Karamjit Jaiswal vs. Commissioner Of Central Taxes GST Delhi East

Facts

The Petitioner, Karamjit Jaiswal, challenged a letter dated November 27, 2020, issued by the Commissioner of Central Taxes, GST Delhi East, directing the attachment of his immovable properties and bank accounts. The Petitioner argued that while he owns 34.79% shares in M/s Milkfood Ltd., he is neither a director nor an authorized signatory and is not involved in the company's day-to-day operations. He further contended that he is not a taxable person under the CGST Act, 2017, and is not registered under it. The Petitioner also pointed out that a similar provisional attachment order concerning his daughter's bank account had been quashed by the Court. Crucially, the Petitioner asserted that the provisional attachment order had lapsed after one year on November 27, 2021. The Respondent acknowledged that the attachment orders had neither been renewed nor had fresh orders been passed, but stated that a show-cause notice under Section 74 of the CGST Act had been issued to the Petitioner.

Held

The Court held that every provisional attachment order ceases to have effect after the expiry of a period of one year from the date of the order made under Section 83(1) of the CGST Act. Since the Respondent admitted that no fresh attachment order had been issued after the initial impugned orders, the attachment had lapsed. Consequently, the Court directed the Respondent to defreeze the bank account and release the immovable properties of the Petitioner within three days from the date of uploading the order. The Court did not explicitly decide on the Petitioner's status as a taxable person or his involvement in the company's affairs, as the primary ground for relief was the lapse of the attachment period. The ratio decidendi is that a provisional attachment under Section 83 of the CGST Act is time-bound and requires renewal or a fresh order to remain in effect beyond one year.

Key Issues

1. Whether the provisional attachment of the Petitioner's bank accounts and immovable properties under Section 83 of the CGST Act, 2017, remains valid after the lapse of one year from the date of the order, given that no renewal or fresh order was issued? (Question of law) 2. Whether the Petitioner, not being a registered taxable person under the CGST Act, 2017, and not being involved in the day-to-day management of M/s Milkfood Ltd., is amenable to attachment of his personal assets under Section 83 of the CGST Act, 2017, in relation to the inquiry of M/s Milkfood Ltd.? (Question of mixed law and fact) Petitioner's Arguments: The Petitioner argued that the attachment order had ceased to have effect after one year, i.e., on November 27, 2021, as per the provisions of the CGST Act. He also contended that he is not a taxable person as defined under Section 2(107) of the CGST Act and is not registered under the Act. Furthermore, he highlighted that he is not involved in the company's operations despite his shareholding. The Petitioner relied on the fact that a previous attachment order for his daughter's account was quashed by the Court. Respondent's Arguments: The Respondent, through its standing counsel, fairly conceded that the impugned attachment orders had neither been renewed nor had any fresh orders of attachment been passed. However, the Respondent stated that a show-cause notice under Section 74 of the CGST Act had been issued to the Petitioner.