2022 (12) TMI 123 - HC - GST

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 ... Recovery of dues - Attachment of property - Section 83 of the Central Goods and Services Tax Act, 2017 - HELD THAT:- The pendency of the proceedings is sine qua non for exercise of powers of provisional attachment. While earlier section 83 could be invoked only during pendency of certain proceedings, now it can be invoked 'after initiating proceedings under the Chapters mentioned therein'. The fundamental requirement remains valid that there must be proceeding pending before the section could be invoked and provisional attachment could be acted upon. The impugned notice was issued on 06.01.2022. There is no gainsaying that no proceedings were pending. The summons under section 70(1) of the CGST Act and GGST Act came to be issued only on 21.01.2022. The very invocation of powers and issuance of order dated 06.01.2022 was therefore in absence of any proceedings initiated. The powers under section 83 could not have been exercised. The impugned order stands illegal when it seeks to provisionally attach the bank account of the petitioner. It is only on this ground that the impugned Order is liable to be set aside. The attachment order dated 6.1.2022 issued by the respondent no.3 is set aside. The respondent authorities may continue to proceed further pursuant to the summons dated 21.01.2022 and are at liberty to consider imposing the provisional attachment under section 83 of the CGST Act in accordance with law - Petition allowed in part. 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.