M/S. Krishna Fashion vs. Union Of INDIA & Ors.

Facts

The petitioner, M/s. Krishna Fashion, filed a writ petition challenging two orders: one dated March 16, 2020, provisionally attaching its current bank account with Union Bank of India, and another dated February 6, 2020, blocking its Electronic Credit Ledger. The petitioner sought directions to de-freeze the bank account and unblock the Electronic Credit Ledger. The petitioner argued that the blocking of the Electronic Credit Ledger, under Rule 86A(3) of the CGST Rules, 2017, ceased to operate on February 5, 2021, after one year. Similarly, the provisional attachment order under Section 83(2) of the CGST Act, 2017, had lapsed after one year from its passing. The petitioner also contended that the impugned order did not disclose the pendency of any proceedings under Sections 62, 63, 64, 67, 73, or 74 of the GST Acts, which would justify the attachment.

Held

The Court noted that the respondents' counsel fairly admitted that every attachment and blocking of an electronic credit ledger shall cease to have effect after the expiry of a period of one year from the date the orders had been passed. The counsel also clarified that no fresh GST DRC-22 had been issued. In light of this admission and the petitioner's undertaking to cooperate with the investigating authorities and supply documents as and when required, the Court disposed of the writ petition. The Court directed the respondents to de-freeze the petitioner's bank account and unblock its Electronic Credit Ledger within three working days of the order's upload. The Court clarified that the respondents were at liberty to proceed in accordance with law. The issue of whether the impugned order disclosed pendency of proceedings under Sections 62, 63, 64, 67, 73 or 74 was not expressly decided, but the relief was granted based on the lapse of the attachment period and the petitioner's undertaking.

Key Issues

1. Whether the provisional attachment of the petitioner's Electronic Credit Ledger, made under Rule 86A(3) of the CGST Rules, 2017, has ceased to have effect after the expiry of one year from the date of the order. 2. Whether the provisional attachment of the petitioner's bank account, made under Section 83(2) of the CGST Act, 2017, has lapsed upon completion of one year from the date the order was passed. Petitioner's Arguments: - The petitioner argued that the blocking of the Electronic Credit Ledger under Rule 86A(3) of the CGST Rules, 2017, automatically ceased to operate after one year, citing various High Court orders. It further argued that the provisional attachment order under Section 83(2) of the CGST Act, 2017, had also lapsed after one year. The petitioner relied on the judgment in M/s. Shri Dhan Laxmi Trade House Vs. Principal Commissioner of Goods and Service Tax and the Supreme Court's decision in Radha Krishan Industries Vs. State of H.P. for its submissions. Respondents' Arguments: - The respondents' counsel admitted that every attachment and blocking of an electronic credit ledger ceases to have effect after one year from the date the orders were passed. They clarified that no fresh GST DRC-22 was issued. However, they stated that the petitioner had not been appearing before the Investigating Officer and had not supplied all relevant documents.