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2020 (11) TMI 111
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....e the 12 bank accounts of the petitioner and family members as per details furnished in the writ petition including in the prayer portion; 3. for a direction to the respondents to unfreeze the Importer Exporter Code No.0314035460 of the proprietorship firm of the petitioner by the name of 'M/s. XS Components'; and 4. for a direction to the respondents allowing presence of a lawyer of petitioner's choice during investigation (questioning) of the petitioner. 3. On 08.09.2020, this Court had issued notice on admission as well on stay while directing the respondents to file affidavit. Subsequently an affidavit was filed by the respondents. 4. On 08.10.2020, the interim prayer of the petitioner was heard whereafter the following order was passed:- "2] Our attention has been drawn to Section 83 of the Central Goods and Services Tax Act, 2017 as well as to the garnishee notices issued including the one at page 195 of the Writ Petition. 3] From a reading of Section 83, we find that there are two preconditions which must be satisfied before the Commissioner can exercise jurisdiction under Section 83. First precondition is pendency of any proceedings....
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....ed out of India, petitioner claims various export incentives as is permissible in law. 8.2. With regard to export incentives claimed by the petitioner, office of respondent Nos.3 and 4 carried out search operations in the residence and office premises of the petitioner on 11.09.2019 whereafter various documents etc. were seized. Simultaneously, the importer exporter code of the petitioner was blocked. According to the petitioner, the search warrant was only in respect of M/s. XS Components; nonetheless, documents belonging to another entity called Evertime Trading Private Limited were also seized. However, seizure memo has not been furnished to the petitioner. 8.3. Thereafter summons were issued to the petitioner by respondent No.4 on 06.11.2019 seeking certain information pertaining to export incentives claimed by the petitioner which was replied to by the petitioner on 13.11.2019. Further details were furnished by the petitioner to respondent No.4 on 15.11.2019. 8.4. It is stated that on the insistence of respondent No.4, petitioner made payment of Rs. 30,00,000.00 without prejudice to his rights and contentions vide three demand drafts dated 17.01.2020, 20.01.2020 and 2....
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....dharth P. Mandavia 159920799999 10 Indusind Bank Ltd. Mansi Siddharth Mandavia 159820756968 11 HDFC Bank Ltd. Santacruz (W) Hriaan Siddharth Mandavia (Minor) & Siddharth P. Mandavia 00791460006096 12 HDFC Bank Ltd. Santacruz (W) Mansi Mandavia & Siddharth P. Mandavia 00791000210784 8.9. Aggrieved by the above, petitioner has preferred the present writ petition seeking the reliefs as indicated above. 9. Respondent Nos.5 to 7 have filed a common affidavit in reply through Mr. Hrishikesh Kiran Utpat, Deputy Director in the office of Directorate General of GST Intelligence, Mumbai Zonal Unit. Though many things have been stated, for the purpose of consideration of the interim prayer we may mention that as per the stand of the answering respondents, based on information received that some exporters had availed input tax credit (ITC) on the basis of ineligible documents or by committing fraud showing payment of IGST on goods exported out of India, a joint pan India operation was conducted on 11.09.2019 by the Directorate General of GST Intelligence and Directorate General of Revenue Intelligence. Various exporters covered in the said operation....
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....ransactions in the two bank accounts of the petitioner in Karnataka Bank Limited and in Indusind Bank, it appeared that after receipt of the IGST refund, he had transferred substantial amounts to various other accounts. Therefore, there was bona fide apprehension that petitioner would siphon-off the remaining money lying in his bank accounts with a view to thwarting the ultimate collection of tax demand that is likely to be raised on completion of the enquiry. 9.5. After referring to section 83 of the Central Goods and Services Tax Act, 2017 (briefly 'the CGST Act' hereinafter), it is stated that provisional attachment of bank accounts of the petitioner was proposed. Holding that the investigation carried out against the petitioner falls within the ambit of pendency of any proceedings under section 67 and section 74 of the CGST Act, it is stated that Principal Additional Director General concluded that it was necessary to provisionally attach the bank accounts of the petitioner. In this connection, reference has been made to rule 159 of the Central Goods and Services Tax Rules, 2017 (briefly 'the CGST Rules' hereinafter), more particularly sub-rules (5) and (6) thereof as well a....
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....ons. In the said affidavit, relevant note-sheets have been annexed wherefrom it is seen that Principal Additional Director General had noted on 08.07.2020 that in the light of the apparent findings of fraudulent availment of IGST refund, it was deemed necessary to attach the bank accounts of the concerned person Mr. S. P. Mandavia to protect government revenue as per section 83 of the CGST Act. It has been clarified that the post of Principal Additional Director General is equivalent to the post of Principal Commissioner and he granted approval to the action under section 83. Thereafter the order was issued on 08.07.2020 in the prescribed format i.e., Form GST DRC-22. Reference has been made to sections 67 and 74 of the CGST Act whereafter it is contended that the investigation carried out in respect of the petitioner falls within the ambit of pendency of any proceedings under sections 67 and 74 which is an essential pre-requisite for invocation of section 83 of the CGST Act. 12. While Dr. Kantawala submits that attachment of the bank accounts of the petitioner and his family members is wholly unjustified and illegal being beyond the purview of section 83 of the CGST Act causing....
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....nment revenue, it is necessary to attach any property provisionally, including bank account belonging to the taxable person. On satisfaction of the above two conditions, the Commissioner must pass an order in writing provisionally attaching any property of the taxable person including bank accounts. Because of the very nature of temporary attachment, sub-section (2) makes it abundantly clear that such provisional attachment shall not be in excess of one year from the date of the order made under sub-section (1) and shall cease to have effect after the expiry of one year from the date of the order. 17. Rule 159 of the CGST Rules deals with provisional attachment of the property as envisaged in section 83 of the CGST Act. Rule 159 is extracted hereunder:- "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 Authori....
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....ry as opposed to permanent. Dictionary meaning of provisional is 'arranged or existing for the present, possibly to be changed later'; Black's Law Dictionary, 8th Edition has defined it as 'temporary or conditional'. Being provisional such attachment is required to be reviewed periodically by the Commissioner. Such suo-motu review is implicit in rule 6 which empowers the Commissioner to release the property provisionally attached before the outer limit of one year if he is satisfied that such attachment of property is no longer required. 17.3. In so far sub-rule (5) is concerned, it goes without saying that preassessment attachment of property, including bank account, even if provisional, is a drastic measure. Its sole purpose is to protect the interest of government revenue. It cannot be used as a punitive measure. It is a serious invasion into the private domain of a tax payer. Therefore, to ensure that the said power is exercised after due consideration and in a reasonable manner as well as to provide an opportunity to the tax payer to satisfy the Commissioner that such attachment is unnecessary and therefore should be lifted, provision for objection, hearing and release is p....
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....ent made by the respondents that any money belonging to the petitioner or to his firm have been credited into the joint accounts of the petitioner with his wife or with his minor son or into the account of his wife. As a matter of fact, in paragraph 38 of their first affidavit, respondent Nos.5 to 7 have stated that the reason for attachment of other bank accounts appears to be their link with the petitioner or his PAN. They being not the tax payers in this case, provisional attachment of their bank accounts therefore would not be justified. 21.1. In so far the other bank accounts are concerned, considering the seriousness of the measure and having regard to the provisions contained in sub-rule (5) of rule 159, we are of the view that liberty may be granted to the petitioner even at this stage to file objection to the provisional attachment and if such an objection is filed, the competent authority may take an appropriate decision thereon after providing an opportunity of hearing to the petitioner. 22. At this stage, we may usefully refer to the observations of the Gujarat High Court in the case of Patran Steel Rolling Mill Vs. Assistant Commissioner of State Tax, 2019 (20) G....
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....rs made thereunder or the foreign trade policy, the Director-General or any other officer authorised by him may call for the record or any other information from that person and may, after giving to that person a notice in writing informing him of the grounds on which it is proposed to suspend or cancel the Importer-exporter Code Number and after giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice and, if that person so desires, of being heard, suspend for a period, as may be specified in the order, or cancel the Importer-exporter Code Number granted to that person. (2) Where any Importer-exporter Code Number granted to a person has been suspended or cancelled under sub-section (1), that person shall not be entitled to (import or export any goods or services or technology) except under a special licence, granted, in such manner and subject to such conditions as may be prescribed, by the Director-General to that person." 23.2. From a careful reading of sub-section (1) of section 8 it is seen that when there is contravention of the provisions of the Foreign Trade (Development and Regulatio....