M/S Adsun Electronics Private Limited vs. The Commissioner Of State Tax GST And Others

Facts

The petitioner, M/s Adsun Electronics Private Limited, filed a writ petition challenging the order freezing its current bank account. The petitioner contended that the freezing order was passed in contravention of Section 83 of the Haryana Goods and Service Tax Act, 2017. The respondents, represented by the Commissioner of State Tax (GST) and others, stated that information was received regarding the petitioner claiming Input Tax Credit (ITC) on fake invoices, leading to the order dated 06.07.2021 to freeze the account. A notice (DRC-22) was issued to the bank on 06.07.2021, and a notice was issued to the petitioner only on 12.07.2021. The court noted that the mandatory conditions prescribed under Section 83 were not met at the time of passing the freezing order.

Held

The Court held that the mandatory conditions prescribed under Section 83 of the Haryana Goods and Service Tax Act, 2017, were not in existence at the time the order of freezing the petitioner's bank account was passed. The judgment explicitly states that the respondents' submission that a notice was issued to the petitioner only on 12.07.2021, after the freezing order was passed on 06.07.2021, clearly indicates a non-compliance with the procedural requirements of Section 83. Consequently, the Court found no option but to set aside the order freezing the petitioner's account. The ratio decidendi is that provisional attachment of bank accounts under Section 83 requires adherence to the prescribed conditions and procedures, including issuing notice to the taxable person contemporaneously or prior to the attachment, to protect revenue. The Court set aside the impugned order with liberty to the respondents to take action in accordance with law.

Key Issues

1. Whether the provisional attachment of the petitioner's bank account, by way of freezing, was made in accordance with the mandatory conditions prescribed under Section 83 of the Haryana Goods and Service Tax Act, 2017? Petitioner's argument: The petitioner argued that the order freezing its current account was passed in direct contravention of Section 83 of the Act of 2017, implying that the procedural safeguards or conditions precedent for such an action were not met. Respondents' argument: The respondents contended that information was received indicating the petitioner had claimed ITC on fake invoices, which necessitated the freezing of the account to protect government revenue. They stated that the order was passed on 06.07.2021, and a notice was issued to the petitioner on 12.07.2021, suggesting that the action was taken based on received information.