Bombay HC directs the competent authority to withdraw AJE's India Provisional Attachment of Bank Accounts

Bombay HC directs the competent authority to withdraw AJE's India Provisional Attachment of Bank Accounts

The Bombay High Court (HC) has directed the competent authority to withdraw the provisional attachment of the bank accounts of AJE Pvt. Ltd.

AJE India Pvt. Ltd. (petitioner) is a company incorporated under the Companies Act, 1956. The petitioner is engaged in the business of manufacturing and supplying carbonated fruit drinks that include Big Cola, Big Orange Cola, Big Lemon, and other such products.

It is contended by the petitioner that since December 2017 they have been manufacturing fruit juice-based drinks that have more than 5% juice content in apple drink and 2.5% juice content in the lemon drink.

The petitioner has classified these goods under Tariff Item 2202-99-20 of the Customs Tariff Act, 1975 and specified at Serial No.48 under Schedule-II as "fruit pulp or fruit juice based drinks" of the Central Government Notification dated 28 June 2017.

The petitioner further asserted that the said goods and products are taxable at the rate of 12% and based on the said classification the petitioner has been filing the GST returns and paying taxes regularly.

In March 2019, the departmental authorities (respondent) initiated an investigation regarding the said classification of goods and products that was somehow dropped in between. Again in January 2020, the inquiry was revived however there was no progress due to the COVID-19 pandemic.

Later on, the respondent authority visited the petitioner's factory and initiated further investigation. After the said investigation, summons was issued to the petitioner seeking the appearance of the Director of the company and other authorized representatives which was complied with.

That the respondent authority issued an order addressing to the Branch Manager of the ICICI Bank, Nagari Reespost, Mohopada, Khalapur, Raigad. That in the said order the respondent directed for provisional attachment of bank accounts of the petitioner under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act).

The petitioner filed a writ petition before the Bombay High Court seeking the quashing of the order passed by the respondent authority regarding provisional attachment of the bank accounts of the petitioner.

The matter was listed before the Division judge bench of Justices Ujjal Bhuyan and Abhay Ahuja.

After hearing the parties and going through the material evidence on record it was held by the HC that the Commissioner is conferred with the power of provisional attachment under Section 83 of the CGST Act. It further held that it would not ipso-facto and he can straightaway proceed with the provisional attachment of any property that also includes bank accounts of a taxable person and it can be done on the mere basis of pendency of proceedings under Section 67.

The HC stayed the order passed by the respondent authority and it directed the withdrawal of the provisional attachment of the bank accounts of the petitioner.

The HC also gave directions to the petitioner for furnishing an undertaking through an affidavit mentioning that the company would not alienate its land, plant, building, and machinery during the pendency of the proceeding before the Court. The final date of hearing of this matter is 9March 2021.