TaxTMI 
TaxTMI 
2020 (3) TMI 1179
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.... the current bank accounts of the writ petitioner under Section 83 of the Central Goods and Services Tax Act, 2017. 2. For the purpose of convenience, the facts in writ petition W.P. No. 21272(W) of 2019 are being taken into consideration and are chronologically delineated hereinbelow: a. The writ petitioner no. 1 is a private limited company duly incorporated under the Companies Act, 2013, under the name of Amazonite Steels Private Limited [hereinafter referred to as the "said company"] whereas petitioner no. 2 is the director of the said company. The said company is duly registered under the Central Goods and Services Tax Act, 2017 [hereinafter referred to as "CGST Act, 2017"] and West Bengal Goods and Services Tax Act, 2017, having its registration number as 19AAPCA2903C1ZW. b. The said company carries on its business transactions through the current account registered with M/s. Lakshmi Vilas Bank, New Alipur Branch [hereinafter referred to as the "said bank"] having account no. 0125360000002129 [hereinafter referred to as the "said account"]. c. On 5th June, 2018, the Additional Director General, Directorate General of Goods & Services Tax Intelligence (hereinafte....
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....although during the pendency of any proceedings under Section 67, the concerned authority had power to provisionally attach the bank account under sub-section (1) of Section 83 of the CGST Act, 2017 but under Section 83(2) of the CGST Act, 2017, such provisional attachment 'shall cease to have effect after one year from the date of the order made under sub-section (1)'. The letter for provisional attachment was issued by the DGGI, GOI on 05-06-2018 and in terms of Section 83(2) the period of provisional attachment expired on 05-06-2019. In such circumstances, you are requested to immediately de-freeze the said account and allow the operation of the account forthwith." k. Thereafter, on 31st October, 2019, the Principal Additional Director General, Directorate General of Goods & Services Tax Intelligence (hereinafter referred to as "PDDGI") passed a fresh provisional order directing the said bank to provisionally attach the said current account of the petitioner. The said order was annexed to the affidavit-in-opposition filed in the earlier writ petition. l. Assailing the above fresh order of provisional attachment a fresh writ was filed being W.P. 21272 (W) of 2019. 3....
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....rs General of Central Tax' and 'Additional Directors General of Central Tax'. She further submitted that Section 5(2) allows an officer of central tax to exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him. She submitted that the definition of 'Commissioner' in Section 2(24) has to be read in conjunction with Section 3. In light of the same, she submitted that the orders passed by the respondent nos. 2 and 3 are absolutely legal and within the scope of the officers who have passed these orders. 6. For a better understanding of the issue, Section 2(24), Section 3 and Section 5 of the CGST Act, 2017 are delineated below:- "Section 2 (24):- "Commissioner" means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act; Section 3:- Officers under this Act:- The Government shall, by notification, appoint the following classes of officers for the purposes of this Act, namely:- (a) Principal Chief Commissioners of Central Tax or Principal Di....
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....arned counsel appearing on behalf of the petitioner company submitted in relation to the earlier writ petitions that the writ petitioners are aggrieved by the illegal and highhanded actions on the part of the respondent authorities. He submitted that the current accounts that were used by the petitioner companies for its daily business transactions was provisionally attached by the order dated 5th June, 2018, and ceased to have any effect after one year according to Section 83(2) of the CGST Act, 2017. 9. Mr. Chakrabarti further argued that various representations were made to the respondent authorities praying before them to defreeze the said accounts of the petitioners but to no avail. He further submits that the fresh orders dated 31st October, 2019, passed by respondent no. 3 was not even served personally upon the petitioner, in fact, it was annexed along with the Affidavit-in-Opposition filed by the respondent No. 3 in the earlier writ petitions. 10. Counsel on behalf of the respondent submitted that the non issue of the fresh orders within time was an error on the part of the authorities. She further submitted that since the investigation with regard to the entire transact....
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.... Supreme Court has time and again held that strict interpretation is required to be followed and no liability of tax can be imposed dehors the statute. He further relied on the Supreme Court judgments in CIT Bombay Vs. Gwalior Rayon Silk Manufacturing Company Ltd. (1992) 3 SCC 326 and State of Jharkhand and others Vs. Ambay Cements and another AIR 2005 SC 4168 to buttress the argument that when the language is plain and unambiguous and the provision penal in nature, the same must be strictly construed and the courts should not do violence to the provision by reading and/or adding something that is not intended by the legislature. 13. Mr. Chakraborty further relied on judgements of the Punjab and Haryana High Court, Calcutta High Court and Andhra Pradesh High Court in PML Industries Ltd. Vs. Commissioner of Central Excise 2013 (290) ELT 3 (P & H), I.C.I. India Ltd. Vs. Collector of Customs 1992 (60) ELT 529 (Cal) and Commissioner of Customs & Central Excise, Hyderabad -IV Vs. Sunder Ispat Ltd. 2015 (316) ELT 238 (AP) respectively to submit that the respondent authorities are creatures of statute and can only exercise power that has been specifically entrusted upon them and c....
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.... period of one year for completion of such investigation and adjudication of alleged demand, if any, and in the interregnum, provisional attachment would be in operation. 17. Mrs. Sanjukta Gupta, counsel appearing on behalf of the respondents submitted that in the instant case investigation has been initiated under Section 67 of the CGST Act, 2017 and the demand will be made under Section 74 of the CGST Act, 2017. The counsel submits that the fresh order of provisional attachment was issued on the grounds that the investigation authorities have come across fresh evidences against the writ petitioners and also that there is no bar under Section 83 of the CGST Act, 2017, preventing a fresh order of provisional attachment. 18. The learned counsel relied on the case of Shrimati Priti v. State of Gujarat 2011 SCC Online Guj 1869 wherein the Court interpreted the scope of Section 45 of the Gujarat Value Added Tax Act, 2003 (provisional attachment similar to Section 83) and held that on one hand Section 45 requires the competent officer to review the situation compulsorily at least upon completion of the period, while so doing, does not limit his discretion to exercise such powers again....
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....n various incriminating documents had been recovered and seized. She further submitted that these two persons were controlling several companies including the petitioner companies and had passed on approximately Rs. 40 crores of fake input tax credit. She submitted that these persons had been arrested on May 12, 2018 and have been presently enlarged on bail on furnishing personal bond of Rs. 50 lakhs each by an order of the High Court dated October 9, 2018. Mrs. Gupta highlighted the factual aspect that the erstwhile directors (directors at the time of search and seizure) of the three petitioner companies had made statements to the investigating authorities that they were dummy directors who are unemployed and had simply submitted copies of their personal documents to Shri Bhuwalka who operated the bank accounts of the three petitioner companies. She further highlighted that investigations had been started by the authorities with respect to the companies that had received the fake input tax credit and new material is being unearthed in the course of investigations that are presently being pursued by the DGGI. 21. Mrs. Gupta finally submitted that the investigation is a continuing ....
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....or the operator of warehouse or godown or any other place. (2) Where the proper officer, not below the rank of Joint Commissioner, either pursuant to an inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act. (3) The documents, books or things referred to in sub-section (2) or any other documents, ....
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....ribed. (10) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the word "Commissioner" were substituted. (11) Where the proper officer has reasons to believe that any person has evaded or is attempting to evade the payment of any tax, he may, for reasons to be recorded in writing, seize the accounts, registers or documents of such person produced before him and shall grant a receipt for the same, and shall retain the same for so long as may be necessary in connection with any proceedings under this Act or the rules made thereunder for prosecution. (12) The Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of t....
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....otice 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 sub-section (1) prays 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 issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly a....
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....or Transport Authority or any such Authority to place encumbrance on the said movable or immovable property, which shall be removed only on the written instructions from the Commissioner to that effect. (3) Where the property attached is of perishable or hazardous nature, and if the taxable person pays an amount equivalent to the market price of such property or the amount that is or may become payable by the taxable person, whichever is lower, then such property shall be released forthwith, by an order in FORM GST DRC-23, on proof of payment. (4) Where the taxable person fails to pay the amount referred to in sub-rule (3) in respect of the said property of perishable or hazardous nature, the Commissioner may dispose of such property and the amount realized thereby shall be adjusted against the tax, interest, penalty, fee or any other amount payable by the taxable person. (5) Any person whose property is attached may, within seven days of the attachment under sub-rule (1), file an objection to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, rel....
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....ther 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. (6) The attachment of bank account and trading assets should be resorted to only as a last resort or measure. The provisional attachment under Section 83 of the Act should not be equated with the attachment in the course of the recovery proceedings. (7) The authority before exercising power under Section 83 of the Act for provisional attachment should take into consideration two things: (i) whether it is a revenue neutral situation (ii) the statement of "output liability or input credit". Having regard to the amount paid by reversing the input tax credit if the interest of the revenue is sufficiently secured, then the authority may not be justified in invoking its power under Section 83 of the Act for the purpose of provisional attachment." 24. The counsel for petitioner has also cited VLS Finance Limited (supra) wherein the court has made an observation about not extending the time of provision attachment after a period of time as prescribed under Section 281B of the Income Tax Act, 1961. Relevant paragraph of ....
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....ied on Shrimati Priti (supra) for buttressing the argument that fresh issue of provisional attachment orders is permissible even after the expiry of one-year period as prescribed under the Act. The relevant paragraph of the judgement is as follows: "13. Contention that an order of provisional attachment can last only for one year and that no further order thereafter, can be passed is not borne out from statutory provisions contained in Section 45 of the Act. It is undoubtedly true that sub-section(2) of Section 45 statutorily provides for maximum life of a provisional order to last not beyond one year from the date of order. There is nothing in the language used in the said section to suggest that upon completion of such a period, no fresh order could be passed. Reading any such requirement or limitation would amount to supplying words not used in the section itself. Section 45 of the Act aims to protect Revenue's interest pending assessment proceedings by empowering the competent authority to pass provisional attachment order. To obviate, obvious inconvenience to an assessee, such provisional attachment order cannot be effective beyond one year. However, that by itself does ....
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.... parties. Upon hearing both the parties on the third issue, the Court is of the opinion that the powers conferred under Section 83 are drastic and extraordinary in nature. The Court also believes that the powers under this section should not be invoked routinely and must be exercised with due caution, circumspection and deliberation. The judgments relied on by the learned counsel for petitioners in Valerius Industries (supra) and Pranit Hem Desai (supra) can be distinguished on the grounds that they only highlight the rationale and nature of the powers conferred under Section 83. These judgements do not deliberate upon the point of fresh issue of an order for provisional attachment which is of principal relevance to this case. The judgments relied by the learned counsel for respondents, that is, Shrimati Priti (supra) and Kaithal Timber Pvt. Ltd. (supra) interprets a similar provision of provisional attachment in the Gujarat Value Added Tax Act, 2003. The Court in both cases while dealing with a provision that is pari materia to the present Section 83, has categorically held that fresh order for provisional attachment can be issued after the expiry of the time as prescribed under t....
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.... that Section 83 does not provide for an extension of an order for provisional attachment and any such extension shall be dehors the statute. Section 83 empowers the competent authority to issue an order for provisional attachment of property including bank accounts if it is of the opinion that such a step is necessary for protecting the interest of government revenue. It is palpably clear that Section 83(2) permits continuation of a provisional attachment order for a period of one year from the date of order after which it ceases to remain in effect. However, there is nothing in the section which indicates that upon completion of the prescribed period, a fresh order cannot be issued. To say this would amount to supplying such requirements into the section which would go against the well-established principles of interpretation of statutes. In the view point of the Court, after the expiry of the time period, the appropriate authority may be of the opinion that such an attachment is further required to protect the interest of government revenue, and may therefore, issue a fresh order upon compliance of the formalities in Section 83(1). 32. One may also examine the scheme of the GST....
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....Another point raised by the petitioner is with respect to non-service of the fresh order personally upon the petitioner. Section 83 of the CGST Act, 2017 read with Rule 159 of the CGST Rules, 2017 does not provide for supply of an order of provisional attachment of a bank account to the assessee concerned. Accordingly, there is no requirement on the part of the respondent to serve such an order under Section 83 personally upon the petitioners. 36. In light of the discussions made hereinabove, the third issue is decided in favour of the Revenue. 37. I would like to summarize the issues that have been answered by this Court for an easier understanding of the parties; Issue A: Whether the Principal Additional Director General, DGGI and Additional Director General, DGGI are competent to pass orders under Section 83 of the CGST Act, 2017? Answer: Both the officers that have passed the orders under Section 83 of the CGST Act, 2017 are competent to pass the same, and accordingly, the issue is answered in favour of the Revenue. Issue B: Whether an order passed under Section 83 of the CGST Act, 2017, remains valid after the expiry of one year from the date of the order? Ans....