Mahakali Enterprises Through Prop. Rakesh Mathursingh Thakor vs. Union Of INDIA

Facts

Mahakali Enterprises, through its proprietor Rakesh Mathursingh Thakor, filed a writ application challenging an order of provisional attachment of its bank account. The order was passed by the Commissioner, CGST, Gandhinagar, on November 2, 2020, in Form GST DRC-22. The petitioner contended that the attachment order was no longer in force as it had exceeded its statutory period. The department, represented by the learned Additional Solicitor General, did not dispute this fact. The issue arose because the bank continued to restrict the operation of the account despite the expiry of the attachment period, awaiting instructions from the department.

Held

The Court held that the impugned order of provisional attachment, passed by the Commissioner, CGST, Gandhinagar, in Form GST DRC-22 dated 02.11.2020, could not be considered in force or operation as on the date of the order. This was because the order had outlived its statutory life of one year. The Court reasoned that once the statutory period for a provisional attachment expires and no fresh order is passed, the department is obliged to inform the bank to allow the account holder to operate their bank account. The Court directed the IDFC First Bank, Rakhiyal Branch, Ahmedabad, to permit the writ applicant to operate its bank account. The Court clarified that this order would not prevent the Commissioner from proceeding with any inquiry against the writ applicant in accordance with law if a case was made out. The Court also requested the learned ASG to communicate to all GST departments the necessity of informing banks promptly upon the expiry of provisional attachment orders.

Key Issues

1. Whether the provisional attachment order dated 02.11.2020, issued by the Commissioner, CGST, Gandhinagar, in Form GST DRC-22, is still in force or operation, considering its statutory life of one year has elapsed? Petitioner's Argument: The petitioner argued that the provisional attachment order had outlived its statutory validity of one year and was therefore no longer enforceable. They contended that the bank's continued restriction on operating the account was unjustified. Revenue's Argument: The revenue, represented by the learned ASG, did not contest the petitioner's claim regarding the expiry of the statutory period of the attachment order. The primary concern raised by the Court was the departmental practice of not informing banks about the expiry of such orders, leading to continued account restrictions.