The Hon’ble High Court of Madras vide its order dated 18.11.2022 in the matte of M/s Rayan Traders Vs Principal Chief Commissioner of GST Central Excise & Others in W.P. No. 33 of 2020 And WMP Nos. 39 and 40 of 2020 and 8435 of 2021, set aside the attachment notice issued to the bank of the petitioner for withholding the amount, without any assessment under Section 73 or 74 for the tax demanded.

The petitioner filed the writ petition before the Hon’ble High Court challenging the attachment notice issued to the HDFC Bank, Korattur Branch dated 27.12.2019 in Form GST DRC -13, whereby the bank has been directed to withhold the amount of up to a sum of Rs.74,52,943/- and pay the same forthwith to the Government.

Facts of the Case: –

• The Petitioner is an assessee under Goods and Service Tax Act, 2017. That an attachment notice dated 27.12.2019 was issued by the respondents to the bank of the petitioner namely HDFC Bank, Korattur Branch in Form GST DRC -13, whereby the bank was directed to withhold the amount up to a sum of Rs. 74,52,943/-.
• That the said attachment notice was issued referring the petitioner as ‘defaulter’ and mentioning the GSTIN number and other particulars. Further through the impugned notice, directions were given to the bank to withhold the amount of Rs.74,52,943/- and also to pay the said amount to the Government immediately.

It was submitted on the behalf of the respondents that from the perusal of GSTR 1 and 3B filed by the petitioner, it was found that the petitioner has set off the output tax liability as against the available credit.  However, there was no credit available for set off as against the liability.  

Held: –

• The Hon’ble Court after considering the submissions made and facts of the case found that there is no dispute that there has been no order of assessment or any other order passed under the applicable provisions making a determination of the aforesaid amount as being ‘due’ from the petitioner. Neither the petitioner has been assessed under Section 73 or 74, nor there has been any order passed reversing the Input Tax Credit that is claimed by the petitioner.
• In the given circumstances, the Hon’ble Court was of the view that the impugned notice has no legs to stand. Further the respondents’ reliance on the statement of the petitioner in the course of an enquiry conducted by the Intelligence Officer under Section 70 of the Act, cannot substitute a determination of liability under an order of assessment or any other order passed under the applicable provisions under the Act.
• Thereafter, the Hon’ble Court while considering the submissions made on the behalf of the respondents, found that Section 42 provide for a procedure for matching, reversal and re-claiming of input tax credit in order that a proper determination of the credit may be made, however, no such procedure was initiated/undertaken by the Officer. Therefore, the respondents’ recourse to the recovery alone, is not sustainable.
• Lastly, the Hon’ble Court referring to the decision of the same court in VN Mehta & Company v. The Assistant Commissioner (W.P.No.26187 of 2019 order dated 08.11.2019), wherein the similar issue was involved and the writ petition was allowed holding the impugned proceedings were not maintainable under law, set aside the impugned notice dated 27.12.2019, as there is no statutory sanction for the issuance of the same in terms of Section 83 of the Act.

The Hon’ble Court with the above findings, allowed the writ petition by setting aside the impugned order.