31-01-2022 – Bank account as well as Electronic Credit Ledger cannot be attached/froze by the revenue for more than one year

www.taxo.onlineThe Hon’ble High Court of Delhi vide its Order dated 18 January 2022 in the matter of M/s Krishna Fashion v. Union of India & Ors. in Writ Petition (Civil) No. 602/2022 & CM Application No. 1696/2022 directed the GST authorities to de-attach the Petitioner’s Bank Account and unblock/unfreeze the Electronic Credit Ledger beyond one year of attachment/blocking.

The Petitioner preferred the Writ Petition challenging the order dated 16 March, 2020, whereby the Petitioner’s current Bank Account was provisionally attached under Rule 83 of CGST Act, 2017, and the order dated 06 February, 2020 blocking the Petitioners Electronic Credit Ledger under Rule 86A of CGST Rules, 2017.

Section 83(2) provides that “Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order”. Similarly, Rule 86A of CGST Rules which was inserted w.e.f. 26 December 2019 and empowers the proper officer to block/freeze the E-credit ledger of a taxpayer, provides vide sub-rule (3) that “such restriction shall cease to have effect after the expiry of a period of one year from the date of imposing such restriction”.

Thus, it was contention of the Petitioner that the impugned provisional attachment order & Order blocking E-credit ledger of the Petitioner has lapsed upon completion of one year from the date on which the order was passed, however, the petitioner account remained attached presently.

The Hon’ble High Court after considering the submissions, facts of the case and law applicable, directed the respondents to de-freeze the petitioner’s bank account with Union Bank of India and unblock the Electronic Credit Ledger within three days.

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