Case Note & Summary
The petitioner, Kaish Impex Private Limited, a company engaged in the export of perfumes and compound fragrance oil and registered under the Goods and Services Tax Act, 2017, challenged the action of the respondent authorities in provisionally attaching its bank account maintained with State Bank of India. The respondents had initiated an inquiry against an export firm, M/s Maps Global, suspecting fraudulent availing of Input Tax Credit. During the inquiry, they noticed that M/s Maps Global had transferred Rs. 28,50,000 to M/s Balajee Enterprises, which in turn transferred Rs. 1,63,00,000 to the petitioner's account. The Directorate General of GST Intelligence issued a summons to the petitioner on 22 October 2019 to attend on 5 November 2019, referring to the inquiry against M/s Maps Global. However, without waiting for the petitioner's response, the authorities proceeded to provisionally attach the petitioner's bank account under Section 83(1) of the CGST Act, 2017. The petitioner contended that the attachment order was passed without any prior show cause notice or opportunity of hearing, violating principles of natural justice. The respondents argued that Section 83(1) does not mandate a prior hearing and that the power is preventive in nature. The court analyzed the provision and held that the power of provisional attachment is drastic and can seriously affect the business of an assessee. Relying on the principle that statutory provisions should be interpreted to include principles of natural justice unless expressly excluded, the court found that Section 83(1) does not exclude the requirement of a show cause notice. The court emphasized that before attaching a bank account, the authorities must issue a notice and give the assessee an opportunity to explain why the attachment should not be made. Since no such notice was given, the attachment order was quashed. The court directed the respondents to de-freeze the bank account within one week. The petition was allowed, and rule was made absolute.
Headnote
A) Constitutional Law - Principles of Natural Justice - Right to be Heard - Attachment Without Notice - The court considered whether an order of provisional attachment under Section 83(1) of the CGST Act, 2017, can be passed without issuing a show cause notice to the assessee. Held that the power of attachment is drastic and cannot be exercised without affording an opportunity of hearing, as it affects the fundamental right to carry on business under Article 19(1)(g) of the Constitution. (Paras 6-10) B) Goods and Services Tax - Provisional Attachment - Section 83(1) of CGST Act, 2017 - Requirement of Show Cause Notice - The court examined the scope of Section 83(1) and held that the provision does not expressly exclude the application of principles of natural justice. Therefore, before attaching a bank account, the authorities must issue a show cause notice and give the assessee an opportunity to explain why the attachment should not be made. (Paras 6-10) C) Goods and Services Tax - Provisional Attachment - Validity of Order - Absence of Prior Notice - The court found that the impugned attachment order was passed without any prior notice or opportunity of hearing to the petitioner. Consequently, the order was held to be violative of natural justice and was quashed and set aside. (Paras 6-10)
Issue of Consideration
Whether the provisional attachment of the petitioner's bank account under Section 83(1) of the Central Goods and Services Tax Act, 2017, without issuing a prior show cause notice and affording an opportunity of hearing, is valid in law.
Final Decision
The court allowed the writ petition, quashed the attachment order, and directed the respondents to de-freeze the petitioner's bank account within one week.
Law Points
- Principles of natural justice
- Provisional attachment under Section 83(1) of CGST Act
- 2017
- Requirement of show cause notice before attachment
- Right to be heard
- Validity of attachment order without prior notice
