Provisional Attachment Order Can’t be Continued if SCN Issued After 3 Years from Date of Inspection: HC

Case Details: Nitesh Jain Mangal Chand v. Senior Intelligence Officer, Directorate General of Goods and Service Tax Intelligence - [2023] 150 taxmann.com 420 (Madras)

Judiciary and Counsel Details

• • Dr Anita Sumanth, J.
  • P. Jitendra Kumar for the Petitioner.
  • V. Sundareswaran for the Respondent.

Facts of the Case

The petitioner was engaged in business of manufacturing aluminium frames, UPVC windows, shutters and similar goods. There was an inspection in business premises of petitioner on 24.01.2019 and various documents and electronic devices were seized. Thereafter, an order under Section 83 was issued provisionally attaching various bank accounts of petitioner along with his family members and attachment was re-imposed twice thereafter.

It filed writ petition to challenge the provisional attachment order and issue directions to permit operation of the bank accounts. The question before the High Court was whether Section 83 contemplates a continued attachment of bank accounts for several years.

High Court Held

The Honorable High Court noted that in the present case, the show-cause notice has been issued only on 08.10.2022 in respect of an inspection that had transpired in January, 2019. The Court found that these time lines were sufficient to arrive at a conclusion that the purpose of Section 83 which is stated to be ‘provisional attachment to protect revenue in certain cases’ cannot be deployed so as to work against the petitioner continuously for several years as happened in the present case.

Therefore, the Court held that such delay of nearly four years in issuing show-cause notice could not be reason for attachment to continue under section 83, which itself was provisional in nature. Thus, the writ petition was allowed by the Court and department was directed to finalize proceedings in a time bound fashion.