act, 2017, for the period ending January 2019. The learned Single Judge stayed the attachment order, subject to the appellant depositing 50% of the balance demand. An order dated July 18, 2019, permitted the withdrawal of this 50% from the frozen bank account. The current appeal challenges the order dated June 27, 2019, which imposed the condition of depositing 50% of the balance demand. The appellant subsequently submitted an affidavit showing payment of CGST from August 2018 to March 2019, amounting to Rs. 3,93,81,214.00.

Key Issues

1. Whether the provisional attachment of the appellant's bank account under Section 83 of the CGST Act, 2017, was justified given the subsequent payment of the entire demand. The appellant argued that since the entire amount due and payable, for which the provisional attachment was issued, has now been paid by him, the impugned communication and the condition imposed by the learned Single Judge have become inoperative. The appellant relied on the fact that the payment of CGST from August 2018 to March 2019, amounting to Rs. 3,93,81,214.00, has been duly evidenced. The revenue (First Respondent) did not dispute that the entire amount due and payable, which led to the provisional attachment under Section 83 of the CGST Act, has been paid by the appellant.