TaxTMI 
TaxTMI 
2023 (2) TMI 322
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.... It is also having valid registration number under the Act. 2.2 The respondent No.2 is an officer under the provision of section 3 of the Act entrusted with the assessment and recovery of GST under various provisions of the Act. 2.3 The petitioner is regular in filing its return under the Act both annually and periodically. 2.4 During the period between 2018-19, the petitioner company had purchased Iron and Steel Waste Scrap from M/s. Arsh Enterprise, which has having valid GST registration at the time of purchase of goods. The goods worth Rs.37,31,420/- had been purchased where the value of goods was of Rs.31,53,746/- and the GST was Rs.5,67,674/-. The goods purchased from M/s. Arsh Enterprise also had been sold by the petitioner to various other purchasers and the sale proceeds were received in his Bank account. The GST registration of M/s. Arsh Enterprise had been cancelled on 31.10.2020. 2.5 On 04.01.2022 summons under section 70 of the Act was issued to the petitioner where he was called upon by the respondent No.2 to remain present for recording of statement and production of sales and purchase registers. The summons is silent regarding specific subject matter abo....
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....1 According to the respondent, the petitioner had purchased the goods from M/s. Arsh Enterprise as per its returns filed for the year 2018-19 and 2019-20. Directorate General of Goods and Service Tax Intelligence, Surat Zonal Unit, had gathered the intelligence that M/s. Arsh Enterprise having its place of business at Surat was involved in wrongfully availed and utilizing the Input Tax Credit without any actual receipt or supply of goods. Hence, the search was conducted at the office premises of M/s. Arsh Enterprise and relevant documents were seized. The panchnama was also recorded on 09.04.2019. 4.2 The show cause notice was issued for the purpose of cancellation of registration of M/s. Arsh Enterprise on 16.10.2020 on the ground that M/s. Arsh Enterprise had obtained the registration by means of fraud, willful mis-statement and by suppression of facts. The proprietor of M/s. Arsh Enterprise was required to remain personally present before the authority and he did remain present. 4.3 It is the say of the respondent that 40 business entities as per the report of intelligence had passed on Input Tax Credit amounting to Rs.6.03 Crore (rounded off) during the period from ....
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....d been made. Relying heavily on the decision of the Arya Metacast Pvt. Ltd. vs. State of Gujarat, Special Civil Application No.2787 of 2022 he has urged this Court to quash the order/communication, whereby the provisional attachment of the Bank account is made. 6. Per contra, the learned AGP, has vehemently submitted that for protecting the revenue's interest the steps have been taken. More particularly, realizing that the dealing of the present petitioner was with M/s. Arsh Enterprise where about 40 suppliers in whose connection the verification was conducted by the senior intelligence officer. The process revealed that the supplier listed in the communication dated 23.06.2022 have passed on the Input Tax Credit amounting to Rs.6.03 Crore to M/s. Arch Enterprise. They were found to be bogus/fake firms. M/s. Arsh Enterprise since had wrongly availed and utilized the Input Tax Credit amounting to Rs.6.03 Crore on the strength of the invoice issued from supplier, further investigation was necessary. The preliminary verification in respect of the supplier had necessiate the action on the part of the respondent authority. More particularly, when the petitioner had been called and ne....
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.... GST Policy Wing ***** New Delhi Dated 23rd February, 2021 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All) The Principal Director (Generals/Director Generals (All) Madam / Sir, Subject: Guidelines for provisional attachment of property under section 83 of the CGST Act, 2017-Reg. 1. I am directed to refer to the section 83 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the Act"). This section provides for provisional attachment of property for the purpose of protecting the interest of revenue during the pendency of any proceeding under section 62 or section 63 or section 64 or section 67 or section 73 or section 74 of the Act. 2. Doubts have been raised by the field formations on various issues pertaining to provisional attachment of property under the provisions of section 83 of the Act read with rule 159 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the "CGST Rules"). Besides, in a number of cases, Hon'ble Courts have also made observations on the modalities of implementation of....
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....xercising power under section 83. The collective evidence. based on the proceedings/ enquiry conducted in the case, must indicate that prima-facie a case has been made out against the taxpayer, before going ahead with any provisional attachment. The remedy of attachment being, by its very nature, extraordinary, has to be resorted to with utmost circumspection and with maximum care and caution. 3.2 Procedure for provisional attachment of property 3.2.1 In case, the Commissioner forms an opinion to attach any property, including bank account. of the taxable person in terms of section 83, he should duly record on file the basis, on which he has formed such an opinion. He should, thereafter, pass an order in FORM GST DRC-22 with proper Document Identification Number (DIN) mentioning therein the details of property being attached. 3.2.2 A copy of the order of attachment should be sent to the concerned Revenue Authority or Transport Authority or Bank or the relevant Authority to place encumbrance on the said movable or immovable property. The property, thus attached, shall be removed only on the written instructions from the Commissioner. 3.2.3 A copy ....
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....erson. 3.3 Cases fit for provisional attachment of property 3.3.1 As mentioned above, the remedy of attachment being, by its very nature, extraordinary. needs to be resorted to with utmost circumspection and with maximum care and caution. It normally should not be invoked in cases of technical nature and should be resorted to mainly in cases where there is an evasion of tax or where wrongful input tax credit is availed or utilized or wrongfully passed on. While the specific facts of the case need to be examined in detail before forming an opinion in the matter, the following are some of type of cases, where provisional attachment can be considered to be resorted to, subject to specific facts of the case: Where taxable person has: a. supplied any goods or services or both without issue of any invoice, in violation of the provisions of the Act or the rules made there under, with an intention to evade tax; or b. issued any invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made there under; or c. availed input tax credit using the invoice or bill referred to in clause....
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....sisting charge, liens, mortgages or encumbrances, property tax fully paid up to date and not involved in any legal dispute. The taxable person must produce the original title deeds and other necessary information relating to the property, for the satisfaction of the concerned officer. 3.5 Attachment Period 3.5.1 Every provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the provisional attachment order. 3.5.2 Besides, the provisional attachment order shall also cease to have effect if an order in FORM GST DRC-23 for release of such property is made by the Commissioner. 3.6 Investigation and Adjudication As the provisional attachment of property is resorted to protect the interests of the revenue and may also affect the working capital of the taxable person, it may be endeavored that in all such cases, the investigation and adjudication are completed at the earliest, well within the period of attachment, so that the due liability of tax as well as interest, penalty etc. arising upon adjudication can be recovered from the said taxable person and the purpose of attachment is achieved. ....
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....ld that power under section 83 of the act should not be used as a tool to harass the assessee nor should it be used in as manner which may have irreversible detrimental effect on the business of the assessee. However, we may once again remind the respondent authorities what has been instructed, more particularly, in form of Clause 3.4.3 to 3.4.5, which reads as under: "3.4.3 It may be noted that the provisional attachment can be made only of the property belonging to the taxable person, against whom the proceedings mentioned under section 83 of the Act are pending. 3.4.4 Movable property should normally be attached only if the immovable property, available for attachment, is not sufficient to protect the interests of revenue. 3.4.5 As far as possible, it should also be ensured that such attachment does not hamper normal business activities of the taxable person. This would mean that raw materials and inputs required for production or finished goods should not normally be attached by the Department." 10. Apart from the aforesaid guidelines, the above stated decision in the case of Valerius Industries ( supra), has been recognized in the recent pro....
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....roperty is attached is entitled to dual procedural safeguards: a. An entitlement to submit objections on the ground that the property was or is not liable to attachment; and b. An opportunity of being heard; • There has been a breach of the mandatory requirement of Rule 159(5) of the HPGST Rules and the Respondent was clearly misconceived in law in coming into conclusion that the Respondent had a discretion on whether or not to grant an opportunity of being heard; • The Respondent is duty bound to deal with the objections to the attachment by passing a reasoned order which must be communicated to the taxable person whose property is attached; • The Appellant having filed an appeal against the order under Section 74(9) of the HPGST Act, the provisions of Sections 107(6) and Section 107(7) of the HPGST Act will come into operation in regard to the payment of the tax and stay on the recovery of the balance as stipulated in those provisions, pending the disposal of the appeal. 11. In the facts of the case, undisputedly, the respondent no.2 has not only provisionally attached the stock of goods lying at the factory premise of the writ appl....
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....al data by availing necessary certificate under Section 65B of the Information and Technology Act. With the aforesaid, the petition stands disposed of accordingly." 9. The chronology of events clearly indicate that the trade activities of M/s. Arsh Enterprise had come under a scanner and not only the serious doubts were raised, but also the inquiry had revealed that it was involved in bogus billing. Out of the 40 suppliers, the verification was conducted in respect of the supplier, the one who had passed on the Input Tax Credit amounting to Rs.6.03 Crore (rounded off) to M/s. Arsh Enterprise were found to be bogus and fake firms. M/s. Arsh Enterprise also has wrongfully availing and utilizing the Input Tax Credit amounting to Rs.6.03 Crore (rounded off). 9.1 Summons came to be issued to the present petitioner in exercise of the powers delegated under section 70(1) of the CGST Act to appear in person for giving statement and producing the sales and purchase registered and also on 10.03.2022 he was asked to produce the freehold property of the company or of the Directors. On 11.04.2022, the correspondence shows that there had been no freehold property in India or abroad of the ....