Perfect Boring Private Limited vs. Union Of INDIA

Held

The Court held that while the object of Section 83 of the CGST Act is to protect government revenue, the attachment of the petitioner's bank accounts was causing significant hardship that could adversely affect its business and potentially lead to a loss of revenue. The Court found that a balance could be struck between protecting the petitioner's interests and safeguarding government revenue by allowing the petitioner to pay the outstanding excise dues in installments, provided adequate security was furnished. The Court directed the release of the attached bank accounts upon the petitioner furnishing a bank guarantee for Rs.55,00,000/- within one month and undertaking to pay the remaining Rs.55,00,000/- in eight equal monthly installments, with the first installment due by March 10, 2019. The ratio is that provisional attachment of bank accounts under Section 83, while permissible for revenue protection, should consider the impact on the assessee's business and can be modified to allow installment payments with security.

Facts

The petitioner, Perfect Boring Private Limited, filed a writ petition challenging an order dated 15.5.2018 passed by the respondent No.2 under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act), provisionally attaching eight of its bank accounts. The attachment was initiated due to outstanding excise dues of Rs.1,05,27,185/-. The petitioner argued that it had been consistently paying GST and CGST dues, and had also made significant payments towards the outstanding excise dues, clearing Rs.49,51,000/- from April 2018 till the date of the petition. The petitioner sought permission to pay the remaining excise dues in installments and requested the release of the attached bank accounts, citing severe hardship including an inability to deposit provident fund and a risk of its bank accounts becoming Non-Performing Assets.

Key Issues

1. Whether the provisional attachment of the petitioner's bank accounts under Section 83 of the CGST Act, 2017, was justified given the petitioner's efforts to pay outstanding dues and the hardship caused by the attachment? (Question of law and fact, turning on Section 83 of the CGST Act). Petitioner's arguments: The petitioner contended that despite outstanding excise dues, it had continued to deposit GST and CGST, and had paid a substantial portion of the excise dues. It argued that the attachment was causing severe business hardship, preventing it from meeting statutory obligations like provident fund payments and risking its accounts becoming NPAs. The petitioner requested permission to pay the remaining dues in installments and sought the release of the attached bank accounts. Revenue's arguments: The revenue argued that the attachment was necessary to safeguard government revenue and that the respondent No.2 was empowered under Section 83 of the CGST Act to pass such an order. It further contended that the petitioner was a habitual defaulter and not entitled to installments under Circular No.996/3/2015-CX, and that the petitioner had failed to adhere to its previous commitment to pay Rs.25,00,000/- monthly towards excise liability.