Since no proceedings have been contemplated and / or initiated under any of aforesaid provisions of the CGST Act against petitioners, the provisional attachment of the escrow account belonging to the petitioners is not justified and is ex-facie arbitrary.
Section 83 of the CGST Act, 2017 — Provisional Attachment of Bank Accounts- Attachment of Escrow Account —–The applicant prayed for direction to quash and set aside communication / order dated 27.09.2019 & 22.09.2020 issued by Respondent to the extent it provisionally attaches share of the Petitioner No.1 in the escrow account. The petitioner No.1 is a contractor and respondent No.3 sublet the contract of construction to petitioner. An escrow account was opened wherein Respondent No.3 was the first party whereas petitioner No.1 was the second party in the joint account. It was agreed that out of the deposits 3% shall be transferred to respondent No.3 and 97% shall be transferred to petitioner No. 1. The petitioner submitted that as one year had elapsed since passing of the provisional attachment order dated 27.09.2019, fresh provisional attachment order dated 22.09.2020 was passed. The respondent no. 2 submitted that enquiry has been initiated against respondent No.3 and their bank account has been attached. The petitioner submitted that no proceedings were initiated against petitioner No.1; Proceedings, if any, were initiated against respondent No.3; Escrow account being a joint account held by respondent No.3 and petitioner No.1 could not be attached to the extent of the petitioner No1's share. Petitioners have filed objections dated 09.10.2020 under Rule 159(5) to the fresh provisional attachment order dated 22.09.2020, however, no decision has been taken. The court observed that in view of the contractual arrangement between respondent No.3 and petitioner No.1, the receipts received in the escrow account belonged to the respective parties in the proportion as agreed upon by the parties.
Held that:- The Hon’ble High Court directed that the Respondent No.2 to decide objections filed by the petitioner. Further directed that until this decision is taken, petitioner No.1 shall maintain a balance of Rs. 5,00,000.00 in the escrow account. Lifted the provisional attachment in so far as petitioner No. 1’s share in the escrow account is concerned subject to maintaining credit balance of Rs. 5,00,000.00 by petitioner No. 1.
Since no proceedings have been contemplated and / or initiated under any of aforesaid provisions of the CGST Act against petitioners, the provisional attachment of the escrow account belonging to the petitioners is not justified and is ex-facie arbitrary.
Section 83 of the CGST Act, 2017 — Provisional Attachment of Bank Accounts- Attachment of Escrow Account —–The applicant prayed for direction to quash and set aside communication / order dated 27.09.2019 & 22.09.2020 issued by Respondent to the extent it provisionally attaches share of the Petitioner No.1 in the escrow account. The petitioner No.1 is a contractor and respondent No.3 sublet the contract of construction to petitioner. An escrow account was opened wherein Respondent No.3 was the first party whereas petitioner No.1 was the second party in the joint account. It was agreed that out of the deposits 3% shall be transferred to respondent No.3 and 97% shall be transferred to petitioner No. 1. The petitioner submitted that as one year had elapsed since passing of the provisional attachment order dated 27.09.2019, fresh provisional attachment order dated 22.09.2020 was passed. The respondent no. 2 submitted that enquiry has been initiated against respondent No.3 and their bank account has been attached. The petitioner submitted that no proceedings were initiated against petitioner No.1; Proceedings, if any, were initiated against respondent No.3; Escrow account being a joint account held by respondent No.3 and petitioner No.1 could not be attached to the extent of the petitioner No1's share. Petitioners have filed objections dated 09.10.2020 under Rule 159(5) to the fresh provisional attachment order dated 22.09.2020, however, no decision has been taken. The court observed that in view of the contractual arrangement between respondent No.3 and petitioner No.1, the receipts received in the escrow account belonged to the respective parties in the proportion as agreed upon by the parties.
Held that:- The Hon’ble High Court directed that the Respondent No.2 to decide objections filed by the petitioner. Further directed that until this decision is taken, petitioner No.1 shall maintain a balance of Rs. 5,00,000.00 in the escrow account. Lifted the provisional attachment in so far as petitioner No. 1’s share in the escrow account is concerned subject to maintaining credit balance of Rs. 5,00,000.00 by petitioner No. 1.