Chhattisgarh High Court stays order freezing bank accounts over tax rules

Chhattisgarh High Court stays order freezing bank accounts over tax rules

The Court noted that prima facie reasons were not assigned as mandated under Rule 21 of the CGST Rules while cancelling the registration

The Chhattisgarh High Court stayed the order for cancellation of registration and attachment of the bank accounts for non-compliance by authorities in following the Central Goods and Services Tax Rules, 2017 (CGST Rules).

The matter titled Cheema Local Carrier & Construction v Assistant Commissioner SGST was placed before a single-judge court of Justice Goutam Bhaduri in the High Court of Chhattisgarh.

The Petitioner - Company had challenged the following three acts of the Respondent – Assistant Commissioner through the petition:

(i) Provisional attachment of the bank account

(ii) Cancellation of registration certificate under the GST

(iii) Input credit ledger bring blocked

The Petitioner contended that no particulars were shown as to which contravention was made and therefore, did not fulfil the ingredients of Rule 21 of the Central Goods and Services Tax Rules, 2017 (CGST Rules). It was submitted that no hearing was given as per Rule 159(5) of the CGST Rules, which had resulted in the closure of his business. The Petitioner further contended that the input tax credit ledger was also blocked without following the procedure as provided under the law.

The Petitioner prayed for a stay on the blocking of the bank account and cancellation of registration so that he could restart his business.

The Court noted that after the attachment of the bank account, the reply was filed by the Petitioner but it has yet not been decided. The Court observed this prima facie would be non-compliance of Rule 159(5) of the CGST Rules.

The Court further noted that prima facie the reasons were not assigned as mandated under Rule 21 of the CGST Rules while cancelling the registration.

The Court while taking the non-compliance of Rules into account decided to stay the attachment of the bank accounts and the order for cancellation of registration through this interim order.