Provisional attachment of bank account of assessee merely on the basis of summons was without jurisdiction
Kaish Impex Private Limited
The Union of India
Facts of the case:
The Petitioner has challenged the action of the authorities under the Central Goods and Service Tax, Mumbai of attaching the Petitioner’s bank account in State Bank of India.
The Petitioner-Kaish Impex Private Limited is a Company incorporated under the Companies Act, 1956. The Petitioner Company is engaged in the export of perfumes and compound fragrance oil. The Petitioner is registered under the Goods and Service Tax Act, 2017 ( the ‘Act’). The Petitioner, in pursuant of its activity of export, had carried out various transactions with different entities.
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Observations of the court:
Power to provisionally attach bank accounts is a drastic power. Considering the consequences that ensue from the provisional attachment of bank accounts, the Courts have repeatedly emphasized that this power is not to be routinely exercised. Under Section 83, the legislature has no doubt conferred power on the authorities to provisionally attach bank accounts to safeguard government revenue, but the same is within the well-defined ambit. Only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power.
It is therefore not possible to accept the submission of the Respondents that even though specified proceedings have been launched against one taxable person, the bank account of another taxable person can be provisionally attached merely based on the summons issued under section 70 to him.
In view of our discussion as above, we hold that the order dated 22 October 2019 provisionally attaching the bank account of the Petitioner was without jurisdiction and is liable to be quashed and set aside.
The Petitioner also advanced various contentions to demonstrate how the Petitioner is not involved in the money trail or is not guilty of the offenses under the Act. We do not have to go into that question because of our conclusion of the absence of power with the Authorities to provisional attach the bank account of the Petitioner in the facts.
The Petition succeeds. The rule is made absolute in terms of prayer clause Para 21(i), (ii) and (iii) of the provisional attachment on the bank account specified in the prayers clause stands lifted. The concerned bank authorities will act upon the same. All parties to act on the authenticated copy of the order.
At this stage, Mr. Jetly, the learned Counsel for the Respondents prays that this direction stayed for some period. The mandate we have issued will come into effect two weeks after the order is uploaded on the server of this Court.
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