Proper officer not allowed to direct customers of Taxpayer to stop further payments to taxpayer

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Proper officer not allowed to direct customers of Taxpayer to stop further payments to taxpayer

 

 

There are cases wherein the GST authorities are issuing notices to the customers of the dealer asking to stop payment to their vendors. Here is one such cases wherein the action was challagned.

The case details is as under:
Sri Sai Balaji Associates v. State of Andhra Pradesh

[2023] 149 taxmann.com 66 (Andhra Pradesh)

Let us have a short overview of the case:

The petitioner filed a writ petition before the High Court to challenge the notices issued by the proper officer to the customers of the petitioner.

It was contended by the dealer that that the proper officer had no power to direct customers to stop making payment to the petitioner.

The Honorable High Court noted that as per Section 70 of CGST Act, 2017, the proper officer has power to summon any person whose attendance is considered necessary either for giving evidence or producing a document or any other thing in any inquiry.

As per Section 83, the Commissioner may order provisional attachment of any property including bank account belonging to the taxable person.

However, in the instant case, one of the portion in the impugned notice issued under Section 70 stated that “in view of the above explanation you are hereby requested stop all further payments from here onwards until clearance is given by the undersigned”.

Therefore, it was held that such a direction was beyond the jurisdiction and thus, the same was liable to be set aside.

Conclusion:

Proper officer not allowed to direct customers of Taxpayer to stop further payments to taxpayer

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