Continuation Of Order Of Attachment And Garnishee Notice Is Impermissible When Appeal Filed Against Order Of Assessment: Andhra Pradesh High Court

The Andhra Pradesh High Court stated that when the assessee files an appeal against an order of assessment, the enforcement actions that have been taken, such as property attachment and garnishment notices, should not continue.

The Division Bench of Justices R Raghunandan Rao and Harinath. N observed that the assessee has preferred an appeal and has paid 10% of the disputed tax, as required under Section 107 of the CGST Act, no further tax can be recovered from the assessee, in pursuance of the order of assessment under appeal.

Section 107 of the CGST Act, 2017, provides provisions for preferring an appeal against the order of the Adjudicating Authority to the Appellate Authority. 

Rule 159 of CGST Rules, 2017, provides that where the Commissioner decides to attach any property, including bank account in accordance with the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of property which is attached.

DRC-13 is a GST notice served to a third person for recovering the GST dues towards the taxable person.

The assessee/petitioner suffered an order of assessment under the A.P. Goods and Services Tax Act, 2017, issued by the second respondent/Assistant Commissioner of State Tax. Under this order of assessment, the assessee was declared liable to pay Rs. 2,84,10,044. To recover this amount, the Assistant Commissioner of State Tax initiated proceedings, issuing an attachment order in FORM GST DRC-22 and a garnishee notice in FORM GST DRC-13 to Branch Manager.

The assessee subsequently approached Assistant Commissioner of State Tax with a representation, contending that they had filed an appeal against the order of assessment and had also paid 10% of the disputed tax, as required under Section 107 of the Central Goods and Services Tax Act, 2017. The assessee has challenged the attachment order and garnishee notice before the Andhra Pradesh High Court.

The bench noted that the assessee has preferred an appeal and has paid 10% of the disputed tax, as required under Section 107 of the CGST Act, no further tax can be recovered from the petitioner/assessee, in pursuance of the order of assessment under appeal.

The bench further concluded that in such circumstances, continuation of the order of attachment and Garnishee is clearly impermissible and against the provisions of Section 107 of the CGST Act.

In view of the above, the bench allowed the petition and set aside the order of attachment and Garnishee notice.

Counsel for Petitioner/ Assessee: J.N. Venkata Suresh Kumar

Counsel for Respondent/ Department: GP for Commercial Tax

Case Title: M/s SKS Traders v. Assistant Commissioner of State Tax and Others

Case Number: WRIT PETITION NO: 26244/2023

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