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2021 (2) TMI 392 - HC - GSTProvisional attachment of escrow bank account - shares of the petitioner / contractor - Joint Escrow account opened by the Principal - seeking to direct the Respondent No.4 to transfer 97% of the amount lying in escrow account to the account of the Petitioner No.1 as per instruction dated 25.07.2017 - Section 83 of the CGST Act - HELD THAT:- From Section 83 it is discernible that such power can be exercised only if any proceedings under mentioned provisions of the act have been initiated against the taxable person. In the present case, the 'taxable person' is respondent No.3 and it appears that proceedings under the CGST Act have been initiated against the said respondent. As part of the said proceedings, the escrow account which stood in the joint names of respondent No.3 being the first holder and petitioner No.1 (second holder) was provisionally attached vide order dated 27.09.2019. Petitioners have pleaded that since no proceedings have been contemplated and / or initiated under any of aforesaid provisions of the CGST Act against petitioners, the provisional attachment of the escrow account to the extent of 97% of the receipts received in the account belonging to the petitioners is not justified and is ex-facie arbitrary. It is an undisputed and admitted position that in view of the contractual arrangement between respondent No.3 and petitioner No.1, the receipts received in the escrow account belonged to the respective parties in the proportion as agreed upon by the parties. These receipts have been in respect of the amounts deposited by the MSPGCL into the escrow account pertaining to the running account (RA) bills of the work done / completed. In the past, receipts of amounts pertaining to 11 RA bills had been apportioned in the agreed manner. The receipt of amounts pertaining to the 12th RA bill into the escrow account has been provisionally attached due to proceedings initiated against respondent No.3 by respondent Nos. 1 and 2. Since respondent No. 3 has not raised any grievance, we may not go into the proceedings initiated under the provisions of Section 74 of the CGST Act against respondent No.3 in the present petition. Case of the petitioners, needs to be considered as admittedly petitioner No. 1 is not the taxable person. Petitioners have filed their statutory objections under Rule 159(5) of the CGST Rules in response to the fresh provisional attachment order dated 22.09.2020 before respondent No.2. Respondent No.2 shall give a hearing to the petitioners and decide their objections in accordance with the provisions of the CGST Act and the CGST Rules. Considering the admitted fact that no proceedings have been initiated against the petitioners and no inquiry has been contemplated against the petitioners under the provisions of the CGST Act, we direct that until decision is taken on the objection filed by the petitioners by respondent No.2, petitioner No.1 shall maintain a balance of ₹ 5,00,000.00 in the escrow account out of the share belonging to the petitioner No.1 - we lift the provisional attachment in so far as petitioner No. 1’s share in the escrow account is concerned subject to maintaining credit balance of ₹ 5,00,000.00 by petitioner No. 1 out of its share and direct that respondent No.4 would be at liberty to transfer / remit the proportionate amount due to petitioner No. 1 to the account of petitioner No.1 and maintain balance of ₹ 5,00,000.00 till the aforementioned decision is taken. Petition disposed off.
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