IMPORTANT POINT
Provisional attachment orders under Section 83 of the CGST Act cannot extend beyond one year as per the explicit language of the statute, requiring strict interpretation.

JUDGMENT :

Gopinath P., J.

Petitioners are partners of a firm trading in the name and style of ‘SR Trades’ (hereinafter referred to as ‘the Firm’). The Firm is, primarily, in the business of purchase and sale of scrap. In the month of November 2020, there was a search conducted in the business premises of the petitioners under Section 67 of the CGST Act. The 1st petitioner was also arrested and detained on the allegation of fraudulent transactions, leading to the evasion of GST on a massive scale. The registration of the Firm under the CGST/SGST Acts was also cancelled. According to the petitioners, they were thus forced to close down their business in the year 2022. Ext.P1 show cause notice was issued to the petitioners on 04.05.2023, calling upon the petitioners to show cause regarding the following:-

“8.1 the Input Tax Credit of Rs. 8,59,16,757/- (Rupees Eight Crores, Fifty NineLakhs, Sixteen Thousand, Seven Hundred and Fifty-Seven only) availed by M/s SR Traders on the strength of fake invoices, as discussed above, should not be declared fake and inadmissible and recovered under sub-section (1) of Section 74 of the CGST Act, 2017, read with Section 20 of the IGST Act, 2017;

8.2 interest payable on 8.1 above, should not be demanded and recovered from them, under Section 50 of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017;

8.3 for the said violation at 8.1, penalty should not be imposed upon them under Section 74 read along with Section 122(1)(vii) of the CGST Act, 2017 and Section 20 of the IGST Act, 2017.”

The aforesaid show cause notice is pending adjudication. Through Ext.P2 series of proceedings dated 10.03.2023/13.03.2023, orders were issued by the Additional Director General, Directorate General of GST Intelligence, Kochi Zonal Unit under Section 83 of the CGST/SGST Acts, provisionally attaching certain properties belonging to the petitioners. Some of the attachment orders relate to the bank accounts of the Firm also. The Firm challenged the orders of provisional attachment by filing W.P.(C.)No.12519 of 2023. This Court, by the judgment dated 09.06.2023 (marked as Ext.P3 in the writ petition), dismissed the writ petition, leaving open the right of the Firm to avail alternative remedies, if available. A Writ Appeal was carried against Ext.P3. A Division Bench of this Court, by Ext.P4 judgment, modified the judgment of the learned Single Judge and directed as follows:-

“4. On a consideration of the rival submissions, we find that while it may be a fact that the value of the immovable properties attached is not sufficient to meet the demand contained in the show cause notices, we must necessarily remind ourselves that the appellant cannot be financially choked to the extent of preventing it from carrying on legitimate business activities while simultaneously defending the proceedings initiated by the respondents against him. We feel therefore that the ends of justice would require us to modify the judgment of the learned single Judge and permit the appellant to operate two of its bank account pending finalisation of the adjudication proceedings by the respondents so that the appellant can carry on its legitimate business activities even while defending the proceedings initiated against him by the respondents. Accordingly, we direct a lifting of the attachment in respect of the following two accounts pertaining to the appellant, and covered by Ext.P6 order that was impugned in this writ petition.

(1) A/c.No.50200027207947, HDFE Bank, Pattambi - savings account in the name of Safeek.K; and

(2)A/c.No.14120100032507, Federal Bank - PTB – savings account in the name of Ali.K.M.

5. The appellant shall be permitted to operate the aforesaid accounts during the pendency of the adjudication proceedings initiated at the instance of the respondents and until the culmination thereof. Save for the above limited modification, we refrain from interfering with the judgment of the learned single Judge in all other respects.’’

On ex