M/S Shri Dhan Laxmi Trade House PVT. LTD. vs. Principal Commissioner Of Goods And Service Tax & Anr.

Held

The Court allowed the writ petition. The Court noted the admission by the counsel for Respondent No. 1 that every provisional attachment ceases to have effect after one year from the date of the order passed under Section 83(1) of the CGST Act. The Petitioner's argument was that the attachment order was dated August 10, 2020, and the one-year period expired on August 9, 2021, yet the account remained frozen. Since the Respondent conceded to the legal provision regarding the expiry of the attachment period, the Court found no justification for the continued freezing of the Petitioner's bank account. The Court directed the Respondents to de-freeze the Petitioner's current account within three working days of the order's upload. The ratio decidendi is that a provisional attachment under Section 83(1) of the CGST Act automatically lapses upon the expiry of one year as per Section 83(2) if no further action is taken or extended within that period, and the bank account must be unfrozen.

Facts

The Petitioner, M/s Shri Dhan Laxmi Trade House Pvt. Ltd., filed a writ petition seeking directions to the Principal Commissioner of Goods and Service Tax (Respondent No. 1) and ICICI Bank (Respondent No. 2) to de-freeze the Petitioner's current account. The account was debit freezed by Respondent No. 1 on August 10, 2020, pursuant to proceedings initiated under Section 67 of the CGST Act to determine any tax due. The Petitioner contended that the provisional attachment had expired after one year, on August 9, 2021, as per Section 83(2) of the CGST Act, yet the account remained frozen. The Petitioner also highlighted that no show cause notice had been issued for any tax liability.

Key Issues

1. Whether the provisional attachment of the Petitioner's bank account, made under Section 83(1) of the CGST Act, 2017, ceased to have effect after the expiry of one year from the date of the order, as stipulated in Section 83(2) of the CGST Act, 2017, despite no show cause notice being issued for any tax liability. Petitioner's Arguments: - The Petitioner argued that Section 83(2) of the CGST Act mandates that every provisional attachment shall cease to have effect after one year from the date of the order under Section 83(1). - In this case, the attachment order was dated August 10, 2020, and the one-year period expired on August 9, 2021. - Despite the expiry of the statutory period, the Petitioner's account remained frozen. - The Petitioner emphasized that no show cause notice had been issued to it for any amount of tax payable. Respondents' Arguments: - The Respondent No. 1, through its counsel, admitted that every provisional attachment shall cease to have effect after the expiry of one year from the date the order had been passed under Section 83(1) of the Act.