TaxTMI 
TaxTMI 
2020 (3) TMI 1179
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....red to as "DGGI"], to provisionally attach 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, Dir....
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....d account. The relevant portion of the letter is delineated below: "In this connection it is to inform you that 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 earlie....
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....ubmit that Section 3(c) and 3(d) make it clear that 'Principal Commissioner of Central Tax' and "Commissioner of Central Tax' are equivalent to 'Principal Additional Directors 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:-....
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....l Director of Central Tax' who is the superior officer and therefore, as per Section 5(2) of the CGST Act, 2017 she possesses the power to pass the provisional attachment orders under Section 83. Hence, the first issue is answered in favour of the Revenue. Issue B: 8. Mr. Arijit Chakrabarti learned 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 Affidavi....
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.... The State of West Bengal and Others 2002 LAB I.C. 65 and the Supreme Court judgment in Indian National Congress (I) Vs. Institute of Social Welfare and Others (2002) 5 SCC 685 to bring home the point that an authority cannot act beyond the powers conferred by the statute. He submitted that in fiscal statutes, the 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....
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....ount of the petitioners creates embargo on the rights of the petitioners as guaranteed under Article 19(1)(g), 300A and 301 of the Constitution of India, the order of provisional attachment during pendency of investigation cannot continue for an indefinite period, and it is for that reason the Legislature had provided the 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 s....
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....o made several fake transactions with various iron and steel manufacturing units and passed on fake input tax credit to these companies. She further submitted that the petitioner companies were nonexistent at their registered address and on search carried out by the officers of DGGI on Shri Sanjay Kr. Bhuwalka and Shri Neeraj Jain 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 furthe....
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....ther place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such a manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central 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. (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....
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....by notification, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by the proper officer in such manner as may be prescribed. (9) Where any goods, being goods specified under sub-section (8), have been seized by a proper officer, or any officer authorised by him under sub-section (2), he shall prepare an inventory of such goods in such manner as may be prescribed. (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 connec....
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....he same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (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 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 ....
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.... as may be prescribed. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1). Rule 159: Provisional Attachment of Property (1) Where the Commissioner decides to attach any property, including bank account in accordance with the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of property which is attached. (2) The Commissioner shall send a copy of the order of attachment to the concerned Revenue Authority 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 t....
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....t the ultimate collection of the demand that is likely to be raised on completion of the assessment. It should, therefore, be exercised with extreme care and caution. (4) The power under Section 83 of the Act for provisional attachment should be exercised only if there is sufficient material on record to justify the satisfaction that the assessee is about to dispose of wholly or any part of his/her property with a view to thwarting the ultimate collection of demand and in order to achieve the said objective, the attachment should be of the properties and to that extent, it is required to achieve this objective. (5) The power under Section 83 of the Act 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. (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 provis....
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....act of the judgement is delineated below: "6. We do not, however, think it necessary to examine the said contention for the reason that the total period for which extensions can be granted under section 281B is two years and that period has also expired on and with August 19, 1989. It is thus clear that the attachment under section 281B cannot survive beyond the said date, namely, beyond August 19, 1989. The petitioner shall be entitled to encash or withdraw the amounts concerned subject, of course, to any demand for any tax due as on today. Even if there is any such demand, the amount equal to such demand shall be retained and the remaining amount returned to the petitioner." 26. Counsel for Revenue has relied 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 t....
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....osition and would take a fresh decision that to protect the interest of Government revenue, it is necessary to pass fresh order of provisional attachment and that the earlier order of attachment would not mechanically continue indefinitely." 28. ""Bad facts make bad cases" - the court crafts its decision to create an outcome dictated by the facts, instead of an outcome based on a proper legal analysis" - I am very well aware of the above adage and do not intend to fall prey to the same. Ergo, the interpretation of Section 83 of the CGST Act, 2017 is not based on the facts that have been presented by the respondents in their affidavits, but on the legal principles of interpretation of fiscal statutes and examination of the precedents cited by 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 D....
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....khpal Singh (supra) to contend that extension of provisional attachment beyond the time-period prescribed is not permitted by the statute. It is to be noted that Section 83 of the CGST Act, 2017 does not have a provision for extension of an order for provisional attachment. The contention in hand is with respect to issue of fresh order of provisional attachment and not extension of the same. On this note, the case laws referred to by the learned counsel shall not be applicable to the issue in hand. 31. One need not join issue with regard to the judgments cited by the petitioner with respect to interpretation of fiscal statutes, as I am firmly of the view that Section 83 has to be construed literally and strictly. On a perusal of Section 83, it is evident 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 ....
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....iency of reasons for issue of the fresh order of provisional attachment. However, it may be noted that Mrs. Gupta, counsel on behalf of the respondents has categorically submitted in Court that apart from the reasons provided in the affidavits filed in the earlier writ petitions, fresh material has also been unearthed by the DGGI. 34. However, given the far-reaching consequences of provisional attachment under Section 83, the Court is of the opinion that an issuance of a fresh order under Section 83 of the CGST Act, 2017 will require a fresh review and assessment of the circumstances in hand. In no manner, a fresh order should be issued in the garb of an extension of the earlier order without actually evaluating and analysing the requirement of doing so. 35. 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....