Order Date – 01 February 2023

Parties: Smita and Sons Coal Private Limited Vs State of Gujarat

Facts –

• The Petitioner, Smita and Sons Coal Private Limited, had purchased Iron and Steel Waste Scrap from M/s. Arsh Enterprise, and sold to various other purchasers and the sale proceeds were received in his Bank account.
• Upon cancellation of GST registration of M/s. Arsh Enterprise, summons under section 70 of the Act and a letter were issued to the petitioner. The respondent failed to indicate any live link with the document sought as well as with the inquiry which the summons under section 70 of the Act was issued.
• Accordingly, on 18.05.2022, FORM GST DRC-22 was issued on the Bank under section 83 of the Act. The request to release Bank account made by the petitioner on 21. 05.2022 was not released till date.

Issue –

• Whether the provisional attachment of Bank account is in order?

Order –

• The Divisional bench of the Hon’ble High Court observed that the procedure that had been required to be followed as per the Circular CBEC-20/16/05/2021-GST/359 dated 23 February 2021 and also on issuance of FORM DRC 01A had not been done before the provisional attachment of the Bank account had been made. There is no explanation as to why the FORM DRC-01A has been issued on 18.01.2023 could not have been done if, it was for ascertaining the preliminary details and for protecting the revenue.
• The guidelines issued by the said Circular also make it amply clear that the remedy of attachment being by itself very extra ordinary needs to be resorted to with at most circumspection and maximum care and caution, which in the instant case appear to have been missing and hence, that order needs to be quashed and set aside.
• It was held that it would be apt to release the Bank account by directing the Bank to not permit the petitioner to operate so far as the tax amount of Rs.3,95,568/- for the year 2018- 19 and tax amount of Rs.1,72,104/- for the year 2019-20. For the remaining amount of penalty and interest, the petitioner shall furnish the bond before the authority concerned.