M/S Choudhary Sales Corporation vs. Union Of INDIA And Others

Facts

The petitioner, M/s Choudhary Sales Corporation, filed a writ petition challenging an order dated 12.06.2024 by respondent No. 8, which disposed of their complaint dated 26.04.2024. The petitioner's bank account was provisionally attached by the Central GST Commissionerate, Jind on 19.02.2020, and subsequently by the Central GST Commissionerate, Rohtak on 21.02.2020. Despite repeated requests and a letter from the State GST authorities indicating no objection to de-freezing the account, the bank refused to do so, citing the lack of permission from CGST, Jind. The petitioner invoked Section 83(2) of the Central Goods and Services Tax Act, 2017, which stipulates that a provisional attachment ceases to exist after one year from the date of attachment.

Held

The Court held that the bank was legally obligated to de-freeze the petitioner's bank account. The Court noted the clear mandate of Section 83(2) of the Central Goods and Services Tax Act, 2017, which stipulates that a provisional attachment ceases to exist after one year from the date of attachment. The Court accepted the submission of the learned counsel for the respondents (Union of India and others) that the authorities had no objection to the account being de-freezed as per Section 83(2). The Court found that the bank's reliance on seeking further instructions from the authorities was contrary to the explicit provision of law. The ratio decidendi is that statutory provisions like Section 83(2) are self-executing, and banks cannot hold accounts provisionally attached beyond the statutory period without valid cause, nor can they demand further clearance from tax authorities when the law itself dictates cessation of attachment. The Court directed the respondent-bank to de-freeze the petitioner's account within three working days.

Key Issues

1. Whether the bank is legally obligated to de-freeze the petitioner's bank account in light of Section 83(2) of the Central Goods and Services Tax Act, 2017, which states that a provisional attachment ceases to exist after one year from the date of attachment? Petitioner's arguments: The petitioner contended that Section 83(2) of the 2017 Act clearly provides that the provisional attachment of a bank account automatically ceases to exist after one year from the date of attachment. They argued that the bank's refusal to de-freeze the account, despite the statutory provision and the State GST authorities' no-objection, was unjustified. They relied on the clear wording of Section 83(2). Revenue/State's arguments: The counsel for respondents No. 1 to 4 and 7 submitted that the authorities have no objection if the petitioner's account is de-freezed in terms of Section 83(2). They further stated that the bank is not required to seek instructions from the authorities because Section 83(2) is unambiguous.