Eunike General Trading vs. Commissioner Of Goods And Service Tax West And Ors

Held

The Court noted that the petitioner had approached the court because its bank account was blocked by a letter to the bank without a formal order under the CGST Act. The respondents subsequently passed an order under Section 83 of the CGST Act, 2017. In light of this development, the Court disposed of the petition. The Court clarified that all rights and contentions of the petitioner were reserved to pursue statutory remedies. The reasoning for the blocking of the account, as stated by the respondents in their counter-affidavit, was accepted as the basis for the action taken under Section 83. The operative direction was to dispose of the petition with liberty to the petitioner to pursue other remedies.

Facts

The petitioner, Eunike General Trading, filed a writ petition before the Delhi High Court challenging the blocking of its bank account, which held a sanctioned refund of Input Tax Credit (ITC) amounting to ₹34,48,080/-. The respondents, the Commissioner of Goods and Service Tax and others, had blocked the account based on three grounds: a mismatch in payments to a supplier for exported goods, doubts about the procurement of goods from that supplier (citing investigation findings about transport vehicles not entering Delhi and insufficient storage space), and the suo motu cancellation of another supplier's registration. The respondents stated that an order under Section 83 of the CGST Act, 2017, was issued to freeze the petitioner's bank account to the extent of ₹50 lacs, allowing the petitioner to operate the account for amounts exceeding this balance.

Key Issues

1. Whether the blocking of the petitioner's bank account, which held a sanctioned refund of Input Tax Credit (ITC) of ₹34,48,080/-, was legal and justified, particularly when it was initially done without a formal order under the CGST Act, 2017? (Mixed question of law and fact, concerning procedural fairness and the application of Section 83 of the CGST Act, 2017). Petitioner's contention: The petitioner argued that the blocking of its bank account was an arbitrary action, especially as it was initially done without a proper order under the CGST Act. The petitioner sought the quashing of this action and the unblocking of the sanctioned refund. Respondents' contention: The respondents contended that the blocking was justified based on grounds including a mismatch in payments for exported goods, doubts regarding the procurement of goods from a supplier, and the cancellation of another supplier's registration. They submitted that a formal order under Section 83 of the CGST Act, 2017, was subsequently issued, confining the freezing of the bank account to ₹50 lacs.