Dnb Multitrade INDIA PVT. LTD. vs. Union Of INDIA Through Secretary Ministry Of Law And Justice Dept. And Ors

Held

The Court held that the provisional attachment of the Petitioner's bank account was not valid. The Court found that Section 83 of the CGST Act, 2017, read with Rule 159(1) and Form GST DRC-22, clearly lays down a scheme for provisional attachment that is contingent upon the pendency of proceedings under specific sections (62, 63, 64, 67, 73, and 74) against the taxable person. The Court reiterated its previous observation in Kaish Impex Pvt. Ltd. v/s. Union of India & Ors. that Section 83 does not allow for an automatic extension of proceedings to another taxable person merely because a summons was issued to them in relation to an inquiry against a different entity. The power of provisional attachment is described as drastic and not to be exercised routinely, being confined to well-defined circumstances. Since no proceedings under the specified sections were initiated against the Petitioner, the attachment was deemed illegal. The Court quashed and set aside the order of attachment dated December 6, 2019.

Facts

The Petitioner, DNB Multitrade India Pvt. Ltd., filed a writ petition challenging the provisional attachment of its bank account by the Deputy Commissioner, CGST, on December 6, 2019. The attachment was purportedly in connection with proceedings against Yusuf Fauzdar Shaikh, proprietor of M/s. Fashion Creations. The CGST authority believed funds were being transferred to various persons, including the Petitioner. The Petitioner argued that no proceedings under Sections 62, 63, 64, 67, 73, or 74 of the CGST Act were initiated against it, which is a prerequisite for attachment under Section 83. The Petitioner relied on a previous High Court judgment in Kaish Impex Pvt. Ltd. v/s. Union of India & Ors., which dealt with similar facts.

Key Issues

1. Whether the provisional attachment of the Petitioner's bank account under Section 83 of the CGST Act, 2017, is valid when no proceedings under Sections 62, 63, 64, 67, 73, or 74 of the Act have been initiated against the Petitioner. Petitioner's arguments: The Petitioner contended that Section 83 of the CGST Act requires pendency of proceedings under specific sections (62, 63, 64, 67, 73, and 74) against the taxable person whose bank account is to be attached. The Petitioner argued that since no such proceedings were initiated against it, the attachment was illegal. The Petitioner relied on the High Court's decision in Kaish Impex Pvt. Ltd. v/s. Union of India & Ors., which held that Section 83 does not permit an automatic extension of proceedings from one taxable person to another based solely on a summons issued under Section 70. Revenue's arguments: The judgment does not record any specific arguments made by the Respondents (Union of India and Ors.).