M/S. National Steel Supply Company And Anr vs. Union Of INDIA And Ors.

Facts

The appellant, M/s. National Steel Supply Company, challenged an order of attachment of its bank accounts issued by the respondent authorities under Section 83 of the CGST Act on 27.09.2021. A writ petition was filed, and the initial attachment order lapsed after one year. The appellant represented to the authorities to lift the attachment, but a fresh order of attachment was issued on 26.09.2022, valid for one year. The appellant filed an application to set aside this fresh order, which was dismissed by the impugned order on the ground of a fresh cause of action. The appellant preferred an appeal against this dismissal. During the pendency of the appeal, the second attachment order also lapsed. The respondent Department submitted that the second attachment order has been lifted.

Held

The Court noted that both the initial order of attachment dated 27.09.2021 and the subsequent order dated 26.09.2022 had lost their efficacy due to the lapse of one year. The respondent Department confirmed that the second order of attachment had been lifted. In light of these developments, the Court found no further orders were required, as there was no existing order of attachment on the appellant's bank accounts, and the appellant was permitted to operate them. Consequently, the appeal and the writ petition were disposed of. The Court did not explicitly rule on the correctness of the dismissal of the application on the ground of a fresh cause of action, as the underlying issue of attachment had become infructuous.

Key Issues

1. Whether the dismissal of the appellant's application to set aside the second order of attachment dated 26.09.2022 was justified on the ground that it constituted a fresh cause of action, despite the first attachment order having lapsed and a representation for its removal being pending when the second order was issued? (Question of law and fact, turning on the interpretation of the procedural fairness and the effect of subsequent events on the maintainability of the application). Contentions: Appellant: Argued that the second attachment order was a continuation or a consequence of the initial improper attachment, and the dismissal on the ground of a fresh cause of action was erroneous, especially given the circumstances. They likely relied on principles of natural justice and the fact that the second order was issued while a representation regarding the first was pending. Revenue/State: Argued that the second order of attachment was a distinct action, creating a fresh cause of action, and therefore the application to set it aside was correctly dismissed as a new matter. They likely relied on the wording of Section 83 of the CGST Act and the procedural steps taken.