M/S Jaychem Enterprise PVT LTD vs. Additional Director General Nagpur Zonal Unit And Ors

Held

The Court held that the writ petition is not maintainable at this stage because the petitioner has not availed the alternative remedy provided under Rule 159(5) of the Central GST Rules. The Court noted that Rule 159(5) offers a mechanism for aggrieved persons to file objections against provisional attachments, and this remedy is not ineffective. The Court reasoned that the Additional Director General should be given an opportunity to examine the petitioner's objections, including the assertion that a cash credit account cannot be attached and the balance in the account. Such an examination would require a factual determination. Therefore, the Court directed the petitioner to approach the Additional Director General under Rule 159(5) within one week. If the petitioner does so, the Additional Director General must pass a reasoned order after affording an opportunity of hearing. The Court explicitly kept all contentions on the merits of the rival claims open for future adjudication. The Court declined to interfere at this stage.

Facts

The Petitioner, M/s. Jaychem Enterprise Pvt. Ltd., is challenging an order dated June 18, 2021, passed by the Additional Director General, DGGI, Nagpur Zonal Unit. This order, recorded in Form GST DRC-22, provisionally attached a bank account of the petitioner in DBS Bank, Andheri (E), Mumbai. This attachment was made during the pendency of proceedings against the petitioner under Section 67 of the Central Goods and Services Tax Act, 2017. The Petitioner has filed a writ petition before the High Court challenging this attachment order without first availing the remedy provided under Rule 159(5) of the Central GST Rules.

Key Issues

1. Whether the writ petition is maintainable when the petitioner has not exhausted the alternative remedy provided under Rule 159(5) of the Central GST Rules, which allows for filing an objection to the attachment of property? Petitioner's contention: The Petitioner argued that the attachment order is without jurisdiction, specifically contending that a cash credit account cannot be attached. They relied on decisions from the Gujarat High Court in M/s. Formative Tex Fab Vs. State of Gujarat & Ors. and the Punjab & Haryana High Court in Bindal Smelting Pvt. Ltd. Vs. Additional Director General, Directorate General of GST Intelligence to support their claim that the attachment was illegal. Respondents' contention: The respondents raised an objection to the maintainability of the writ petition, pointing to the existence of the remedy under Rule 159(5) of the Central GST Rules.