M/S.Sreshta Constructions vs. The Commissioner Of Central Tax
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M/s. Sreshta Constructions (the petitioner) filed a writ petition before the Telangana High Court challenging the provisional attachment of its bank account by the Commissioner of Central Tax, Secunderabad GST Commissionerate (respondent No.1). The attachment was made via an order in Form GST DRC-22 dated 22.05.2023, directing the Branch Manager of Bank of Baroda (respondent No.3) to attach the petitioner's account. The petitioner contended that the order lacked a mandatory Document Identification Number (DIN), that no proceedings under Section 73 of the CGST Act were initiated, and that no reasons were provided for resorting to such a drastic measure. The respondents argued that the non-mention of DIN was due to technical difficulties and that reasons were available in the digitally signed file. They also stated that the petitioner had a shortfall of Rs.1,11,70,500.00 in tax payment.
Held
The Court held that the provisional attachment of a bank account, even if a provisional measure, is a serious intrusion into the private affairs of a citizen and a drastic measure requiring overwhelming reasons. The Court found that the respondents' contention regarding technical difficulties for the absence of DIN was unacceptable. Furthermore, the Court noted that the quantum of tax mentioned by the respondents was a provisional figure, not an adjudicated one, and that the petitioner had already paid a significant portion of the tax. Attaching the bank account in such circumstances was deemed unjustified and wholly without jurisdiction, and its continuation would be oppressive and violative of Articles 14 and 21 of the Constitution of India. The Court also held that when an order is ex facie without jurisdiction, it is not just and proper to relegate the taxable person to an alternative remedy. Consequently, the Court set aside the provisional attachment order dated 22.05.2023. The writ petition was allowed, and no costs were imposed.
Key Issues
1. Whether the provisional attachment order dated 22.05.2023 issued by Respondent No.1 to Respondent No.3 for the provisional attachment of the Petitioner's bank account is illegal, arbitrary, unjust, and contrary to Circular No.CBEC-2011610512021-GST/359 dated 23.02.2021 and Section 83 of the Central Goods and Services Tax Act, 2017. 2. Whether the said provisional attachment order is invalid for not having the mandatory Document Identification Number (DIN) in terms of CBIC Circular No.12214112019 dated 5.11.2019 and Circular No.128/7/2019-GST dated 23.12.2019. 3. Whether the said order is violative of Articles 14, 19(1)(g), and 265 of the Constitution of India. Petitioner's Arguments: The petitioner argued that the attachment order was illegal and invalid due to the absence of a mandatory DIN, the lack of initiated proceedings under Section 73 of the CGST Act, and the failure to provide reasons for the drastic measure of bank account attachment. They relied on relevant circulars and constitutional provisions. Respondents' Arguments: The respondents contended that the omission of the DIN was due to technical difficulties and that the non-mention of DIN would not dilute the issue of non-payment of tax. They also stated that the reasons for attachment were available in the digitally signed file and that the petitioner had an alternative remedy under Rule 159 of the CGST Rules.
Sections Cited
Section 83, Section 73, Rule 159
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Cause title — parties, addresses and appearances
The Court made the lbllowing: ORDER
HON'BLE THE CTIIEF JUSTICE UJJAL BHUYAN AND HON'BLE SRI JUSTICE N. TUKARAMJI WRIT PETITION No.15837 of 2023 ORDER : (Per Hon'ble the Chief Justice Ujjal Bhtgan) Heard Mr. Karan Talwar, learned counsel for the petitioner; Ms.B.Sapna Reddy, leamed counsel for the respondent Nos.l and 2; and Mr. B.Mukhe{ee, leamed counsel for respondent No.4
Order dated 23.06.2023 has summed up the controversy involved in the present writ petition, which is reproduced hereunder: "By Frling this petition under Article 226 of the Constitution of India, petitioner has assailed legality and validity of the provisional attachment of the bank account of the petitioner vide the notice dated 22.05.2023 issued by respondent No.1 to respondent No.3 under Section 83 ofthe Central Goods and Services Tax Act,2017 (briefly, 'the CGST Act' hereinafter). Learned counsel for the petitioner submits that first and foremost the provisional attachment order letter does not contain Document Identifrcation Number @IN) which is mandatory requirement as per circular dated 23.12.2019 of the Central Board of Indirect Taxes and Customs. His
2 HC.I & N?:R, J W.I .I-'r. 15,137 of 2023 socorlC submission is that though the prrl"ir;ionrrl altachlr ,rrt order/notice mentions that procceding; tLndr:r Section 7,1 of the CGST Act have been initiated, tlret e at e no sucl proceedings. Thirdly, he subrnits t]rat no reinots have bt ,:r rnentioned as to why provisional attacir n'::nt of bank ar :ount which is a drastic measure has been lesort(d t<t C)n rr I the above three grounds, Ir{s. El lSapna Reddy. leamed counsel fol I.lo. 1 ar d 2 to obtarn instructions." we rlireot resp )ndents
In th( hearing today, Ms.B.Sapna l{eddy lubmits on instructions rhat according to the assessment of respondent Nos.I and 2, total 11,. payable by the petitioner woutd be tc'tht: tune of Rs.2.20,62,!1 6.00 [Central Goods and Sen'ices T ax (CGST) Rs.1,10,3 1,ai8.00 plus State Coods and Selvices 'l'ax (SGST) Rs.1,1Cr,3 t,4 i8.001. Petitioner has on its owr1, paid Rs.98,9r2,4 I . 00; therefore, there is shortfall of Rs. I ,l:1 , 70,500.00. 4. Inscfir the two grounds of challenge an: con< elnec[, Ms. B. Sapna Re,: J1', learned Counsel submitrl thitt ttocument Identiflcatic.r Number (DIN) was not mentiont:d in th',r prcvisional attaghnrent u der due to technical difficulty; n rn -rnr:ntioning ,/ --u
3 HCJ & NTR, J W.P.No.15837 of2023 thereof would not dilute the main issue i.e. non-payment of the tax due. Regarding non-furnishing of any reasons, it is stated that the order of provisional attachment was digitally signed and reason for the provisional attachment is available in the file.
We are afraid we cannot accept such contention on behalf of the respondents. Attachment of bank account, even if it be a provisional measure, is a serious intrusion into the private affairs of a citizen. Being a drastic measure, there must be overwhelming reasons to justify such an action. As already mentioned above, it is not a case of complete evasion of tax by the petitioner. Petitioner has on its own paid Rs.98,92,412.00 which has been acknowledged by the respondents. According to the respondents, there is a short- payment of the tax due.
At this stage, we may mention that the quantum mentioned by the respondents is only a provisional figure even before issuance of show cause notice; not to speak of any adjudication order. [n such a case, attaching bank account of the petitioner is not at all justified and would be wholly without juri iction; II I I I I I ! I i I I i t i I I I I I I I I tt. I I I I I I f li I ]I I I I il I I
4 Ht:.I & NT& J ll/. P.,1o.1.;837 oJ 2023 continLrati(lrr thereof would be highly oppressive arid 'i.lative of Articles Lzl ;t i 2l of the Constitution of India. 7 . [,earnt ,l counsel lbr the respondents hal; cont :rrded that the petitioner hi s got an altemative remedy c,f appr:raching the Commission, r under Rule 159 of the Central rloocls and Services Tax Ruies, 2( l'l.
When rr order is ex facie without juri ict,ou ar; in the present case, yo are of the view that it would nct be.iust an,l proper to relegate;a t r.xable person to the lorum of alternative r:)medy. We thereforr:, se aside the provisional attachrnent c rde:. dated 22.05.2Ct23
Writ pe it on is accordingly altowed. No <:osts
Pending miscellaneous annlicationc closed. //// if aw- :;hall standr,z K.AMMAJI ASSISIAN-T_REGTSTRAR r;e cirffi oFFlcER To 1 The commissio re. of centrar. Tax, secunderabad G:ST co nrnisr;ionerate, GST Bhavan, 5t r l:toor, LB Sradium noaO, AisilJJLgh, tlylerabad _ 500004. The-Superinbnr ejrt (AE), Central Tax and Customs, Otfic:e c.. the uommtsstoner rl ()entral Tax, S^ecunderabad GST Commil,sroneiate, GST 9.hav-an, Sth Ftor ,r, LB StadiumRoaO, eaJfreerUlghlilyaeraOaA . 500004. The.Branch tvtar rger, Bank of .Barodi, rr,|iii"o rliiri'rtrlnr;rr, r)-3_2, Road No.1, Banjara H ls Hyderabad - 500034.--- Ikf_-1"::f, *: -Gov6rnment, Union of tndia, rvtinistry of Fini; ncr,, uepanment of H )venue, North Block, New Delhi - 11b001 one CC to SF:t t ARAN TALWAR, novocate t-oiuci '" Qne QC to M/s. TIOKARO SAPNA REDDt,ldvo;a-rl topcc One CC to SRt E I\IUKHERJEE. novocate ioFllti" '' Two CD Copiers \- \.H 2 .1 4 q 6 7I PSK- SW
HIGH COURT DATED:031071 t023 ORDER WP.No.15837 'of 2023 ALLOWING THE WRIT PETITION WITHOUT COSTS. S) I lr | -a .1 1,j,I E qrt 1 ttt ' , I fr- :; t_\ _- -.L_--.;;:- lsi\ o tr \,\\ (- rt> x\. ^s,2 z'\ ]l 1'
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.