GST Authority cannot attach the bank accounts or block ECL beyond an year if assessee is cooperating: Delhi High Court
The Hon'ble Delhi High Court in M/S Krishna Fashion vs. Union of India & Ors. [W.P. (C) 602/2022 & CM APPL. 1696/2022 dated January 18, 2022] held that once the petitioner has been cooperating with the Investigating Agencies and the relevant documents have been furnished. The petitioner will continue to appear as and when directed by the Investigating Authorities and will supply the documents which may be asked for. Then the bank accounts to be de-freezed and Electronic Credit Ledger ("ECL") of the petitioner to be unblocked upon the expiry of one year from the date of imposing such restrictions.
1. Petitioner : M/S Krishna Fashion
2. Respondents : Union of India & Ors
3. Appeal Type/ No. : W.P.(C) 602/2022 & CM APPL.1696/2022
4. CORAM: 1. HON'BLE MR. JUSTICE MANMOHAN,
2. HON'BLE MR. JUSTICE NAVIN CHAWLA
5. Council For Petitioners: Ms.Anjali J.Manish, Advocate with Mr.Priyadarshi Manish and Ms.Kinjal Shrivastava, Advocates.
6. Council For Respondents : Mr.Rakesh Kumar, Advocate for R-1,
Mr.Aditya Singla, Advocate with Ms.A.Sahitya Veena and Mr.Achin Sondhi, Advocates for R-2&3. Mr.Rupak Srivastava, Advocate for R-4
7. Date of pronouncement: JANUARY 18, 2022
8. Facts:
M/s Krishna Fashion ("the Petitioner") has filed the present writ petition before the Delhi High Court challenging the order dated March 16, 2020 ("Impugned order") passed by the Revenue Department ("the Respondents") whereby the Respondents have attached the Petitioner's current bank account maintained with Union Bank of India as well as the order dated 6th February, 2020 blocking the Petitioner's Electronic Credit Ledger. Petitioner also seeks directions to the Respondents to de-freeze the Petitioner's account and unblock the Petitioner's Electronic Credit Ledger.
The learned counsel for the Petitioner contented that as per the Rule 86A(3) of the Central Goods and Services Tax Rules, 2017 ("the CGST Rules") the order blocking the Petitioner's Electronic Credit Ledger had ceased to operate on 5th February, 2021 on completion of one year. However, the same continues to be blocked and, thus, the Petitioner is unable to operate it.
The learned counsel for the petitioner states that as per Section 83(2) of the CGST Act, 2017, the impugned provisional attachment order has lapsed upon completion of one year from the date on which the order was passed.
The Respondents argued that no fresh GST DRC-22 has been issued in the present case and that despite service of summons, the petitioner has not been appearing before the Investigating Officer and all the relevant documents have not been supplied by the petitioner.
9. Nature of Issue:
Provisional attachment to protect revenue in certain cases, Conditions of use of amount available in electronic credit ledger
Whether the Respondent has the power to keep the bank account attached under Section 83(2) of the CGST Act 2017 and the Electronic Credit Ledger (ECL) blocked under Rule 86A(3) CGST Rules 2017 beyond one year?
10. Held:
The Hon'ble Delhi High Court in W.P. (C) 602/2022 & CM APPL. 1696/2022 dated January 18, 2022 held as under:
11. Case Law Refereces :
1. M/s. Shri Dhan Laxmi Trade House Vs. Principal Commissioner of Goods and Service Tax, 2021 (11) TMI 863
2. Radha Krishan Industries Vs. State of H.P., (2021) 6 SCC 771.
12. Relevant Act/ Rules/ Forms:
Section 83(2) of the CGST Act 2017
"83. Provisional attachment to protect revenue in certain cases
(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section 83(1)."
Rule 86A(3) of the CGST Rules 2017
"86A. Conditions of use of amount available in electronic credit ledger:
(3) Such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction."
Form GST DRC-22 - Provisional attachment of property under section 83
13. Database Citation :
