GST Update

 Desk of CA. Praveen Sharma – 1044 Series (CAPS) 

MADRAS HIGH COURT  IN THE CASE OF Kesar Jewellers v. Directorate General of GST Intelligence (DGGI) & Axis Bank

Madras High Court Protects Taxpayers from Arbitrary Bank Account Attachment

In Kesar Jewellers v. Directorate General of GST Intelligence (DGGI) & Axis Bank, the Madras High Court delivered an important ruling on Section 83 of the CGST Act, which deals with provisional attachment of property and bank accounts.

The Court held that provisional attachment is an extraordinary power and cannot be exercised routinely. Merely starting GST proceedings is not enough to freeze a taxpayer's bank account. Before passing such an order, the Commissioner must have tangible material and independently record reasons showing that attachment is necessary to protect government revenue.

The Court found that the department had failed to provide any specific reasons or supporting material and had merely reproduced the wording of Section 83. It also rejected the department's argument that technical limitations in Form GST DRC-22 prevented it from recording detailed reasons.

Relying on the Supreme Court's decision in Radha Krishan Industries, the High Court held that Section 83 powers cannot be exercised mechanically or arbitrarily. Since there was no objective basis for the attachment, the Court quashed the provisional attachment order and directed the authorities to de-freeze the petitioner's bank accounts.

This judgment reinforces that taxpayer rights must be protected and that the GST Department must strictly comply with the legal safeguards before exercising such drastic powers.

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CAPS