The Hon’ble High Court of Andhra Pradesh vide its order dated 07.03.2023 in the matter of M/s Sri Sai Balaji Associates Vs. The State of Andhra Pradesh in Writ Petition No. 4663 of 2023, set aside the portion of notice issued under Section 70, whereby the party to the assessee were directed to stop further payments to the Assessee. It was found that such an action/direction by a notice under section 70 is beyond the jurisdiction of respondent authority.
The Petitioner filed the writ petition before the Hon’ble High Court challenging the notice under Section 70(1) of the GST Act, 2017, issued by Respondent No. 3 to the customer of the Petitioner i.e., M/s Sterlight Technologies limited, Vishakapatnam.
Petitioner’s Submissions: –
- It was submitted that the Respondent No. 3 under Section 70 has the power to summon any person whose attendance is considered necessary either for giving evidence or producing a document or any other thing in any inquiry in the same manner. However, such power is not extended to direct the summoning of a party to stop all further payments, which the petitioner ought to receive from the customers.
- It was submitted that such a direction in the notice is beyond the jurisdiction of the 3rd respondent and thus, it was prayed to allow the writ petition and delete last paragraph in the notice.
On the other hand, it was admitted on the behalf of the respondents’ that under Section 70 of the CGST Act, 2017, the concerned officer may not have power to issue a direction to stop payment by the summoning party to the assessee. Though, he has such power Under Section 83 of GST Act which deals with provisional attachment of any property or bank account of the assessee.
- The Hon’ble Court after considering the submissions made, facts of the case and the law applicable, found that the impugned notice has been issued under Section 70(1) of the CGST Act, which states that the proper officer shall have the power to summon any person whose attendance is considered necessary either to give evidence or to produce a document or any other thing in the enquiry and nothing more. Thus, it is clear that under Section 70 (1) of GST Act, the proper officer cannot exercise powers to direct the summoning party to stop payment to the assessee which is beyond the scope of 70 (1) of GST Act.
- There is not doubt that under Section 83 of the CGST Act, if the Commissioner is of the opinion that for the purpose of protecting the government revenue, he may by order provisional attachment of any property including bank account belonging to the taxed person or any person specified in Sub Section 1 (A) of Section 122 in such manner as prescribed.
- However, in the present matter, the impugned notice was issued under Section 70(1) of CGST, and not in exercise of powers under Section 83. Therefore, it is clear that the 3rd respondent has exceeded his power in directing M/s. Sterlight Technologies Limited to stop further payments to the petitioner herein. Hence, such a direction is beyond the jurisdiction of the 3rd respondent. The same is liable to be set aside to that extent.
The Hon’ble Court with the above observations & findings, allowed the writ petition by setting aside the impugned portion of the notice issued under Section 70(1) of the CGST Act, with a liberty to the 3rd respondent to proceed in accordance with law so far as the other part of the notice issued by him under section 70 (1) of GST Act is concerned.