Court quashes provisional attachment orders under CGST Act, stresses need for credible material.

The court allowed the writ application, quashing the provisional attachment orders passed under Section 83 of the CGST Act, 2017, and the order of prohibition under Rule 139(4) of the CGST Rules, 2017. The court emphasized the need for credible material for provisional attachment and stated that if such material is gathered in the future, authorities may order attachment in accordance with the law. Proceedings under Section 73 of the Act are pending, and the writ applicant was instructed not to destroy or hide any relevant documents until the inquiry concludes.

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Issues Involved:

1. Validity of the warrant of authorization and seizure under Section 67(2) of the CGST Act, 2017.
2. Return of seized material.
3. Validity of provisional attachment orders under Section 83 of the CGST Act, 2017.
4. Quashing of the undated show cause notice issued under Section 74 of the CGST Act, 2017.
5. Quashing of the order of prohibition under Rule 139(4) of the CGST Rules, 2017.
6. Interim relief to stay the execution of provisional attachment orders and the order of prohibition.

Detailed Analysis:

1. Validity of the Warrant of Authorization and Seizure under Section 67(2) of the CGST Act, 2017:
The writ applicant challenged the warrant of authorization issued under Section 67(2) of the CGST Act, 2017, and the subsequent search and seizure operations conducted on 29.07.2019. The court noted that the search and seizure were undertaken by the authorities in March and April 2019 at the office premises of the writ applicant situated in Ahmedabad and Baroda. The court found that the properties in respect of which the prohibition order was passed were not found at the premises searched, making the attachment beyond the scope of the powers under Section 67(2) of the Act.

2. Return of Seized Material:
The writ applicant sought the return of the seized material. The court did not specifically address this issue in detail but quashed the provisional attachment orders, which implicitly includes the return of seized material.

3. Validity of Provisional Attachment Orders under Section 83 of the CGST Act, 2017:
The main issue was the sustainability of the provisional attachment orders passed by the Assistant Commissioner under Section 83 of the CGST Act, 2017. The court referred to the decision in Valerius Industries Versus Union of India, which clarified that the power of provisional attachment under Section 83 is conferred upon the Commissioner and cannot be delegated to the Assistant Commissioner. The court emphasized that the subjective satisfaction required for provisional attachment must be based on credible material, which was lacking in this case. The court found that the order was passed without any credible material and thus quashed the provisional attachment orders for both the immovable property and the bank accounts.

4. Quashing of the Undated Show Cause Notice Issued under Section 74 of the CGST Act, 2017:
The writ applicant sought to quash the undated show cause notice issued on 01.08.2019 under Section 74 of the CGST Act, 2017. The court did not specifically address this issue in detail within the judgment provided.

5. Quashing of the Order of Prohibition under Rule 139(4) of the CGST Rules, 2017:
The writ applicant sought to quash the order of prohibition dated 30.07.2019 passed under Rule 139(4) of the CGST Rules, 2017. The court found that the prohibition order was beyond the scope of the powers under Section 67(2) of the Act and thus quashed the order of prohibition.

6. Interim Relief to Stay the Execution of Provisional Attachment Orders and the Order of Prohibition:
Pending the final disposal of the application, the writ applicant sought interim relief to stay the execution of the provisional attachment orders and the order of prohibition. The court had earlier granted interim relief by staying the execution of the order dated 30.07.2019 and the attachment of the bank accounts.

Conclusion:
The court allowed the writ application, quashing the provisional attachment orders passed by the Assistant Commissioner under Section 83 of the CGST Act, 2017, and the order of prohibition under Rule 139(4) of the CGST Rules, 2017. The court clarified that the proceedings under Section 73 of the Act are pending, and the writ applicant must not destroy or secrete any books of account or other documents until the conclusion of the inquiry. The court also noted that if credible material is gathered in the future, the authority may order provisional attachment in accordance with the law.

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