TMI Blog2021 (2) TMI 392X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be deemed fit; c) Ad interim reliefs in terms of prayers (b); d) Cost of the petition be provided for; e) For such other and further reliefs, as the nature and circumstances of case may require; 3. Petitioners had initially challenged the provisional attachment order dated 27.09.2019 issued by the Commissioner of Central Goods and Services Tax and Central Excise, Mumbai i.e. respondent No.2 provisionally attaching escrow account No. 36030500000014 held in Bank of Baroda, Mahim Branch. Writ Petition was filed on 21.07.2020. This provisional attachment order automatically came to an end on the expiry of one year under the provisions of Section 83(2) of the Central Goods and Services Act, 2017 (for short the CGST Act ). Respondent No.2 has issued fresh provisional attachment order dated 22.09.2020 of the said escrow account during the pendency of the writ petition which is now challenged by the petitioners. This account is jointly held by respondent No.3 and petitioner No.1. 4. Before we advert to the submissions made by learned counsel for the parties, it will be apposite to refer to the relevant facts: 4.1. Petitioner No.1 is a contractor engaged in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2019. Respondent No. 4 bank by letter dated 27.02.2020 informed respondent No.2 that 97% share out of the receipts in the escrow account was for disbursement to the petitioner No.1 in view of the contractual obligation between the parties and standing instructions given to the bank. Simultaneously respondent No.3 also informed the bank to release the share (97%) of respondent No.1 out of the receipts received in the escrow account. 4.5. Since the petitioners did not receive the amount, present petition was filed on 03.07.2020 to challenge the provisional attachment order dated 27.09.2019. 5. As almost one year had elapsed since passing of the provisional attachment order dated 27.09.2019, fresh provisional attachment order dated 22.09.2020 was passed by respondent No. 2 in respect of the said escrow account. 5.1 In view of the aforesaid development, the writ petition was amended subsequently to challenge the fresh provisional attachment order dated 22.09.2020 in respect of the escrow account to the extent of the share of petitioner No.1. 6. Mr.Abhinav Kumar, Deputy Commissioner of Central Goods and Services Tax, Mumbai Central Commissionerate has filed reply affidavi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cooperated with the investigation carried out by respondent Nos.1 and 2. 9. Mr. Saurabh Tapadia, learned counsel appearing for the petitioners submitted that the escrow account was attached under the provisions of Section 83 of the CGST Act due to proceedings initiated against respondent No.3; such provisional attachment of escrow account under Section 83 can be exercised only if any proceedings referable to sections 62, 63, 64, 67, 73 and 74 of the CGST Act have been initiated against the taxable person. He submitted that in the present case no such proceedings were initiated against petitioner No.1; Proceedings, if any, were initiated against respondent No.3; Escrow account being a joint account held by respondent No.3 and petitioner No.1 could not be attached to the extent of the petitioner No1's share in view of standing instructions given to the bank on 25.07.2017 that the bank was required to remit 97% of the amount received in the escrow account to the account of petitioner No.1 and 3% to the account of respondent No.3; at the highest 3% of the receipts in the escrow account as belonging to respondent No.3 could be attached; there was no direct nexus nor privity of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... di of respondent No.3 to evade tax and to cause loss to the government exchequer is systematically planned; and that the lis in the petition solely pertains to breach of trust between petitioner No.1 and respondent No.3 without involving the government department. He submitted that the fresh order of provisional attachment dated 22.09.2020 has been correctly passed in view of the on going investigation in order to protect the interest of government revenue after the expiry of the period of one year from the date of the first order. 11. Mr. Paranjape, learned counsel for respondent No. 3 while supporting the contentions advanced by learned counsel for the petitioners, however submits that respondent No. 3 is cooperating with the investigation carried out by respondent Nos. 1 and 2. 12. Submissions made by learned counsel for the parties have been duly considered. Materials on record have also been perused. 13. Before we advert to the submissions made by the learned counsel for the respective parties, we may briefly refer to the relevant provisions of the CGST Act. 14. Section 83 of the CGST Act confers power upon the authority to make provisional attachment in certain ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information available with the department, it has come to my notice that the said person has a Account in your bank having Account No.36030500000014. In order to protect the interests of the revenue and in exercise of the powers conferred under Section 83 read with Rule 159(1) of CGST Act, 2017, I Shri. Rajesh Sanan, Commissioner CGST Central Excise, Mumbai Central hereby provisionally attach the aforesaid account. No debit shall be made from the said account or any other account operated by the aforesaid person on the same PAN without the prior permission of this department. 16.1. The provisional attachment order states that M/s Creative Business Associates i.e. respondent No.3 having GST registration No. No.27AAFFC4843GIZI is a registered taxable person under the CGST Act and proceedings have been launched under Section 74 of the CGST Act to determine the tax and any amount due in order to protect the interest of the revenue. Therefore bank account No. 36030500000014 was provisionally attached under Section 83 of the CGST Act read with Rule 159(1) of the CGST Rules. However it is also imperative to note that account No.36030500000014 is an escrow account in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 20. However in the given facts, 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. In effect, we lift the provisional attachment in so far as petitioner No. 1 s share in the escrow account is concern ..... X X X X Extracts X X X X X X X X Extracts X X X X
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