Order Date – 16 March 2023

Parties – M/s Eunike General Trading Vs Commissioner of Goods and Service Tax, West, Delhi

Facts –

• The Petitioner, M/s Eunike General Trading, by an order dated 05-08-2022 was sanctioned a refund of Input Tax Credit (ITC) of ₹34,48,080/-.
• However, the respondent blocked the bank account of the petitioner in respect of the above-mentioned sum by issuing a letter to the concerned bank and without passing any order under the CGST.
• The blocking was made due to three reasons. First, that there had been a mismatch in the payment made by the petitioner to the supplier in respect of the goods that are stated to have been exported. Second, there was a doubt as to whether any goods were procured from the supplier in question. And third, that the petitioner had also procured goods from another supplier whose registration was suo motu cancelled.
• Order dated 05-08-2022 was subject to an audit and a review pursuant to which the petitioner was directed to deposit a sum of ₹38,786/- as an amount erroneously refunded.

Issue –

• Whether the respondent have power to indefinitely block the bank account of the petitioner in respect of the amount of ITC received?

Order –

• The divisional bench of the Hon’ble High Court observed that Section 73 and 74 of the CGST Act provide for recovery of refund where the same has been erroneously granted. Clearly, if the respondents are of the view that the refund has been erroneously granted, they would be required to take appropriate action under these provisions.
• Further, by virtue of  sub-section (2) of Section 83 of the Act, the said order of  attachment ceases to be operative on expiry of a period of one year from the date of the order. The respondents are required to adhere to the said discipline.
• In addition to this, the Court directed the respondent to reconsider the petitioner’s request for lifting of the block placed on the petitioner’s bank account and continue the same only if it is satisfied that the conditions as specified in Section 83 of the Act continue to exist.
• Hence, the present petition along with other pending applications are disposed of as per the above terms.