2023 Taxo.online 659

Legal Bombshell: High Court Unfreezes Bank Accounts, Exposes Tax Authority Missteps!

Introduction:

In a groundbreaking judgment handed down on June 30, 2023, the Bombay High Court, presided over by Justices G. S. Kulkarni and Jitendra Jain, delivered a significant verdict in the case of Bharat Parihar and others vs. State of Maharashtra and others. This verdict pertains to the provisional attachment of bank accounts under Section 83 of the Central Goods and Service Tax (GST) Act, 2017, sending shockwaves through the tax and legal community.

What Happened:

The case revolves around the provisional attachment of the petitioners' bank accounts with Yes Bank, Mumbai, carried out under Section 83 of the CGST Act. The initial provisional attachment took place on April 21, 2022, and was followed by a communication dated April 19, 2023, which sought to retain the provisional attachment.

Why it Happened:

The primary contention of the petitioners was that the provisional attachment of their bank accounts was unlawful. The respondents, on the other hand, argued that the order disposing of objections to the provisional attachment was appealable under Section 107 of the GST Act and, therefore, the court should not entertain the petition. However, the petitioners cited a precedent from the Supreme Court, Radha Krishan Industries vs. State of Himachal Pradesh, which established that objections to provisional attachment were not appealable but could only be challenged through a writ petition under Article 226 of the Indian Constitution.

Analysis & Impact:

The High Court, in its detailed analysis, referred to Section 83 of the CGST Act, which allows provisional attachment of property, including bank accounts, during ongoing GST proceedings. Notably, Section 83(2) states that such provisional attachments cease to have effect after one year from the date of the initial order. In this case, the initial attachment was executed on April 21, 2022, and, according to the law, it ceased to be valid on April 21, 2023.

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