PROVISIONAL ATTACHMENT UNDER SECTION 83 OF CGST ACT FOR SECURING REVENUE OF ANOTHER GST TAXABLE PERSON IS UNJUSTIFIED

PROVISIONAL ATTACHMENT UNDER SECTION 83 OF CGST ACT FOR SECURING REVENUE OF ANOTHER GST TAXABLE PERSON IS UNJUSTIFIED

IN THE HIGH COURT OF DELHI AT NEW DELHI

Zhudao Infotech Private Limited

Vs

Principal Additional Director General & Appeal

CORAM: HON’BLE MR. JUSTICE VIBHU BAKHRU

HON’BLE MR. JUSTICE AMIT MAHAJAN

Appeal Number: Writ Petition No. CM APPL. 13239/2023

Date of Judgement/Order: 22nd May 2023

Thus, the bank accounts of ZIPL cannot be attached for securing the revenue of another taxable person. It is implicit that the bank accounts and assets of only those taxable person or persons specified in Section 122(1A) of the CGST Act can be attached who may be liable for payment of any government revenue and the Commissioner is of the opinion that it is necessary to attach their assets in the interest of government revenue. A debt owed by any person to the taxable person, whose assets or bank accounts are liable to be attached under Section 83 of the CGST Act, can be attached being an asset of such a person. But the bank account of the person owing such debt cannot be subject to a provisional attachment order under Section 83 of the CGST Act.

Para 25. We are also unable to find any basis for the various directions issued by respondent no.1 in the impugned order dated 01.02.2023 requiring ZIPL to obtain NOCs or acknowledgments from the bank accounts of the recipient merchants.

Para 26. Mr. Tarun Gulati, learned senior counsel appearing for ZIPL, submitted that ZIPL had no issue in accepting the respondents’ condition that the payments to various merchants be made only in the specified bank accounts as communicated to the respondents and as noted in the impugned order dated 01.02.2023. He also states that ZIPL has no cavil in undertaking that the amounts payable to the merchants and as recorded in the impugned order dated 01.02.2023 will be paid without holding back any amount.

Para 27. Mr. Harpreet Singh fairly states that, at this stage, attachment of the assets of ZIPL may be lifted subject to the condition that the money due to various merchants would be remitted to the specified bank accounts as disclosed by ZIPL.

Para 28. In view of the above, this Court Court considers it apposite to dispose of the present petition by setting aside the impugned orders attaching ZIPL’s bank accounts albeit with the further direction that ZIPL shall make payments due to various merchants directly in their respective bank accounts as disclosed by ZIPL to the respondents and as recorded in the impugned order dated 01.02.2023. Insofar as the remaining amount of ₹69.92 crores is concerned, ZIPL shall transfer the same to its current account.

Para 29. The respondents are not precluded from taking any effective steps, in accordance with law, in respect of various merchants if they are of the opinion that it is necessary to do so in the interest of protecting the government revenue.

Para 30. It is also clarified that the respondents are not precluded from taking any action against ZIPL in accordance with law, if it is found that any amount is due and payable by ZIPL. The concerned Commissioner is also not precluded from taking protective action, in accordance with law, in respect of any liability of ZIPL, if in his opinion the interest of protecting the government revenue requires such action.

Para 31. The petition is disposed of in the aforesaid terms. All pending applications are also disposed of.