Balancing Taxpayer Rights while Protecting Interests of Revenue: A Case Comment on Supreme Court Decision Clarifying Provisional Attachment Mechanism under GST Laws

Abstract

In the Goods and Services Tax (GST) laws, the tax-administration is entrusted with the power to effect ‘provisional attachment to protect revenue in certain cases’ wherein “any property, including bank account” can be attached provisionally by the tax-administration during the pendency of certain proceedings. In a short span of four years since the enforcement of GST laws, this power of provisional attachment has been exercised in plenitude by the tax-administration which has resulted into judicial challenges and detailed judgments of the High Court. Recently the Supreme Court was seized with a controversy regarding provisional attachment of the properties of a taxpayer by the GST authorities. By way of a detailed judgment in the case of RKI, the Supreme Court has culled out the relevant facets of this power of GST authorities, its contours, limitations, etc. as also enunciated the role of the courts in monitoring the exercise of this power by the GST authorities. The decision is expected to streamline the exercise of such powers under the GST laws while also balancing the rights of the taxpayers. This case comment explores the decision in greater detail so as to demystify the legal position and envision its impact on GST laws.