Petition dismissed for failing to exhaust Rule 159(5) remedy; provisional attachment under Section 83 CGST upheld

The HC dismissed the writ petition challenging provisional attachment under Section 83 CGST, holding the petitioner failed to exhaust the statutory remedy under Rule 159(5) allowing an application to the Commissioner to lift attachment. The court found no infirmity in the executive's delegation empowering the officer to pass the attachment order and rejected the petitioner's competence objection. As an alternative and efficacious remedy existed, extraordinary writ relief was inappropriate and the petition was dismissed.

---

---

Issues involved:
The issues involved in this case are the arbitrary attachment of properties and bank accounts of a partnership firm by the first respondent under Section 83 of the CGST Act, the alleged fraudulent activities of the petitioner leading to the issuance of show cause notices under Section 74 of the KGST Act, and the challenge to the legality of Ext.P6 orders passed by the first respondent.

Arbitrary Attachment of Properties and Bank Accounts:
The petitioner, a partnership firm engaged in the trade of scrap goods, challenged the Ext.P6 orders issued by the first respondent under Section 83 of the CGST Act, attaching the immovable properties and bank accounts of the petitioner. The petitioner contended that the action of the respondents in passing these orders was arbitrary, unjustifiable, and violated the petitioner's fundamental right to carry on business. The petitioner argued that the orders were passed without proper application of mind and in violation of settled provisions of law. The first respondent, in response, defended the attachment by stating that it was done to protect the government revenue and was not motivated by mala fides. The first respondent contended that the petitioner had committed severe fraud by availing input tax credit to non-existent suppliers, resulting in a potential liability running into crores of rupees. The court, after considering the pleadings and materials on record, upheld the validity of the Ext.P6 orders, finding that the first respondent was empowered to pass such orders under Section 83 of the CGST Act.

Fraudulent Activities and Show Cause Notices:
The second respondent had issued show cause notices (Exts.P1 and P2) under Section 74(1) of the KGST Act to the petitioner, alleging that the petitioner had purchased goods from 'non-existing' units and issued 'fake invoices' to avail fraudulent input tax credit. The petitioner had submitted replies to these notices. The first respondent argued that the investigation revealed that the petitioner had availed input tax credit to the tune of Rs.32 crore using forged documents and conducting business even after the cancellation of registration. The first respondent contended that the petitioner had engaged in fraudulent activities by evading taxes, leading to the issuance of the show cause notices and subsequent attachment of properties and bank accounts under Section 83 of the CGST Act. The court found that the investigation was ongoing, and prima facie evidence suggested fraudulent activities by the petitioner, justifying the actions taken by the respondents.

Legality of Ext.P6 Orders:
The petitioner challenged the legality of the Ext.P6 orders passed by the first respondent under Section 83 of the CGST Act. The petitioner argued that the first respondent did not have the authority to issue such orders and that only the Commissioner was empowered to do so. The petitioner contended that the provisions of the Act limited the powers of the first respondent in this regard. However, the court held that the first respondent was empowered to pass orders under Section 83 of the CGST Act, as delegated by the relevant notification and provisions of the Act. The court distinguished the case cited by the petitioner's counsel and found that the first respondent had the necessary authority to issue the Ext.P6 orders. Consequently, the writ petition challenging the legality of the orders was dismissed, with the petitioner advised to pursue statutory remedies if desired.

---