Bank account attachment under Section 83 CGST Act quashed for lack of reasoned opinion by Commissioner

The Allahabad HC addressed a challenge to bank account attachment under Section 83 of CGST Act, 2017. The court found that the Commissioner failed to record a reasoned opinion establishing necessity to attach petitioner's bank account for revenue protection, as required by SC precedent in Radha Krishan Industries case. The court emphasized that the Commissioner must pass reasoned orders addressing objections to attachment and communicate them to the affected taxpayer. The case was adjourned to allow petitioner to file rejoinder affidavit, with further hearing scheduled.

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Issues Involved:
1. Legality of the provisional attachment order under Section 83 of the CGST Act, 2017.
2. Compliance with procedural requirements and the formation of the Commissioner's opinion.
3. Reference to the Supreme Court's interpretation of Section 83 in the case of Radha Krishan Industries vs. State of Himachal Pradesh.

Detailed Analysis:

1. Legality of the Provisional Attachment Order under Section 83 of the CGST Act, 2017:
The petitioner challenged the order of attachment dated 19.5.2022 issued under Section 83 of the CGST Act, 2017. The attachment was directed towards the bank account of M/s. S.G. Industries to protect the interests of revenue. The respondents stated that proceedings under Section 67 were initiated on 9.9.2021/12.9.2021 through a search of the petitioner's business premises and recording of statements under Section 70. The petitioner was also arrested under Section 69 on 11.9.2021. However, no proceedings under Section 74 had been initiated yet.

2. Compliance with Procedural Requirements and the Formation of the Commissioner's Opinion:
The court scrutinized whether the Commissioner had recorded an opinion based on tangible material indicating the necessity to attach the bank account to protect the revenue. The respondents failed to produce any such opinion before the court. The court emphasized the importance of the formation of an opinion by the Commissioner, as mandated by Section 83, before ordering a provisional attachment.

3. Reference to the Supreme Court's Interpretation of Section 83 in Radha Krishan Industries vs. State of Himachal Pradesh:
The court referred to the Supreme Court's judgment in Radha Krishan Industries, which elucidated the stringent requirements for invoking Section 83. The Supreme Court highlighted that the power to provisionally attach property is draconian and must be exercised with strict adherence to statutory preconditions. The Commissioner must form an opinion based on tangible material that the attachment is necessary to protect government revenue. The judgment also underscored the necessity of procedural safeguards, including the right to submit objections and the opportunity to be heard.

Summary of Findings from Radha Krishan Industries Case:
- The formation of an opinion by the Commissioner must be based on tangible material.
- The necessity to attach must be to protect the government revenue.
- Procedural safeguards must be strictly followed, including the right to submit objections and the opportunity to be heard.
- The Commissioner must pass a reasoned order dealing with objections to the attachment.

Conclusion:
The court granted the petitioner a week to file a rejoinder affidavit and scheduled further hearing for 26 July 2022. The In Charge Commissioner CGST, Ghaziabad, was directed to appear in proper dress on the next date.

This detailed analysis captures the core issues and legal reasoning while preserving the significant phrases and legal terminology from the original judgment.

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