Filing objections against the attachment of property before going to Court!

In the case of Lalita vs. Central Goods And Service Tax And Another 2023 LiveLaw (AB) 243 [Writ Tax No. - 862 of 2023] The Allahabad High Court has clarified that Rule 159(5) of the Central Goods and Service Tax Rules, 2017, which provides a remedy to file objections against the attachment of property, must be exhausted before approaching the Court for relief!

Case Summary

An investigation conducted by CGST Department

• Allegations: Wrongful availing and passing of Input Tax Credit
• Individuals Involved: Petitioner, her husband, and another person
• Action Taken: Provisional attachment of petitioner's bank account under Section 83 of CGST Act, 2017, with Rule 159(1) of CGST Rules '2017'
• Expiry of Attachment: Attachment order ceases after one year (Section 82(3) of CGST Act)
• Petitioner's Request: Applied for de-attachment claiming non-taxable status (Section 2(107) of CGST Act) and no pending investigations against her
• Petitioner's Argument: The attachment order lacked essential prerequisites under Section 83. The department did not follow Rule 159's prescribed procedure for Provisional Attachment of Property. 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).
• Respondent's Argument: Petitioner had a remedy under Rule 159(5) to file objections against attachment

Thus, the court held, 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 for the petitioner to approach the Department.

Our Perspective

Rule 159 does not explicitly require the authorities to send the Order of Attachment, i.e., DRC-22, to the Assessee. The window for filing objections under Rule 159(5) is limited to a mere 7 days, necessitating swift action on our part.

An interesting precedent was set in the case of J.L. ENTERPRISES VERSUS ASSISTANT COMMISSIONER, STATE TAX, BALLYGUNGE CHARGE & ORS., where the Calcutta High Court accepted a writ despite the Assessee's failure to file objections. Nevertheless, it is essential to note that the Supreme Court in the case of M/S RADHA KRISHAN INDUSTRIES VERSUS STATE OF HIMACHAL PRADESH & ORS. emphasized the significance of filing objections.

In light of this, we recommend the following immediate steps upon receiving notice of attachment:

1. File strong objections expressing the intent to be heard in person, as Rule 159(5) provides for the possibility of a personal hearing, which the Supreme Court considers a crucial safeguard.
2. Despite filing objections, if the authorities do not provide the desired relief, we may consider approaching the court for redress, depending on the unique facts of our case.
3. It is crucial to act promptly and diligently in such matters to safeguard our interests effectively.

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