TaxTMI 
TaxTMI 
2022 (5) TMI 560
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....ursuance of the same, the deponent of the writ affidavit and the employees of the petitioner-company attended for the enquiry and their statements were recorded. By way of the impugned provisional orders of attachment, the accounts of the petitioner in the respondents 6 and 7-banks have been provisionally attached. As mentioned supra, the said orders of provisional attachment are under challenge in the present Writ Petition. Heard Sri Vemireddy Bhaskar Reddy, learned counsel for the petitioner, and Sri Y.N.Vivekananda, learned Government Pleader for respondents. Broadly, there are two contentions raised by the learned counsel for the petitioner. They are: 1) Fourth respondent herein in the impugned orders of provisional attachment did not record anything with regard to the formation of opinion or subjective satisfaction and the same is contrary to the provisions of Section 83 of the Act. 2) As on the date of the orders of provisional attachment, there were no proceedings pending under Section 67 of the Act nor any proceedings have been initiated either under Section 73 or 74 of the Act. In support of his submissions and contentions, learned counsel for th....
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....uring the pendency of any proceedings under Section 62 or 63 or 64 or 67 or 73 or Section 74 of the Act, if the Commissioner is of the opinion that, for the purpose of protecting the interest of the Government revenue, the same is essential. The scope and ambit of the said provision of law fell for consideration before the Hon'ble Supreme Court in the case of M/s Radha Krishan Industries (referred to supra) and the Hon'ble Supreme Court, at paragraphs 48, 49, 50, 51, 53, 54 to 56 and 59, held in the following manner: 48. Now in this backdrop, it becomes necessary to emphasize that before the Commissioner can levy a provisional attachment, there must be a formation of "the opinion" and that it is necessary "so to do" for the purpose of protecting the interest of the government revenue. The power to levy a provisional attachment is draconian in nature. By the exercise of the power, a property belonging to the taxable person may be attached, including a bank account. The attachment is provisional and the statute has contemplated an attachment during the pendency of the proceedings under the stipulated statutory provisions noticed earlier. An attachment which is contemplated i....
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....he pendency of certain proceedings, meaning thereby that a final demand or liability is yet to be crystallized. An anticipatory attachment of this nature must strictly conform to the requirements, both substantive and procedural, embodied in the statute and the rules. The exercise of unguided discretion cannot be permissible because it will leave citizens and their legitimate business activities to the peril of arbitrary power. Each of these ingredients must be strictly applied before a provisional attachment on the property of an assesses can be levied. The Commissioner must be alive to the fact that such provisions are not intended to authorize Commissioners to make preemptive strikes on the property of the assessee, merely because property is available for being attached. There must be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the government revenue. 50. These expressions in regard to both the purpose and necessity of provisional attachment implicate the doctrine of proportionality. Proportionality mandates the existence of a proximate or live link between the need for the attachment and the....
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....45 of the VAT Act." (emphasis supplied) Section 45 (1) provides as follows: 51. We adopt the test of the existence of "tangible material". In this context, reference may be made to the decision of this Court in the Commissioner of Income Tax v Kelvinator of India Limited. Mr Justice SH Kapadia (as the learned Chief Justice then was) while considering the expression "reason to believe" in Section 147 of the Income Tax Act 1961 that income chargeable to tax has escaped assessment inter alia by the omission or failure of the assessee to disclose fully and truly all material facts necessary for the assessment of that year, held that the power to reopen an assessment must be conditioned on the existence of "tangible material" and that "reasons must have a live link with the formation of the belief". This principle was followed subsequently in a two judge Bench decision in Income Tax Officer, Ward No. 162 (2) v Techspan India Private Limited39. While adverting to these decisions we have noticed that Section 83 of the HPGST Act uses the expression "opinion" as distinguished from "reasons to believe". However for the reasons that we have indicated earlier we are clearly of the vie....
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....st- provisional attachment right of: (i) Submitting an objection to the attachment; (ii) An opportunity of being heard. Sub - Rule (5) contains clear language to the effect that a person whose property is attached is entitled to two procedural entitlements: first, the right to submit an objection on the ground that the property was not or is not liable to be attached; and second, an opportunity of being heard to the person filing an objection. This is a clear indicator that in addition the filing of an objection, the person whose property is attached is entitled to an opportunity of being heard. It is not open to the Commissioner, as has been stated in the present case, to hold the view that the only safeguard under sub-Rule 5 is to submit an objection without an PART D opportunity of a personal hearing. Such a construction would be plainly contrary to sub-Rule 5 which contemplates both the submission of an objection to the attachment and an opportunity of being heard. The opportunity of being heard can be availed of as a matter of right by the person whose property is attached. Both the right to submit an objection and to be afforded an opportunity of be....
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.... the Commissioner in the exercise of powers under Rule 159(5). The scope of objection can also extend to the nature of the property which is being provisionally attached. Now, it is in this backdrop that we proceed to a determination of whether the petition under Article 226 was maintainable and if it was, whether Commissioner exercised the powers under Section 83 read with Rule 159 in accordance with law. 59. The sole ground which has weighed with the High Court in holding that the writ proceedings were not maintainable is that "the writ petitioner has not only (an) efficacious remedy, rather alternative remedy under the GST Act". In addition, the High Court has observed that the writ petition filed by GM Power tech against whom similar allegations have been leveled had been dismissed by relegating it to the pursuit of an alternative remedy. The learned senior counsel appearing on behalf of the appellant submitted that GM Powertech had been relegated to the pursuit of an alternative remedy since an order of assessment had been passed against it. However, insofar as the appellant is concerned, the writ proceedings were instituted to challenge the levy of a provisional atta....
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....ss 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." 16. We are of the view that none of the above referred conditions are fulfilled in the present case. 17. In the result, this writ application stands partly allowed. The relief with regard to the order in Form GST DRC- 01A is not granted, whereas the order of provisional attachmen....