Provisional attachment order under Section 83 CGST Act set aside for being issued before initiating proceedings

The Gujarat HC set aside a provisional attachment order dated 6.1.2022 issued under Section 83 of the CGST Act, 2017. The court held that provisional attachment powers require pending proceedings as a fundamental requirement. Since the attachment order was issued before any proceedings were initiated (summons under Section 70(1) were issued later on 21.1.2022), the exercise of powers under Section 83 was illegal and premature. The authorities were permitted to continue proceedings pursuant to the subsequent summons and consider fresh provisional attachment in accordance with law.

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Issues:
Challenge to attachment notice under Section 83 of CGST Act, de-freezing of bank account, challenge to summons under section 70(1) of CGST Act.

Analysis:
1. The petitioner sought to set aside an attachment notice dated 06.01.2022 issued under Section 83 of the Central Goods and Services Tax Act, 2017 and requested the de-freezing of a bank account. The petitioner operates from Mumbai and does not have a commercial presence in Gujarat.

2. The respondent issued a provisional attachment order based on alleged fraudulent activities by M/s. Raja Traders involving GST refund. The petitioner claimed to have paid an advance to M/s. Raja Traders for goods not received, while the respondent alleged involvement in fraudulent refund claims.

3. The petitioner argued that the attachment notice lacked jurisdiction as the petitioner's operations were in Maharashtra. Legal precedents were cited to emphasize the need for credible grounds for provisional attachment and to avoid irreversible effects on businesses.

4. The respondent contended that various irregularities were found during a search operation at M/s. Raja Traders, linking transactions to the petitioner's bank account. The respondent justified the attachment based on these findings.

5. Section 83 of the Gujarat Goods and Services Tax Act, 2017 allows provisional attachment during pending proceedings under specific sections. The court referenced a Supreme Court case emphasizing the necessity of pending proceedings for invoking Section 83.

6. The court found the attachment order issued without pending proceedings, making it illegal. The court set aside the attachment order but allowed further proceedings based on a subsequent summons issued under section 70(1) of the CGST Act.

7. The petition was partly allowed, setting aside the attachment order while permitting authorities to proceed as per the summons. The ruling clarified the importance of pending proceedings for invoking provisional attachment powers under Section 83.

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