Naskon Soft Private Limited vs. The Commissioner Of Commercial Taxes

Facts

The petitioners, Cemetrix (IT) Services Private Limited and Naskon Soft Private Limited, filed writ petitions before the Telangana High Court challenging orders issued under Section 83 of the Central Goods and Services Tax Act, 2017. These orders, dated March 11, 2024, were issued by the Commissioner of Commercial Taxes (Respondent No. 1) and directed the attachment of the petitioners' bank accounts held with Kotak Mahindra Bank Limited (Respondent No. 4). The petitioners sought a declaration that these attachment orders were void, illegal, arbitrary, and violative of constitutional provisions and principles of natural justice, and consequently, sought their setting aside and the release of their bank accounts. Interlocutory applications were also filed seeking suspension of the attachment notices and directions to the revenue authorities not to recover further amounts.

Held

The Court held that the impugned orders of attachment of bank accounts, issued under Section 83 of the Central Goods and Services Tax Act, 2017, dated March 11, 2024, have ceased to have effect. This decision is based on Sub-section (2) of Section 83 of the Act, which stipulates that orders of attachment cease to have effect on the expiry of a period of one year. Since the one-year period from the date of the orders had expired, the Court found the continued attachment to be invalid. The Court relied on its own Division Bench judgment in W.P.No.14809 of 2024, which interpreted the provisions of Section 83(2). Consequently, both impugned orders dated March 11, 2024, were set aside. The Court explicitly stated that the petitions were disposed of without expressing any opinion on the merits of the cases.

Key Issues

1. Whether the impugned orders of attachment of bank accounts issued under Section 83 of the Central Goods and Services Tax Act, 2017, are void and illegal due to the expiry of their validity period, as per Sub-section (2) of Section 83 of the Act? The Petitioner argued that the attachment orders, issued on March 11, 2024, have ceased to have effect as per the statutory period stipulated in Section 83(2) of the CGST Act. They contended that the continued attachment is without authority of law and violates their fundamental rights. The Revenue (Respondents No. 1 to 3) submitted that the issue involved in these cases is covered by a Division Bench judgment of the High Court in W.P.No.14809 of 2024. They did not present any separate arguments beyond this submission.