Share:   Share on facebook   Share on twitter   Share on linkedin

        Home        
 
Blank
Article Section

Home Articles Goods and Services Tax - GST CA Bimal Jain Experts This

Assessee’s bank account cannot be blocked without complying the provisions embedded u/s 83 of the CGST Act

Submit New Article

Discuss this article

Assessee’s bank account cannot be blocked without complying the provisions embedded u/s 83 of the CGST Act
CA Bimal Jain By: CA Bimal Jain
August 6, 2022
All Articles by: CA Bimal Jain       View Profile
  • Contents

The Hon’ble High Court, New Delhi in the matter of ZURIC TRADERS VERSUS THE COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, DELHI AND ANR. [2022 (7) TMI 1228 - DELHI HIGH COURT]  quashed the letter issued by the Revenue department for blocking assessee’s bank account as it does not comply with the perquisites embedded under Section 83 of the Central Goods and Services Tax Act 2017 (“the CGST Act”).

Facts:

A Letter dated February 25, 2020 (“the Letter”) was issued by the Revenue department (“the Respondent”) to the IndusInd Bank, Punjabi Bagh Branch, New Delhi to block the bank account of the M/s Zuric Traders (“the Petitioner”). Being aggrieved by the Letter, the Petitioner has filed the present writ petition to direct the Respondent for unblocking the bank account. In this regard the Hon’ble High Court issued the notice to the Respondent, to file a counter affidavit.

Petitioner’s contention:

Respondent’s contention:

  • The Letter has been issued in exercise of power conferred under Section 83 of the CGST Act.
  • By virtue of the orders passed by the Supreme Court in IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION - 2020 (5) TMI 418 - SC ORDER, the time frame prescribed under Section 83 of the CGST Act stands extended and that the department would have the benefit of period prescribed in Section 83 of the CGST Act.
  • Inward supplies had been made to the Petitioner, the investigation has shown that the foreign currency remittances have not been received against the exports made by the Petitioner for which the Integrated Goods and Services Tax (“IGST”) refund was credited to the account of the Petitioner. Hence the Respondent have to make the recovery of the IGST refund availed by the Petitioner.

Issues:

Held:

The Hon’ble High Court, New Delhi in ZURIC TRADERS VERSUS THE COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, DELHI AND ANR. [2022 (7) TMI 1228 - DELHI HIGH COURT] has held as under:

  • The Letter does not advert to Section 83 of the CGST Act and the Petitioner would have been entitled to trigger the provisions of Rule 159 (5) of the CGST Rules i.e., to file objections against the Letter purported “blocking” of the bank account.
  • Further that, the expression used in Section 83 is “provisional attachment” and not “blocking”; with the former having a definitive connotation in law, as its use requires fulfilment of certain pre-requisites.
  • Opined that, the blocking order does not comply with the jurisdictional pre-requisites which are embedded in Section 83 of the CGST Act.
  • The Letter is thus, quashed.
  • Stated that Section 83 of CGST Act, provides a time frame i.e. statutory space for enabling investigation, to protect the interest of the revenue and not a period of limitation.
  • Lastly, that the foreign remittances against the export made by the Petitioner have not been received, has never been put to the Petitioner and no record to show that this aspect was put to the petitioner
  • Directed the Respondent to communicate the bank regarding unblocking the Petitioner’s account.

Relevant Provision:

Section 83 of the CGST Act:

(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.

(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 (1).

(Author can be reached at info@a2ztaxcorp.com)

 

By: CA Bimal Jain - August 6, 2022

 

 

Discuss this article