TaxTMI 
TaxTMI 
2024 (5) TMI 1035
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....). The order passed under Section 83 (which is at Exhibit B) sets out the liability that is provisionally determined on investigation that is carried out and also records the tax paid. Thereafter in Paragraph 4, it is stated that since the Petitioner has failed to discharge the liability without any justification, the Joint Commissioner of State Tax-II, Pune Division, Pune is of the opinion that there is every chance that the Petitioner shall default in paying the ultimate tax, interest and penalty, for which a demand may be raised in assessment proceedings on completion. Therefore, the said authority is of the opinion that it is necessary to exercise powers under section 83 of the MGST Act read with Rule 159 of the CGST Rules, for the purpose of protecting the interest of the government revenue. Accordingly, all bank accounts of the Petitioner are attached, and the Petitioner and the banks are directed not to carry out any transaction, whatsoever, from the date of the said order dated 5th April 2014 till the receipt of written orders from the GST Authorities regarding release of the bank accounts. 2. On perusing the said order which also doubles up as a Show Cause Notice as to wh....
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....l 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 in Section 83 is, in other words, at a stage which is anterior to the finalisation of an assessment or the raising of a demand. Conscious as the legislature was of the draconian nature of the power and the serious consequences which emanate from the attachment of any property including a bank account of the taxable person, it conditioned the exercise of the power by employing specific statutory language which conditions the exercise of the power. The language of the statute indicates first, the necessity of the formation of opinion by the Commissioner; second, the formation of opinion before ordering a provisional attachment; third the existence of opinion that it is necessary so to do for the purpose of protecting the interest of the government revenue; fourth, the issuance of an order in writing for the attachment of any p....
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....al attachment is necessary for the purpose of protecting the interest of the government revenue. 51. 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 purpose which it is intended to secure. It also postulates the maintenance of a proportion between the nature and extent of the attachment and the purpose which is sought to be served by ordering it. Moreover, the words embodied in sub-section (1) of Section 83, as interpreted above, would leave no manner of doubt that while ordering a provisional attachment the Commissioner must in the formation of the opinion act on the basis of tangible material on the basis of which the formation of opinion is based in regard to the existence of the statutory requirement. While dealing with a similar provision contained in Section 45 [Section 45 (1) provides as follows: "45. Provisional attachment.-(1) Where during the tendency of any proceedings of assessment or reassessment of turnover escaping assessment, the Commissioner is of the opinion that for t....
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....mmissioner in pursuance of the delegation effected under Section 5(3) and an appeal against the order of provisional attachment was not available under Section 107(1). 76.2. The writ petition before the High Court under Article 226 of the Constitution challenging the order of provisional attachment was maintainable. 76.3. The High Court has erred in dismissing the writ petition on the ground that it was not maintainable. 76.4. The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled. 76.5. The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the govern....