Voluntary payment covers pre-deposit; bank attachment lifted while limitation challenge awaits Supreme Court verdict
Issue
Pre-Deposit & Attachment: Whether a voluntary deposit made by the assessee can be treated as the mandatory pre-deposit for filing a statutory appeal, thereby warranting the lifting of a bank account attachment.
Limitation Validity: Whether the Notifications extending the limitation period for passing orders under Section 73 (e.g., Notification No. 56/2023-CT) are legally valid.
Facts
Writ Action: The assessee filed a writ petition challenging the Show Cause Notice, the subsequent Assessment Order for the period 2018-19, and the order attaching their bank account.
Revenue’s Defense: The Department argued that the assessee was aware of the demands but deliberately chose not to challenge them until the recovery proceedings (bank attachment) were initiated.
Financial Fact: It was noted on record that the assessee had already voluntarily deposited a sum of Rs. 3.91 Lakhs during the proceedings.
Limitation Challenge: The assessee also challenged the validity of various Central and State Notifications (specifically 56/2023-CT and 09/2023-CT) that extended the time limit for issuing orders for the period 2017-18.
Decision
Pre-Deposit Adjusted: The High Court observed that the voluntary deposit of Rs. 3.91 Lakhs was more than the mandatory pre-deposit required (10% of the disputed tax) to file an appeal under Section 107 of the CGST Act.
Remedy Granted: The assessee was permitted to file a statutory appeal before the Appellate Authority without the need for any further pre-deposit.
Attachment Lifted: Subject to filing the appeal, the impugned assessment order was stayed, and the Court ordered the provisional attachment of the bank account to be set aside.
Limitation Ruling: Regarding the challenge to the limitation extension notifications, the Court noted that the issue is pending before the Supreme Court in HCC-SEW-MEIL-AAG JV. The final outcome in this case is effectively stayed and subject to the Supreme Court’s decision.
Key Takeaways
Voluntary Payments Count: Amounts paid voluntarily during investigation or adjudication (often via DRC-03) can be successfully adjusted against the mandatory pre-deposit required for appeals, saving cash flow.
Attachment is a Last Resort: Courts are inclined to lift bank attachments if the assessee shows willingness to pursue statutory appellate remedies and has secured the Revenue’s interest through sufficient deposits.
Section 168A Status: Challenges to the limitation extension notifications continue to be tagged with the pending Supreme Court case, meaning no finality on that specific legal point yet.
Would you like me to draft a letter to the Bank Manager enclosing this order to expedite the lifting of the lien on the account?