2020 (9) TMI 583 - HC - GST

Court sets aside provisional attachment orders as illegal, directs release of bank account.

The court deemed the provisional attachment orders as 'patently illegal' since proceedings under Section 67 had concluded without new proceedings under ... Provisional attachment to protect revenue - Power under Section 83 to provisionally attach property including bank accounts - Pendency of proceedings under Sections 62/63/64/67/73/74 as a condition precedent - Effect of cessation of the triggering proceedings on continuance of attachment - Requirement of formation of opinion by Commissioner for protecting Government revenueProvisional attachment to protect revenue - Power under Section 83 to provisionally attach property including bank accounts - Pendency of proceedings under Sections 62/63/64/67/73/74 as a condition precedent - Effect of cessation of the triggering proceedings on continuance of attachment - Validity of provisional attachment under Section 83 where proceedings under Section 67 had concluded and no proceedings under Sections 63 or 74 (or other Sections specified in Section 83) were pending. - HELD THAT: - Section 83 empowers the Commissioner to provisionally attach property, including bank accounts, only during the pendency of proceedings under any of the specified provisions (Sections 62, 63, 64, 67, 73 or 74). The Court held that pendency of proceedings is a sine qua non for exercise and continuation of powers under Section 83. Where the proceedings which gave rise to the provisional attachment (here, proceedings under Section 67) have been concluded and no other proceedings under the Sections enumerated in Section 83 have been initiated, the statutory condition enabling provisional attachment does not subsist. The Court accepted the petitioner's submission and the reasoning in the cited Gujarat High Court authority that, in absence of any pending proceedings under the listed provisions, an order of provisional attachment under Section 83 is without authority of law. Applying these principles to the facts, since the Section 67 proceedings were over and no proceedings under Section 63 or 74 (or any other provision mentioned in Section 83) had been initiated, the impugned provisional attachment could not lawfully continue and had to be set aside. The Court accordingly directed release of the provisionally attached bank account on receipt of certified copy of its order.Impugned orders of provisional attachment set aside; respondents directed to release the petitioner's bank account forthwith on receipt of certified copy of this order.Final Conclusion: The provisional attachment made under Section 83 was unlawful once the proceedings under Section 67 had concluded and no other specified proceedings were pending; the attachment is quashed and the bank account must be released on production of certified copy. Issues Involved:1. Legality of the provisional attachment of the petitioner's bank account under Section 83 of the Central Goods and Services Tax Act, 2017.2. Continuation of attachment post-completion of proceedings under Section 67 of the Act.3. Interpretation and application of Sections 63, 67, and 74 of the Central Goods and Services Tax Act, 2017.Detailed Analysis:1. Legality of the Provisional Attachment under Section 83:The petitioner challenged the provisional attachment of their bank account, arguing that the attachment order dated 29.07.2020, issued under Section 83 of the Central Goods and Services Tax Act, 2017 (the Act), had become redundant as the proceedings under Section 67 of the Act had concluded. The petitioner sought a writ of certiorari to quash the attachment order and a writ of mandamus to direct the release of the attached bank account. The court examined Section 83, which allows the Commissioner to provisionally attach any property, including bank accounts, during the pendency of proceedings under specified sections, including Section 67.2. Continuation of Attachment Post-Completion of Proceedings under Section 67:The court noted that the attachment was initially justified under Section 83 due to ongoing proceedings under Section 67, which involves inspection, search, and seizure. However, the court highlighted that the proceedings under Section 67 had concluded, and no further proceedings under Sections 63 or 74 had been initiated. The court emphasized that the sine qua non for the exercise of powers under Section 83 is the pendency of proceedings under the specified sections. Once the proceedings under Section 67 concluded, the basis for the provisional attachment ceased to exist.3. Interpretation and Application of Sections 63, 67, and 74:The court referred to the relevant sections of the Act:- Section 67: Grants the power of inspection, search, and seizure to the proper officer when there is reason to believe that a taxable person has suppressed transactions or evaded tax.- Section 63: Pertains to the assessment of unregistered persons.- Section 74: Deals with the determination of tax not paid or short paid due to fraud or willful misstatement.The court cited the Gujarat High Court's decision in Kushal Ltd. Vs. Union of India, which held that provisional attachment under Section 83 is not sustainable if no proceedings are pending under the specified sections. The court concluded that the provisional attachment should cease once the proceedings under Section 67 are over, unless new proceedings under Sections 63 or 74 are initiated.Conclusion:The court found the provisional attachment orders to be 'patently illegal' as the proceedings under Section 67 had concluded without any new proceedings under Sections 63 or 74 being initiated. Consequently, the court set aside the impugned orders and directed the respondents to release the petitioner's bank account forthwith.Order:The impugned orders dated 29.07.2020 and 06.08.2020 were quashed, and the respondents were directed to release the petitioner's bank account provisionally attached under Section 83 of the Act.