TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 322
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....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 about the inquiry. The Director of the petitioner was un....
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....r 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 April 2018 to June 2019 to M/s. Arsh Enterprise and most of these entities were bogus. On verification, i....
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....lication 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 neither the director nor the company had any immovable property at his credit. He admits that FORM DRC-01A has been iss....
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....issioners/ 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 provisions of section 83 of the Act by the tax officers. In view of the same, the following guidelines are hereby issued with respect to the exercise of power under section 83 of the Act. ....
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....y 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 of such attachment order shall be provided to the said taxable person as early as possible so that objections, if any, to the said attachment can be made by the taxable person within the time period prescribed under rule 159 of the CGST Rules. If such objection is filed by the t....
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....cal 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 (b) or fraudulently availed input tax credit without any invoice or bill, or d. collected any amount as tax but has failed to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; or e. fraudulently obtained refund; or f. passed on input tax credit fraudulently to ....
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....eriod 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. 3.7 Share in property Where the property to be provisionally attached consists of the share or interest of the concerned taxable person in property belonging to him and another as co-owners, the provisional attachment shall be made by order to the concerned person prohibiting him from transferring the share or interest or charging it in any way. 3.8 Property exempt from attachment All such property as is by the Cod....
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....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 pronouncement of the Supreme Court in the case of Radhe Krishan Industries vs. state of H.P. reported in (2021) 6 SCC 771 and has in detail has dealt with similar provision on statute book of Himachal Pradesh Goods and Service Tax act, 2017. The Supreme Court set aside the judgment passed by the Himachal Pradesh High Court and the orders of provisional attachment passed by the Joint commissioner. The Supreme Court held that, the power to order a provisional attachment of the property of the taxable pe....
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....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 applicants, at the same time, the respondent No.2 has also provisionally attached the demat account and current account of the writ applicants. These are the valuable assets of the writ applicants, more particularly, raw material and the finished goods are valuables which are otherwise necessary for running of the business of the applicants. Even operating the demat account and current account are essentially required for the routine business of the writ applicants. Time and again, this Court as well as even the instructions instructions issued by the higher authority of the respondents, has dire....
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.... 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 company or the Director. The details had been furnished of the Bank. The Manager, Kotak Mahindra Bank had been communicated vide dated 18.05.2022 in FORM GST DRC-21 by provisionally attaching the Bank account under Section 83 of the petitioner. 9.2 Section 83 would be apt to be reproduced at this stage, which provides for the provisional attachment to protect the revenue in certain cases. "Section-83. Provisional attachment to protect revenue in certain cases.(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the ....