Specimen format of letter under CGST Act against bank account attachment beyond one year

To

The Proper Officer

*********************

**********************

Office of Deputy Commissioner

(State Tax)

Subject: Improper attachment of the bank account

Reference : Your Notice No. ***× Dated *****

Dear Sir,

With reference to above captioned subject and reference, It is submitted that your office has issued Show Cause Notice (hereinafter referred as SCN) to us on dated 01/01/2021 U/s 73/74 of the Central Goods and Service Tax Act 2017 (hereinafter referred as Act) for the allegation of ABC and they raised SCN for Rs. xxxxxx  tax, penalty and interest.

We have make replied of that SCN on dated  xxxxxxx with contention that SCN is not accordance with law, further your office has invoked Section 83(1) and attached bank account of us bearing SBI Account No.     *****×               on dated ****

It is submitted that one year has been passed for the attachment of bank account and adjudication of the SCN is still pending, further Section 83(2) allowed Revenue for the attachment of bank account for the period of one year, extract of the Section 83 is reproduced below for your reference.

Section 83(1): Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

Section 83(2): Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).

It is submitted that attachment cannot be continue beyond the period of one year as already stated in the Section 83(2) of the Act and in our case, one year period has been passed on dated 01/01/2021.

Reliance is placed on the decision of Hon’ble Telangana high court decision in the case of M/s KMC CONSTRUCTIONS LIMITED AND ANOTHER Date: 20.10.2020 WP.No.18575 of 2020, Hon’ble court allowed the WP and order for the removal of attachment as same cannot be continue beyond one year as per Section 83(2), extract of the order is reproduced below for your reference.

6. Sri B.Narasimha Sharma, Senior Counsel for Central Taxes does not dispute the above legal position that provisional attachment of a bank account would cease to have affect after expiry of a period of one year from the date of the order made under sub-Section (1) of Section 83 of the Act. He however contends that the matter is at show-cause notice stage, that there is money in the above referred bank account of the petitioner, and that this Court should make an observation that it is open to the respondents to issue a fresh provisional order of attachment under Section 83 of the Act

7. We are of the opinion that the issue in the Writ Petition relates to a provisional attachment order dt.07.06.2019 issued by the 2nd respondent and its continuing existence after 06.06.2020, i.e., after the expiry of one year from 07.06.2019, contrary to sub-Section (2) of Section 83 of the Act. The fact that the said attachment cannot continue in view of the sunset clause in sub-Section (2) of Section 83 of the Act beyond a period of one year from 07.06.2019, is not in dispute.

8. Therefore, the impugned provisional attachment order dt.07.06.2019 issued by the 2nd respondent cannot continue after 06.06.2020 in view of sub-Section (2) of Section 83 of CGST Act, 2017, and any such continuation would be violative of Articles 14, 19(1)(g) and 300A of the Constitution of India and would be wholly without jurisdiction.

9. Accordingly, the Writ Petition is allowed directing the 5th respondent to allow the petitioner to operate its current account bearing No.xxxxxxxxxxxxxxx forthwith. No order as to costs.

Reliance is placed on the decision of Hon’ble Karnataka High Court judgment in the case of  M/s A.P. STEELS WRIT PETITION NO.8586/2020 (GM RES) DATED: 27.07.2020, Hon’ble court order removal of bank attachment being beyond one year, extract of order is reproduced below for your reference.

6. Crux of the matter in the present petition is whether Annexure-A, communication /order dated 28.05.2019 in respect of provisional attachment of Bank Account of the petitioners under Section 83 of the CGST Act, is existing in the eye of law as on this day or not? Section 83 of GST Act reads as under:

“83 Provisional attachment to protect revenue in certain cases.-(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property including bank account, belonging to the taxable person in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of period of one year from the date of the order made under sub-section (1).”

7. By virtue of the Sub Section 2 of Section 83 of the aforesaid Act, 2017, the impugned provisional attachment of Bank account of the petitioners dated 28.05.2019 passed by respondent No.1 under Section 83 of the CGST Act, 2017 is in vogue till 27.05.2020. Whereas, the petitioners have presented the present petition on 22.06.2020. As on 22.06.2020, the provisional attachment of bank account of the petitioners, the communication/order dated 28.05.2019 ceases to operate with the effect from 27.05.2020.

8. In view of the aforesaid legal position, respondent Nos.1 and 2 are hereby directed to defreeze the petitioners’ bank account within a period of two weeks from the date of receipt of this order.

Reliance is placed on the Hon’ble Gujarat High court order in the case of NAMASKAR ENTERPRISE R/SPECIAL CIVIL APPLICATION NO. 18105 of 2019 Date: 07.08.2020, Hon’ble Court order for the removal of bank attachment for more than one year, extract of order is reproduced below for your reference.

5. A perusal of the aforesaid Sub-Section-2 of Section 83 makes it abundantly clear that the provisional attachment would cease to have effect after the expiry of a period of one year from the date of the order made under Sub-Section-1. Although no specific date has been mentioned in the impugned order of provisional attachment of the bank account, yet having regard to the statement made by the learned counsel that the attachment came into force from 2-8-2019, we take it that the order of provisional attachment has come to an end. In such circumstances referred to above, no further adjudication is necessary as regards the other contentions raised in the writ application. We direct the State Bank of India i.e. the respondent No.3 to take notice of this order and permit the writ applicant to operate his Bank Account No.xxxxxxxxxxx forthwith.

It is respectfully submitted based on the Hon’ble Court order and text of the section, that revenue cannot continue attachment beyond the one year, so requested you to remove the attachment as per the Law.

Yours faithfully

*******