Objections to be filed against Provisional attachment order & pursued, directly challenging it is premature: Madras HC

Case details: Principal Additional Director General DGGI, Chennai v. Sri Marg Human Resources (P.) Ltd. - [2021] 130 taxmann.com 12 (Madras)

Judiciary and Counsel Details

• • T. S. Sivagnanam and Sathi Kumar Sukumara Kurup, JJ. 
  • Rajnish Pathiyil for the Appellant.
  • B. Kumar, Sr. Counsel and A. Ganesan for the Respondent.

Facts of the Case

An order was passed against assessee that it had fraudulently availed input tax credit on fictitious invoices to discharge GST liability. The department passed an order of provisional attachment of a bank account of assessee. It filed a writ petition against such provisional attachment on ground that there could not be any attachment of future receivables as it would strangulate entire business module of assessee.

The Writ Court observed that a sum of Rs 5.68 crores, which was lying in bank account of assessee was appropriated by department. The assessee had also agreed to pay another sum of Rs.1 crore against estimated tax due of about Rs.21 crores which would amount to discharge of 27.05% of estimated tax dues. Therefore, there was no meaning in attaching bank account of assessee and, accordingly, it was held that the attachment order was to be vacated.

The department filed an instant writ appeal against the order and submitted that the GST rules provide for a procedure that where person whose bank account was attached, could seek for lifting of such attachment by filing objections.

High Court held

The Honorable High Court observed that the assessee has already filed objections. Since, the assessee who had sought for lifting attachment by filing objection ought to have pursued the same. In this case, without pursuing said objections, a challenge to provisional attachment order would be premature. Therefore, the order issued in the writ petition was to be set aside.