The Delhi High Court has directed the company to file objections and seek revocation of provisional attachment of bank account on the allegation of the wrongful availment of ITC in accordance with Rule 159 of the Central Goods and Services Tax Rules, 2017.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that any person whose property is attached may [file an objection in FORM GST DRC-22A] to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in Form GST DRC-23.
Table of Contents – Wrongful Availment Of ITC
Background
The writ petitioner has challenged the order, pursuant to which the respondents have proceeded to provisionally attach the bank account maintained by it in exercise of powers conferred by Section 83 of the Central Goods and Services Tax Act, 2017.
The petitioner contended that the order is liable to be set aside since it fails to record or reflect any satisfaction having been formed by the competent authority that the provisional attachment was warranted in order to protect the interest of Government revenue.
An allegation was levelled against the petitioner that it had come to the notice of the respondent-department that the petitioner firm had made suspicious and fraudulent payments to a particular account. It had also wrongly availed of Input Tax Credit to the tune of INR 19,37,431. The respondents take the position that a protective order as contemplated under Section 83 of the CGST Act was warranted.
Relevant Provision
Rule 159 of the Central Goods and Services Tax Rules, 2017 confers a right upon the writ petitioner to file objections and seek revocation of a provisional attachment that may be made.
As per Rule 159(1) Where the Commissioner decides to attach any property, including bank account in accordance with the provisions of Section 83, he shall pass an order in Form GST DRC-22 to that effect mentioning therein, the details of property which is attached.
As per Rule 159(2) the Commissioner shall send a copy of the order of attachment [in FORM GST DRC-22] to the concerned Revenue Authority or Transport Authority or any such Authority to place encumbrance on the said movable or immovable property, which shall be removed only on the written instructions from the Commissioner to that effect [or on expiry of a period of one year from the date of issuance of order under sub-rule (1), whichever is earlier] [and a copy of such order shall also be sent to the person whose property is being attached under Section 83].
As per Rule 159(3) where the property attached is of perishable or hazardous nature, [and if the person, whose property has been attached,] pays an amount equivalent to the market price of such property or the amount that is or may become payable [by such person], whichever is lower, then such property shall be released forthwith, by an order in Form GST DRC-23, on proof of payment.
As per Rule 159(4) where [such person] fails to pay the amount referred to in sub-rule (3) in respect of the said property of perishable or hazardous nature, the Commissioner may dispose of such property and the amount realized thereby shall be adjusted against the tax, interest, penalty, fee or any other amount payable by [such person].
Conclusion – Wrongful Availment Of ITC
The court noted that the nature of allegations which stand levelled against the petitioner and stand reflected in the impugned order, the end of justice would merit the petitioner being accorded the liberty to move and seek lifting of the provisional attachment in terms of Rule 159.
The court disposed of the writ petition by permitting the writ petitioner to move in terms of Rule 159 within a period of one week from today. Any application for revocation of provisional attachment so made may be examined and disposed of in accordance with law and preferably within a period two weeks.
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Case Details
Case Title: Triloki Trading V/S Directorate General Of Gst Intelligence (Dggi) Hqrs. & Ors
Case No.: W.P.(C) 14190/2024
Date: 08.10.2024
Counsel For Petitioner: Kanhaiya Singhal
Counsel For Respondent: Anurag Ojha
