TaxTMI 
TaxTMI 
2020 (1) TMI 743
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....ssue a writ of mandamus, or any other appropriate writ, order or direction to the respondents inter alia directing the respondents to return the seized material back to the applicant, in the interest of justice; (C) Your Lordship may be pleased to further quash and set aside the provisional attachment orders at Annexure 'A' (Colly) issued purportedly u/s. 83 of the CGST Act, 2017, in connection with the bank accounts of the applicant and the office premises of the applicant respectively issued to the Branch Manager, HL Commerce College Branch, Central Bank of India, Branch Manager, Naranpura Branch, ICICI Bank, Branch Manager, Vijaya Bank, Ashram Road Branch and City Survey Superintendent, Paldi, Ahmedabad, in the interest of justice; (D) Your Lordship may be pleased to issue a writ of prohibition or any other appropriate writ, order or direction inter alia quashing the undated show cause notice issued on 01.08.2019 (Annexure B) purportedly issued u/s. 74 of CGST Act, 2017, in the interest of justice. (E) Your Lordship may be pleased to issue a writ of mandamus or any other appropriate writ, order or direction inter alia quashing the order of prohibition ....
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.... Ravish Bhatt learned Advocate for the petitioner has inter alia invited the attention of the court to the order of prohibition dated 30.7.2019 passed by the Assistant Commissioner of State Tax under rule 139(4) of the Gujarat Goods and Service Tax, 2017 (hereinafter referred to as 'GGST Act, 2017') to submit that such order is beyond the scope of the provisions of subsection (2) of section 67 of the GGST Act, 2017. 2. It is further submitted that the respondents have exercised powers of provisional attachment of property under section 83 of the GGST Act whereby, the three bank accounts of the petitioner maintained with the Central Bank of India, H.L. Commerce College Branch, Ahmedabad, ICICI Bank, Naranpura Branch, Ahmedabad and Vijaya Bank, Ashram Road Branch, Ahmedabad have been attached. 3. It was submitted that apart from the attachment of the bank accounts, the respondents have also provisionally attached the office premises of the petitioner being B-705, Mondeal Heights. It was submitted that the immovable property which has been attached by the respondents is worth more than a crore rupees, which is more than the amount estimated by the respondents, which ....
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....Commissioner of State Tax to delegate his powers under Section 83 of the Act to the Assistant Commissioner, and (ii) assuming for the moment that it is permissible for the Commissioner to delegate his powers to the Assistant Commissioner, what is expected of the Assistant Commissioner while exercising his delegated powers under Section 83 of the Act, for the purpose of provisional attachment. We may quote the relevant observations, made in the judgment referred to above as under: "15. Section 83 of the Act, 2017, which is relevant for our purpose, reads as under: "83. Provisional attachment to protect revenue in certain cases. (1)Where during the pendency of any proceedings under section 62 or section 63 or 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. (2)Every such provisional attachment shall cease to have effect after the expiry of a period of one y....
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....partment. The property mentioned above shall not be allowed to be disposed of without the prior permission of this department. Sd/- (R.R. Bhatiya) State Tax Officer 1, Unit 44, Vadodara." 18. The order of provisional attachment of the goods valued at Rs. 1,60,00,000/reads as under: "Details of goods seized: M/s Valerius Industries 26/1 G.I.D.C. Industrial Estate, Kalol, Dist: Panchamahal GSTN:24AANFV4191N1ZH The process of site inspection was held at your business premises from 20/11/18. In this connection, it has come to the notice during this inspection and the site inspection of the business premises of the other dealers conducted by the concerned officers that, out of the purchases shown in the books of accounts by you, following dealers have been prima facie found to be engaged only in the billing activity. STATEMENT OF PURCHASE SHOWN IN BOOKS WITHOUT TAKING PHYSICAL DELIVERY OF GOODS. SR NO TAX PAYER NAME GST NO. TOTAL VALUE OF PURCHASES SHOWN CGST + SGST 1 ADIDEV ENTERPRISE 24HEGPS2435C1 ZN 6488624 1167954 2 LAXMIRAJ ENTERPRISE 24GTXPS2601K1 Z3 14284362 2571183 3 RADHE....
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....ve delegated his power by virtue of the aforesaid order. Ms. Mehta, the learned A.G.P. Seeks to rely upon Section 5 of the Act, 2017. Section 5 of the State GST Act reads as under: "5. Powers of Officers (1)Subject to such conditions and limitations as the Commissioner may impose, an officer of State tax may exercise the powers and discharge the duties conferred or imposed on him under this Act and discharge the duties conferred or imposed on him under this Act. (2)An Officer of State tax may exercise the powers and discharge the duties conferred or imposed under this Act on any other Officer of State tax who is subordinate to him. (3)The Commissioner may, subject to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other Officer who is subordinate to him. (4)Notwithstanding anything contained in this section, an Appellate Authority shall not exercise the powers and discharge the duties conferred or imposed on any other Officer of State tax." 21. According to Ms. Mehta, by virtue of Section 5(3) of the Act, the Commissioner is empowered to delegate his power to any other office....
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....ted under section 3;" 27 Section 2(25) of the CGST Act defines "Commissioner in the Board" as under: "2(25) "Commissioner in the Board" means the Commissioner referred to in section 168;" 28. Section 83 of the CGST Act is pari materia to Section 83 of the State GST Act. Section 167 of the CGST Act with regard to the delegation of powers reads as under: "167. Delegation of powers. The Commissioner may, by notification, direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by any authority or officer under this Act may be exercisable also by another authority or officer as may be specified in such notification." 29. Section 168 of the CGST Act, 2017 reads as under: "168. (1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of this Act, issue such orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions. (2)The Com....
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.... representative". In P. Ramanatha Aiyar's, The Law Lexicon, "delegation is the act of making or commissioning a delegate. Delegation generally means parting of powers by the person who grants the delegation, but it also means conferring of an authority to do things which otherwise that person would have to do himself". Justice Mathew in Gwalior Rayon Silk Manufacturing (Wvg.) Co. Ltd. v. The Assistant Commissioner of Sales Tax and Others [1974 (4) SCC 98], has succinctly discussed the concept of delegation. Paragraph 37 reads as follows: "37. ... Delegation is not the complete handing over or transference of a power from one person or body of persons to another. Delegation may be defined as the entrusting, by a person or body of persons, of the exercise of a power residing in that person or body of persons, to another person or body of persons, with complete power of revocation or amendment remaining in the grantor or delegator. It is important to grasp the implications of this, for, much confusion of thought has unfortunately resulted from assuming that delegation involves or may involve, the complete abdication or abrogation of a power. This is precluded by the ....
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....ereunder to evade tax under the Act 2017, then such proper officer not below the rank of Joint Commissioner may authorize in writing any other officer of the State Tax to inspect any places of business of the taxable person or the persons engaged in the business of transporting goods or the owner or the operator of warehouse or godown or any other place. According Ms. Mehta, if, ultimately, the entire exercise of inspection, search and seizure is undertaken by an authorized person, then such authorized officer can always be delegated with the power to pass an order of provisional attachment under Section 83 if the authorized officer who is of the opinion that it is necessary so to do for the purpose of protecting the interest of the government revenue. We are afraid we are not in a position to accept this argument. 34. The first and the foremost thing which needs to be noted is that even for the purpose of Section 67, the satisfaction has to be of the proper officer not below the rank of the Joint Commissioner. If the proper officer not below the rank of the Joint Commissioner has reasons to believe that a taxable person has indulged in contravention of any of the provisio....
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....t of the goods or the bank account to protect the interest of the government revenue. The existence of relevant material is a precondition to the formation of opinion. The use of the word "may" indicates not only the discretion, but an obligation to consider that a necessity has arisen to pass an order of provisional attachment with a view to protect the interest of the government revenue. Therefore, the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. Such a course is impermissible in law. At the cost of repetition, the formation of the opinion, though subjective, must be based on some credible material disclosing that is necessary to provisionally attach the goods or the bank account for the purpose of protecting the interest of the government revenue. The statutory requirement of reasonable belief is to safeguard the citizen from vexatious proceedings. "Belief" is a mental operation of accepting a fact as true, so, without any fact, no belief can be formed. It is equally true that it is not necessary for the authority under the Act to state reasons for its belief. B....
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....dance of "necessity". It is really for that reason that the legislature while conferring discretion upon the Government has provided that the Government shall appoint as many Special Judges as may be necessary. The words "as may be necessary" in our opinion is the guideline according to which the Government has to exercise its discretion to achieve the object of speedy trial. The term "necessary" means what is indispensable, needful or essential." 38. In Barium Chemicals Ltd. vs. Company Law Board [AIR 1967 SC 295], the Supreme Court pointed out, on consideration of several English and Indian authorities that the expressions "is satisfied", "is of the opinion" and "has reason to believe" are indicative of subjective satisfaction, though it is true that the nature of the power has to be determined on a totality of consideration of all the relevant provisions. The Supreme Court while construing Section 237 of the Companies Act, 1956 held : "64. The object of S. 237 is to safeguard the interests of those dealing with a company by providing for an investigation where the management is so conducted as to jeopardize those interests or where a company is floated....
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.... an intent to defraud or a fraudulent or unlawful purpose. It is equally unreasonable to think that the legislature could have abandoned even the small safeguard of requiring the opinion to be founded on existent circumstances which suggest the things for which an investigation can be ordered and left the opinion and even the existence of circumstances from which it is to be formed to a subjective process. These analysis finds support in Gower's Modern Company Law (2nd Ed.) p. 547 where the learned author, while dealing with S. 165(b) of the English Act observes that "the Board of Trade will always exercise its discretionary power in the light of specified grounds for an appointment on their own motion" and that "they may be trusted not to appoint unless the circumstances warrant it but they will test the need on the basis of public and commercial morality." There must therefore exist circumstances which in the opinion of the Authority suggest what has been set out in subclauses (I), (ii) or (iii). If it is shown that the circumstances do not exist or that they are such that it is impossible for any one to form an opinion therefrom suggestive of the aforesaid things, the opinion is....
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.... Government. The discretion, if any, conferred upon the State Government to make substantial modifications in the draft development plan is not unfettered. There is nothing like absolute or unfettered discretion and at any rate in the case of statutory powers. The basic principles in this regard are clearly expressed and explained by Prof. Sir William Wade in Administrative Law (Ninth Edn.) in the chapter entitled 'abuse of discretion' and under the general heading the principle of reasonableness' which read as under : "The common theme of all the authorities so far mentioned is that the notion of absolute or unfettered discretion is rejected. Statutory power conferred for public purposes is conferred as it were upon trust, not absolutely that is to say, it can validly be used only in the right and proper way which Parliament when conferring it is presumed to have intended. Although the Crown's lawyers have argued in numerous cases that unrestricted permissive language confers unfettered discretion, the truth is that, in a system based on the rule of law, unfettered governmental discretion is a contradiction in terms. The real question is whether the discretion is wide or ....
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.... whether the authority acted in good faith or bad faith. In the aforesaid context, we may refer to and rely upon a decision of the Supreme Court in the case of Smt. S.R. Venkatraman vs. Union of India reported in (1979) ILLJ 25(SC) where it had been held: "There will be an error of fact when a public body is prompted by a mistaken belief in the existence of a nonexisting fact or circumstances. This is so clearly unreasonable that what is done under such a mistaken belief might almost be said to have been done in bad faith; and in actual experience and as things go, they may well be said to run into one another. The influence of extraneous matters will be undoubtedly there where the authority making the order has admitted their influence. An administrative order which is based on reasons of fact which do not exist must be held to be infected with an abuse of power." We may also refer to and rely upon a decision of the Supreme Court in the case of ITO Calcutta vs. Lakhmani Mewal Das reported in [(1976) 103 ITR 437 (SC)] wherein it had been held as under: "The reasons for the formation of the belief contemplated by Section 147(a) of the Income tax Act, 1961,....
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....on, Section 83 of the Act stands altogether on a different footing. The considerations also are quite different for the purpose of exercising the power of provisional attachment under Section 83 of the Act. Just because, some proceedings are initiated under Section 67 by itself would not be sufficient to arrive at the satisfaction that it is necessary to provisionally attach the property for the purpose of protecting the interest of the government revenue. The power has been specifically conferred upon the Commissioner to form such an opinion. The legislature was quite alive to the fact that an order of provisional attachment cannot be as a matter of course. It is one of the drastic measures which the authority may be compelled to take if the situation demands for the purpose of protecting the interest of the government revenue. Under Section 67 of the Act, 2017, the legislature has thought fit to use the words "proper officer not below the rank of Joint Commissioner". In Section 83, even that discretion is taken away and it is only the Commissioner who has been empowered to act under Section 83 of the Act. In our opinion, therefore, the subjective satisfaction, which is required f....
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....e covered under subsection (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under subsection (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent. Of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under subsection (1) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty five per cent. Of such tax within thirty days of....
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....ut tax credit reversed prior to the appointed day shall not be admissible as input tax credit under this Act." 48. It appears from the materials on record that without issue of any show cause notice, the tax liability came to be determined under Section 74 of the Act. Section 74 makes it abundantly clear that the defaulter should be called upon to show cause as to why he should not be paid the amount specified in the notice along with the interest payable thereon. There could not have been any assessment under Section 74 of the Act without giving any opportunity of hearing to the writ applicant. In such circumstances, the order is not tenable in law and deserves to be quashed and set aside. We also fail to understand as to on what basis the input tax credit could have been blocked by way of computer entry. At the most, the same could have been ordered to be provisionally attached, but how could the same have been blocked. Such action is also not sustainable in law. 49. Section 83 of the Act, 2017 is in pari materia with the provisions of Section 281B of the Income Tax Act, 1961. Section 281B of the Act, 1961 also provides for a provisional attachment of the proper....
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....e Valuation Officer referred to in the provision of the Income-Tax Act, 1961 who shall estimate the fair market value of the property in the manner provided under that provision and submit a report of the estimate to the Assessing Officer within a period of thirty days from the date of receipt of such reference. (5) An order revoking the provisional attachment under head (3) shall be made (a) within forty-five days from the date of receipt of the guarantee, where a reference to the Valuation Officer has been made under head (4); or (b) within fifteen days from the date of receipt of guarantee in any other cases. (6) Where a notice of demand specifying a sum payable is served upon the assessee and the assessee fails to pay that sum within the time specified In the notice of demand, the Assessing Officer may invoke the guarantee furnished under head (3) wholly or in part, to recover the amount. (7) The Assessmg Officer shall. In the interests of the revenue. Invoke the bank guarantee, if the assessee falls to renew the guarantee referred to in head (3), or falls to furnish a new guarantee from & scheduled bank for an equal amount. Fifteen days befo....
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.... property with a view to thwarting ultimate collection of demand and in order to achieve said objective attachment should be of properties and to extent it is required to achieve this object. It should neither be used as a tool to harass the assessee nor should it be used in a manner which may have an irreversible detrimental effect on the business of the assessee. Attachment of bank accounts and trading assets should be resorted to only as a last resort. In any event, attachment under this provision should not be equated with attachment in the course of recovery proceedings. In the event the revenue is adequately protected by attachment, there is no justification for Assessing Officer for making an days of order of assessment. Further, provisional attachment can be levied even in cases where proceedings under provisions of the Income Tax Act, 1961 dealing with search and Seizure are yet to be initiated. Therefore, invoking this provision and issuing notice under the provision of the lncome Tax Act, 1961 dealing with assessment in case of search or requisition on same day would not effect validity of order passed under this provision. Where on facts Assessing Officer was s....
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....and amounts due from debtors and depositors." 51. Thus, although the provisions of Section 281B of the Income Tax Act is pari materia to Section 83 of the State GST Act, yet one pertinent feature of Section 281B of the Income Tax Act is that it gives guidelines for making the provisional attachment. Such guidelines are missing so far as Section 83 of the State GST Act is concerned. 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 far-fetching, 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 far-reaching power. Such power should be used sparingly a....
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.... paragraph Nos.17, 18, 19 and 20 of the affidavit-in-reply. We quote the paragraph Nos.17 to 20 as under: "17. I say and submit that the factual matrix in the present petition is that the Directions of the petitioner company Dinesh Hinduja, Bijay Agrawal and Sonali Agrawal have been served upon summons to cooperate with the investigation qua billing transaction of the petitioner company with one Shivay Enterprise whose properietor is Tushar Makwana. It is further required to be noted that the said Directors have till date not cooperated with the respondent authorities and are not traceable. Their official representative Trilok Chauhan was present at the time when the search operation took place even Dinesh Hinduja one of the Director was also present but, thereafter, the authorities have not been in a position to find his whereabouts of Dinesh Hinduja as well. The present petition is field through the said legal representative Trilok Chauhan. 18. I say and submit that the respondent authorities with a view of unearth the billing transactions had taken the statement of Trilok Chuahan, the proprietor of Shivay Enterprise Tushar Makwana who in his statement has categ....