Rr INDIA PVT. LTD vs. Union Of INDIA & Ors.

Facts

The petitioner, RR India Pvt. Ltd., filed a writ petition challenging provisional attachment orders issued under Section 83 of the CGST Act, dated December 2, 2019, and December 3, 2019. These attachments were a consequence of a search operation conducted between November 1, 2019, and November 30, 2019. The petitioner's bank accounts were attached, with a total balance of ₹7,31,55,790.36. The petitioner filed objections to the attachment, but these were rejected by an order dated February 6, 2020, solely on the ground that the objections were not filed within the seven-day period stipulated in Rule 159(5) of the CGST Rules. The petitioner argued that this rejection was incorrect.

Held

The Court held that the seven-day period prescribed in Rule 159(5) of the CGST Rules for filing objections to provisional attachment is directory and not mandatory. The Court's reasoning was that there is no provision in the CGST Act or Rules that mandates the filing of objections within seven days or prescribes any consequence for delay. Furthermore, the respondents do not suffer any adverse consequences if the objector files objections beyond the stipulated seven-day period. The Court found the Supreme Court's decision in Sambha Ji Vs. Gangabai, which interpreted a similar provision (Order 8 Rule 1 CPC) as directory, to be clearly attracted to the present case. Consequently, the objections filed by the petitioner could not be rejected on the sole ground of limitation. The Court set aside the order dated February 6, 2020, and remanded the proceedings back to the concerned authority to pass a fresh reasoned order on the merits of the objections within two weeks.

Key Issues

1. Whether Rule 159(5) of the CGST Rules, which prescribes a seven-day period for filing objections to provisional attachment, is mandatory or directory, considering the absence of prescribed consequences for delay and the Supreme Court's interpretation of similar procedural provisions. (Question of law) Petitioner's arguments: The petitioner contended that the seven-day period in Rule 159(5) is directory, not mandatory. They relied on the Supreme Court's decision in Sambha Ji Vs. Gangabai, which held Order 8 Rule 1 CPC, despite its seemingly mandatory language, to be directory. The petitioner argued that neither the CGST Act nor the Rules prescribe any consequence for the delay in filing objections, and the revenue does not suffer any adverse effect from such delay. Therefore, objections should not be rejected solely on the ground of being filed beyond seven days. Respondents' arguments: The respondents argued that they are bound by the letter of the law. Since Rule 159(5) explicitly states that objections may be filed "within seven days of the attachment," the petitioner's failure to adhere to this period justified the rejection of their objections.