CGST Rules | Remedy Under Rule 159(5) Against Provisional Attachment Must Be Availed Before Approaching Court: Allahabad High Court

The Allahabad High Court has held that Rule 159(5) of the Central Goods and Service Tax Rules, 2017 which provides remedy to file objections against the attachment of property must be availed before approaching the Court.

CGST Department carried out an investigation against 3 persons including the petitioner and her husband for availing and passing on wrong Input Tax Credit by creating various firms without supply of goods. Petitioner’s current bank account has been provisionally attached exercising powers under Section 83 of the CGST Act, 2017 read with Rule- 159 (1) of the CGST Rules '2017'.

Under Section 82(3) of the CGST Act, 2017 any attachment order under Section 83 ceases to have effect after the expiry of one year. After the expiry of the said year, the petitioner moved the application requesting for a de-attachment of the Bank account since the petitioner is not a taxable person as defined under Section 2 (107) of the CGST Act, 2017, and no investigation is pending against her.

Counsel for Petitioner contended that the impugned order lacked the necessary ingredients for the exercise of power under Section 83 (Provisional Attachment to Protect Revenue in Certain Cases). The procedure prescribed in Rule 159 of the CGST Rules 2017 relating to “Provisional Attachment of Property” was not followed by the Department. No show cause notice in form DRC-01 under Rule 142 had been issued to the Petitioner before proceeding under Section 122 of the Act (Penalty for Certain Offences).

Counsel for Respondent, on the other hand, argued that the petitioner has a remedy under Rule 159 (5) of the CGST Rules 2017 for filing objections against the attachment.

The bench comprising of Chief Justice Pritinker Diwaker and Justice Ashutosh Srivastava dismissed the writ petition holding that the petitioner had the remedy under Rule 159(5) of the CGST Rules 2017, however chose to sleep on her rights. However, the Court granted an opportunity to the petitioner to approach the Department.

Case Title: Lalita vs. Central Goods And Service Tax And Another 2023 LiveLaw (AB) 243 [Writ Tax No. - 862 of 2023]

Case Citation: 2023 LiveLaw (AB) 243

Counsel for Petitioner: Anoop Trivedi, Senior Advocate and Anuj Agarwal

Counsel for Respondent: Gaurav Mahajan, Om Prakash Mishra

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