Bank Account of Director cannot be attached where allegation was on the company that company has availed ITC through Bogus Invoices.

Case Details:

Issue- In the above case, the petitioner has challenged the impugned provisional attachment order passed by respondent authority attaching several bank accounts of petitioner. Petitioner contented that she was a director on the Board of Directors of a company, going by the name of Milkfood Ltd and also a shareholder and drew salary from the company. The respondent, based on the information received, that Milkfood Ltd. was availing Input Tax Credit (in short ‘ITC’) against fake/ineligible invoices, commenced investigation, under section 67 of the Central Goods and Services Tax Act, 2017 (in short ‘the Act’), against Milkfood Ltd. Several bank accounts of petitioner were provisionally attached under an order.

Held- It was held that Sub-section 1 of section 83 of the Act states that in no uncertain terms states that provisional attachment can be ordered only qua property, including bank account, belonging to the taxable person. Furthermore, the definition of the ‘taxable person’, as set out in section 2(107) of the Act, provides that only that person can be a taxable person, who is registered or liable to be registered as per the Act. It is not even the case of the respondent that the petitioner is either registered or was liable to be registered in terms of the provisions of section 2(107) of the Act. Therefore, according to us, the proceedings must fail on this score alone. However, the petitioner claimed, in her voluntary statement, that she was paid Rs. 1.50 crores in the FY 2019-2020 for rendering services in her capacity as a mentor/advisor to Milkfood Ltd. Therefore, even if we assume, for the moment, that, since investigations are on against the taxable person, and therefore, proceedings are pending under section 67 of the Act, there is nothing placed on record to show that there was material available with the respondent, linking the petitioner to purported fake invoices. In the zeal to protect the interest of the revenue, the respondent cannot attach any and every property, including bank accounts of persons, other than the taxable person. Therefore, the court was inclined to allow the writ petition and was ordered accordingly. The impugned provisional attachment orders dated 7-12-2020 are quashed. The respondent will communicate the order passed to the concerned Banks.