M/S. Gehna Trading LLP vs. Union Of INDIA Through Secretary Ministry Of Law And Justice And Ors

Held

The Court held that the provisional attachment of the Petitioner's bank account was not valid. Following the precedent set in Kaish Impex Pvt. Ltd. v/s. Union of India & Ors., the Court reasoned that Section 83 of the CGST Act, read with Rule 159(1) and Form GST DRC-22, outlines a specific scheme for provisional attachment. This scheme mandates that proceedings must be initiated against a specific taxable person under the enumerated sections (62, 63, 64, 67, 73, and 74) for the power under Section 83 to be exercised. The Court found that the Petitioner's bank account was attached based on proceedings against a different entity, and no proceedings under the specified sections were pending against the Petitioner. The Court emphasized that the power of provisional attachment is drastic and must be exercised within the well-defined ambit of the law, not as an omnibus power. Therefore, the order of attachment was quashed and set aside.

Facts

The Petitioner, M/s. Gehna Trading LLP, 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 view of proceedings against Yusuf Fauzdar Shaikh, proprietor of M/s. Fashion Creations, with the belief that amounts were being transferred to the Petitioner. The Petitioner argued that no proceedings under Sections 62, 63, 64, 67, 73, or 74 of the CGST Act were pending against it, which are prerequisites for attachment under Section 83. The Petitioner relied on a previous judgment of the same High Court in Kaish Impex Pvt. Ltd. v/s. Union of India & Ors.

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 are pending 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. They argued that since no such proceedings were initiated against them, the attachment was illegal. They 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. Respondents' arguments: The judgment does not record any specific arguments made by the Respondents.