TaxTMI 
TaxTMI 
2019 (9) TMI 741
X X X X Extracts X X X X
X X X X Extracts X X X X
....his writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs: "A. Your Lordships may be pleased to admit this petition. B. Your Lordships may be pleased to allow this petition. C. Your Lordships may be pleased to issue writ of mandamus or any other appropriate writ directing the respondent No.01 to immediately remove attachment of following bank accounts belonging to petitioner No.02 company: Name of Bank Branch of Bank Current Account Number Kalupur Commercial Co. Op. Bank Ltd. Xaviers Road Branch, Navrangpura, Ahmedabad 820102455 HDFC Bank Ltd. Paldi Vasna Road Branch, Ahmedabad 12292000000743 and that is how, debit may be allowed to be made from said account or any other account operated by petitioner No.02 company on PAN - AABCD4327M; D. Pending admission, hearing and final disposal of the matter, Your Lordships may be pleased to grant an exparte, ad interim order in favour of the petitioner herein in terms of prayer clause 'C' hereinabove. E. Your Lordships may be pleased to grant such other and further relief(s) that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rusing the said arrest memo, it may be found that it is mentioned therein that all the aforesaid six companies had passed on ITC to various buyers. Various sales and purchase invoices and inward / outward registers were seized under various panchnamas. 5.7 It is pertinent to note that although it is mentioned in the arrest memo that in the investigation conducted so far clearly reveals the offence of unutilization of ITC credit fraudulently to the extent of more than Rs. 43.00 Crore including ITC involved in Circular trading within Desai Group entities by Desai Group of Companies, namely : a. Desai Impex Pvt. Ltd. b. Desai Metalinks Ltd. c. PHD Trading Corporation Ltd. d. PHD Ferro Alloys Ltd e. Desai Overseas Pvt. Ltd. f. Desai Enterprise g. Desai Metalinks No bifurcation of the alleged fake invoices issued or alleged transfer of illegal credits by particular companies individually is made. 5.8 Without leveling any specific allegation against petitioner No. 02 company or for that matter any particular company out of the Desai Group of Companies, arbitrarily and illegally Vide Form GST DRC22 d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd AAJCP1737H 24AAJCP173H1ZG 918020014204 173 Likewise, vide Form GST DRC22 dtd. 03/04/2019 being issued to the Branch Manager, State Bank of India, Ground Floor, Ashirwad Paras, Corporate Road, Satellite, Ahmedabad 380 015, Respondent No. 02 has provisionally attached Current Account No. 37329817472 of Desai Overseas Pvt. Ltd. and vide Form GST DRC22 dtd. 03/04/2019 being issued to the Branch Manager, Oriental Bank of Commerce, G2, Samedh, Nr. Associated Petrol Pump, C.G. Road, Ahmedabad 380 006, Respondent No. 02 has provisionally attached Current Account No. 10511131001097 of Desai Metalinks Ltd. 5.9 Copies of all the aforesaid form GST DRC22 all dtd. 03/04/2019 were handed over to the respective companies of Desai Group of Companies vide respective letters dtd. 04/04/2019 being addressed to the respective Desai Group of Companies. 5.10 Upon receiving the respective form GST DRC22, the accountant of the respective companies including the petitioner No. 02 company had personally visited the office of Respondent No. 01 on 05/04/2019 and had requested the officers of DGGI to kindly remove attachment from the respective bank accounts. On the oth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....fter considering the submissions made before this Hon'ble High Court in aforesaid Special Civil Applications as well as aforesaid objection dtd. 15/04/2019 submitted on 16/04/2019, deliberately the relevant portion of order u/s. 83 (supra) was amended by substituting section 67 with section 83. 5.13 During the course of hearing, it was particularly submitted that it was undisputed fact that no proceeding u/s. 74 (supra) were pending. It is undisputed fact that in the order of attachment u/s. 83 (supra) it was wrongly mentioned that proceeding u/s. 74 (supra) were pending. Only after considering submissions of the petitioners, a corrigendum was issued. It was not permissible to issue corrigendum after receipt of objection/reply/submission of the petitioner. In support of said submission, petitioner had also relied upon judgement of Hon'ble Tribunal in the case of Mahindra & Mahindra Ltd V/s. Commissioner of Central Excise, Mumbai reported at 2006 (196) E.L.T. 62 (Tri.Mumbai). 5.14 Having regard to all the submissions made before the aforesaid authority, it was expected that the order u/s. 83 (supra) wold be vacated and the bank accounts which were provisionally att....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Unit, Ahmedabad, hereby provisionally attach the aforesaid account. No debit shall be allowed to be made from the said account or any other account operated by the aforesaid person on the same PAN without the prior permission of this department. Sd/( Vivek Prasad) Additional Director General DGGI, AZU, Ahmedabad." 7 So far as the order of provisional attachment of the bank account maintained with the Kalupur Commercial Cooperative Bank Limited is concerned reads as under: "Form GST DRC22 [See rule 159(1)] Reference No.DGGI/AZU/12(4)73/201819 Date: 03.04.2019 To, The Branch Manager, Kalupur Commercial Co.op Bank Ltd. Xaviers College Branch, Akshar Arcade Gr. Floor, Opp, Memnagar Fire Station, Navrangpura, Ahmedabad, Subject : Provisional attachment of property under Section 83 of CGST Act, 2017 It is to inform you that following companies / firms are having principal place of business at 407, 4th floor, SigmaCeejay Legacy, Nr. Panjrapole Char Rasta, Ambawadi, Ahmedabad380015. The details of the companies along with reg....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has brought to the notice of the petitioners, the provisions of subrule( 5) of rule 159 of the Central Goods and Services Tax Rules, 2017 to the effect that it is open for the petitioners to file objection to the effect that the property attached was or is not liable to attachment, within seven days of attachment under subrule (1) of rule 159 of the Central Goods and Services Tax Rules, 2017 before the competent authority. 2. Mr. D. K. Trivedi, learned advocate for the petitioners has invited the attention of the court to the order dated 3.4.2019 in Form GST DRC22 under rule 159 (1) of the Central Goods and Services Tax Rules, 2017, to point out that in terms of the said order, proceedings have been launched against the petitioners under section 74 of the CGST Act. It was submitted that no proceeding under section 74 of the CGST Act has been initiated against the petitioners till date, and hence, the action under section 83 of the CGST Act, 2017 is without authority of law. 3. In the opinion of this court, when the communications dated 4.4.2019 of the Deputy Director, DGGI, AZU itself informs the petitioners that the petitioners have a remedy against the order of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ention is invited to Form GST DRC22 dated 03.04.2019 regarding the provisional attachment of property under Section 83 of CGST Act, 2017. In para 2 of the said Form GST DRC22 dated 03.04.2019, the words/sentence "Proceedings have been launched against the aforesaid taxable persons under section 74 of the said Act to determine the tax or any other amount due from the said person" may be read as: "Proceedings have been launched against the aforesaid taxable persons under section 67 which shall culminate into action under section 74 of the said Act to determine the tax or any other amount due from the said person." 10 As in the earlier round of litigation, this Court had directed the writ applicants to file his objections to the action taken under Section 83 of the Act by availing the provision under subsection (5) Rule 159 of the Rules. Such objections were filed and ultimately, the order came to be passed by the respondent No.2, which reads as under: "19. Further, I would like to emphasize that any action under Section 83 of the "Act is only & provisional measure to protect the interest of Revenue when during the investigations the col....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 64 or section 67 or section 73 or section 74, the Commissioner is. Of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed." Thus, I observe that action under Section 83 of the CGST Act, 2017 can be lawfully initiated even when proceedings under Section 67 are going on against the concerned registered person and perusal of records reveal that reference to the proceedings under Section 74 of the CGST Act, 2017 has been made in the order dated 03.04.2019 inadvertently instead of a reference being made to proceedings under Section 67 of the CGST Act, 2017. 23. Now the moot point to be decided here is whether quoting of a wrong provision i.e. reference Section 74 instead of Section 67 of the CGST Act in the orders under the Section 83 of the Act shall make the proceedings under Section 83 of the CGST Act, 2017, invalid. In this regard I find that it is a well settled proposition of the law that if ˙ the exercise of a power can be trace....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the investigation which is akin to a Notice which shall be issued under Section 74 of the CGST Act, 2017, whereas in the instance case corrigendum has been issued with reference to action taken under Section 83 which & provisional measure, in order to rectify the inadvertent error in the said order. Further in the case of "Mahindra & Mahindra Ltd Vs Commissioner of C. Ex., Mumbai"2006 (196) E.L.T. 62 (TriMumbai) cited by the applicants, the corrigendum issued was to alter the scope of Show Cause Notice by trying to invoke provisions under Rule 173Q of the Central Excise or Rule 210of Central Excise Rules 1944 in place of Rule 25 and 27 of the Central Excise (No. 2) Rules 2001. I also observe that not only in & subsequent order in the case of CCE Vs Konark Industries [2011 (270)ELT 673, TriKol], the CESTAT has held issuance of a corrigendum to Show Cause Notice ąs valid but in the case of Uma Laminate Products (P) Ltd. [1997 (94)ELT A.153(SC)], the corrigendum to Show Cause Notice issued was held to be valid and the appeal filed by the assessee was dismissed by the Hon'ble Supreme Court as withdrawn. Moreover, the instant case is not a case where by way of corrigendum ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n that the proceedings under Section 74 of the Act had been initiated and those were pending. According to Mr. Trivedi, the same was altogether not correct. Mr. Trivedi submitted that as soon as it was brought to the respondent No.1 that no proceedings under Section 74 had been initiated, and therefore, there could not have been any provisional attachment under Section 83 of the Act instead of passing an appropriate order lifting the provisional attachment, the respondent No.1 went to the extent of correcting its mistake by issuing a corrigendum. By issuing a corrigendum, the respondent No.1 clarified that instead of Section 74, Section 67 should be read. According to Mr. Trivedi, this is not permissible in law. To put it in other words, according to Mr. Trivedi, such corrigendum is not tenable in law. 13 The second submission of Mr. Trivedi is that it is only the Commissioner who can pass an order of provisional attachment under Section 83 of the Act. In the case at hand, the impugned order of provisional attachment under Section 83 has been passed by the Additional Director General DGGI AZU, Ahmedabad. 14 Mr. Trivedi further submitted that even if the corrigendum is held to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en Thousand One Hundred Three only), the tax amount to the tune of Rs. 63,62,41,525/( Rupees Sixty Three Crore Sixty Two Lakh Forty One Thousand Five Hundred Twenty Five Only) came to be paid. Thus, Rs. 4,13,23,422/( Rupees Four Crore Thirteen Lakh Twenty Three Thousand Four Hundred Twenty Two only) has been paid in excess than the amount of credit availed of. If that be so, then there was no question of arriving at the satisfaction that the interest of the revenue goods are protected. 16 Mr. Trivedi submitted that assuming for the moment that all the allegations are true and correct and the credits were wrongly availed of, still the tax has been paid though it was not liable to be paid in light of the fact that there was no supply of goods. He submitted that the availment of credits can be justified on two counts: (1) It is a revenue neutral satisfaction (2) the payment of tax although not payable yet is to be treated as if unavailable credits are reversed after they are wrongly availed. 17 Mr. Trivedi, in support of his aforesaid submissions, has placed reliance on the following case laws: [i] Commissioner of Customs, Bangalore vs. Kesar Marble and Granites reporte....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... their account and availment of ITC without making payment to their major suppliers in spite of lapse of more than 180 days from the date of issuance of invoices in contravention of the provisions under section 16 of the CGST Act; out of which the liability of M / s Desai Impex Pvt Ltd. comes to the tune of Rs. 6,60,02,079/. 23 Further, the evidences collected during investigation also indicated shortage of stock to the tune of Rs. 18,32,94,291/involving ITC of Rs. 3,29,92,972/availed by M / s Desai Impex Pvt Ltd in respect of Which authorized person Shri Pranit Hem Desai has clearly admitted that they are not having stock of Rs. 18,32,94,291/involving ITC of Rs. 3,29,92,972/in his statement dated 05.03.2019. 24 Any action under Section 83 of the Act is only a provisional measure to protect the interest of Government Revenue when during the investigations the collected evidences overwhelmingly indicate substantial evasion of tax and the Petitioner despite having admitted the liability refrains from making good the loss suffered by the Government exchequer on account of his/their fraudulent acts. Therefore, contention raised by the Petitioner is devoid of any truth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ST Act is one year. Action under Section 79 of CGST Act 2017 is for 'recovery of tax' in the cases after confirmation of the demand, where any amount becomes payable by a person to the Government under any of the provisions of this Act or the rules made thereunder is not paid, the proper officer shall proceed to recover the amount. The provisions for filing of appeal against payment of 10% of the confirmed demand shall be available to the Petitioner after issuance of show cause notice and its adjudication by the proper Officer. This provision is irrelevant in the context of action under Section 83 of the CGST Act. Reply to Para 60: Action under Section 83 against the Petitioner is legal and proper which has been issued by lawful exercise of power under Section 83 of the CGST Act in view of the submissions made hereinabove. Reply to Para 6P: 27. It is to submit before the Hon'ble Court that the statements of Various suppliers and buyers have been recorded under Section 70 Of the CGST Act, 2017. The Petitioner shall get full opportunity to defend themselves at the time of adjudication. The action under Section 83 is only a provisional measure to protect....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the Criminal Misc. Application no. 6623 of 2019 is related to granting of regular bail to Petitioner, this is not based on the merit of the case. Reply to Para GT: Action under Section 83 against the Petitioner is legal and proper which has been issued by lawful exercise of power under Section 83 of the CGST Act. Reply to Para GU: 30. In the instant case, there is no violation of rights under Article 14,19(1)(g) and SOOA under the Constitution of India in as much as the Petitioner is free to carry on their supply of Goods and Services (Business Activity) as per applicable CGST Act, 2017 and rules made under it, the levy of GST is imposed on all suppliers and does not interfere with the right of the Supplier/Petitioner to practice any profession, or to carry on any occupation, trade or business. Accordingly as per Section 16 of CSGT Act, 2017 ITC is available but with certain conditions, which are applicable to all registered persons engaged in supply of goods, but as discussed in above para's, the Petitioners in this case has availed ITC without any actual supply and receipt of goods in violation of conditions of the law as stipulated under S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the attachment of following Bank accounts may be rejected. Name of the Bank Branch of the Bank Current Account Number Closing balance (in Rs.) as on 03.04.2019 Kalupur Commercial Co. Op. Bank Ltd. Xaviers Road Branch, Navragpura, Ahmedabad '00820102455 7,45,513 HDFC Bank Ltd Paldi Vasna Road Branch, Ahmedabad 12292000000743 1,43,847 ● ANALYSIS: 22 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the respondent No.1 was justified in invoking Section 83 of the Act for the purpose of passing an order of attachment of the bank accounts. 23 Without entering into any other controversy, we are inclined to allow all the six writ applications on the short ground that during the period between July 2017 and May 2019, the total input tax credit availed by the writ applicants aggregates to Rs. 59,49,18,103/( Rupees Fifty Nine Crore Forty Nine Lakh Eighteen Thousand One Hundred Three only), whereas the total tax paid during this period aggregates to Rs. 63,62,41,525/( Rupees Sixty Three Crore Sixty Two Lakh Forty ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....amount was Rs. 14.62 crores. 9. The impugned orders of provisional attachment have been made in exercise of powers under section 83 of the Central Goods and Service Tax Act, 2018 (hereinafter referred to as "the CGST Act"). Section 83 of the CGST Act inter alia provides that where during the pendency of any proceedings under sections 67, 73 or 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by an order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed. 10.At the time when the impugned orders under section 83 of the CGST Act came to be passed, according to the respondent, an amount of Rs. 14.62 crores would have been due and payable by the petitioner upon conclusion of the proceedings that may be initiated pursuant to the proceedings under section 67, 73 or 74 of the Act. 11.Under section 83 of the CGST Act, the Commissioner is empowered to order provisional attachment for the purpose of protecting the interest of the Government revenue. In the facts of the present case, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ults in bringing the business of the petitioner to a grinding halt. 7 Subsection (1) of section 83 of the GGST Act provides that where the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person. On a plain reading of the said provision, it is evident that before resorting to such drastic action, the Commissioner is required to form an opinion that it is necessary to do so to protect the interest of the revenue. For the purpose of arriving at such an opinion, the Commissioner should first form an opinion that the petitioner would not be in a position to pay the tax dues after the assessment proceedings are over. In the facts of the present case, the petitioner firm is a going business and the petitioner has readily deposited a sum of Rs. 17,00,00/which covers more than the tax liability that may be assessed. It is not the case of the respondents that the petitioner is a fly by night operator or that it does not have the means to pay the dues that might to assessed at the end of ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the occasion to consider Section 83 of the State GST Act, 2017 at length in the case of Valerius Industries vs Union of India [Special Civil Application No.13132 of 2019 decided on 28th August 2019]. This Court, after an exhaustive discussions on the subject, summarized its final conclusions as under: "52 Our final conclusions may be summarized as under: [1] The order of provisional attachment before the assessment order is made, may be justified if the assessing authority or any other authority empowered in law is of the opinion that it is necessary to protect the interest of revenue. However, the subjective satisfaction should be based on some credible materials or information and also should be supported by supervening factor. It is not any and every material, howsoever vague and indefinite or distant remote or farfetching, which would warrant the formation of the belief. [2] The power conferred upon the authority under Section 83 of the Act for provisional attachment could be termed as a very drastic and farreaching power. Such power should be used sparingly and only on substantive weighty grounds and reasons. [3] The power of provisional a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....timate collection of the demand. In other words, Section 83 gives a power to be exercised during the pendency of any proceeding for assessment or reassessment, so that the assessee may not fritter away or secrete his resources out of the reach of the Commercial Tax department when the assessment or reassessment is completed. The expression "for the purpose of protecting the interest of the revenue" occurring in Section 83 of the Act is very wide in its meaning. Further, the orders of provisional attachment must be in writing. There must be some material on record to indicate that the Assessing Authority had formed an opinion on the basis thereof that it was necessary to attach the property in order to protect the interest of the revenue. The provisional attachment provided under section 83 is more like an attachment before judgment under the Code of Civil Procedure. It is a liability on the property. However, the power conferred upon the Assessing Authority under Section 83 is very drastic, farreaching power and that power has to be used sparingly and only on substantive weighty grounds and for valid reasons. To ensure that this power is not misused, no safeguards have been provide....