TaxTMI 
TaxTMI 
2024 (11) TMI 1086
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....mental Officials. A summon, thereafter, came to be issued for making his appearance before Superintendent of Customs (Preventive), Jaipur on 13.03.2024 and 14.03.2024 at the stipulated time. The statements of the petitioner were also recorded under Section 108 of the Act. Again summons were issued to the brother of the petitioner on 15.03.2024 for tendering the statements before the Superintendent of Customs (Preventive) Jaipur on 22.03.2024 under Section 108 of the Act. 4. Thereafter, the petitioner did not receive/or communicate with any order. It is the case of the petitioner that later on, when the petitioner approached his bank for making banking transaction through his bank account held with the Axis Bank, Sanganeri Gate Branch, Jaipur, bank declined the transaction and informed him that his account has been frozen on the instructions issued by the Custom Authorities. Thereafter, on petitioner's request, the bank vide letter dated 07.05.2024 informed the petitioner regarding freezing of the bank account. A copy of order dated 14.03.2024 addressed to the bank was also provided. Aggrieved by the action of the respondents in freezing the account, the petitioner has approached t....
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....petition, initial period of six months expired on 13.09.2024 and a fresh order for extension of earlier order has now been passed and now reasons have been recorded because under the law, if the order of freezing of account is required to be extended, the law then requires recording of reasons in writing. On such submission, learned counsel for the respondents would submit that there has been full and substantial compliance of law and there is no legality. He refers to the extension order passed on 13.09.2024, annexed along with return as also the impugned notice, which has been given to the petitioner. 7. We have heard learned counsel for the parties and gone through the pleadings as also bestowed our consideration on respective submissions made by learned counsel for the parties in the light of provisions contained under Section 110(5) of the Act. 8. Power of search, seizure and arrest that may be exercised under the Act has been provided in Chapter XIII, under Sections 100, 102 and 110(AA) which deals with power of search of suspected persons, power to arrest, power to search premises, power to stop and search conveyances, power to examine persons, power to summon persons to g....
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....r description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceedings under this Act and shall make an application to a Magistrate for the purpose of- (a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn.] [(1C) Where an application is made under subsection (1B), the Magistrate shall, as soon as may be, allow the application.] [(1D) Where the goods seized under sub-section (1) is gold in any form as notified under subsection (1A), then, the proper officer shall, instead of making an application under sub-section (1B) to the Magistrate, make such application to the Commissioner (Appeals) having jurisdiction, who shall, as soon as may be, allow the application and thereafter, the proper officer shall dispose of such goods in such manner as the Central Government may determine.] ....
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...., without there being any proceedings pending under the Act, the power of attachment could not be exercised on stand alone basis. 11. It is sine quo non that an opinion is required to be formed with reference to the following:- (a) it has become necessary to attach on provisional basis the bank account for the purposes of protecting the interest of revenue. (b) that it is necessary to attach bank account in order to prevent smuggling. (c) Approval of Principal Commissioner, Customs or Commissioner Customs is obtained. 12. Under Sub-section 5 thereof, the aforesaid conditions are required to be fulfilled. 13. In addition, what is importantly provided under the law to keep fetter on the exercise of power and to avoid misuse and abuse of power, is that an order is required to be passed in writing. 14. The entire provision read in this manner leads to conclusion that before the original attachment is made, an order in writing is required to be passed which must contain an opinion based on relevant and tangible material that a necessity had arisen to attach bank account for the purpose of protecting the interest of revenue or preventing smuggling. Unless all these requirement....
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....cessity to regulate the exercise of power. Requirement of passing an order in writing is not an empty formality but such provisions have been made by the statue to militate against arbitrary or malafide exercise of power. 19. True it is that the proviso also requires the reasons to be recorded in writing before expiry of a further period of six months. That even if read conjointly with the main provision, does not lead to an interpretation that recording of reasons in writing is not required by law while passing an order of freezing the bank account. The provisions seek to regulate exercise of power by imposing certain fetter and rider in exercise of power. It is also well settled principle and canon of interpretation statue that where certain pre-conditions for exercise of power are provided, ordinarily they are not directly but mandatory. In Haridwar Singh vs. Bhgun Sumbrui & Ors. [1973 (3) SCC 889], it has been held that powers are normally held to be mandatory. 20. Even if for the argument sake, communication dated 14.03.2024 addressed to the bank is treated as an order, its validity must be judged on the basis of the reasons which have been recorded in the order and not the ....
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....ra). The interpretation of the provisions and the statutory mandate was explained by the Hon'ble Supreme Court as below:- "39. The essence of the present case lies in how the power to order a provisional attachment under Section 83 of the HPGST Act is construed. Before interpreting it, the provision is extracted below for convenience of reference: "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 Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1)." 40. The marginal note to Section 83 provides some indication of Parliamentary intent. Section 83 provides for "provisional attachment to protect revenue in certain cases". The first po....
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....e power, the Commissioner must be "of the opinion that for the purpose of protecting the interest of the government revenue, it is necessary so to do"; 41.4. The order for attachment must be in writing; 41.5. The provisional attachment which is contemplated is of any property including a bank account belonging to the taxable person; and 41.6. The manner in which a provisional attachment is levied must be specified in the rules made pursuant to the provisions of the statute. 42. Under sub-Section (2) of Section 83, a provisional attachment ceases to have effect upon the expiry of a period of one year of the order being passed under sub- Section (1). The power to levy a provisional attachment has been entrusted to the Commissioner during the pendency of proceedings under Sections 62, 63, 64, 67, 73 or as the case may be, Section 74. Section 62 contains provisions for assessment for non-filing of returns. Section 63 provides for assessment of unregistered persons. Section 64 contains provisions for summary assessment. Section 67 elucidates provisions for inspection, search and seizure. 43. to 48. xxxxxxx 49. Now in this backdrop, it becomes necessary to emphasize tha....
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.... legislature has evinced an intent that an attachment is authorized not merely because it is expedient to do so (or profitable or practicable for the revenue to do so) but because it is necessary to do so in order to protect interest of the government revenue. Necessity postulates that the interest of the revenue can be protected only by a provisional attachment without which the interest of the revenue would stand defeated. Necessity in other words postulates a more stringent requirement than a mere expediency. A provisional attachment under Section 83 is contemplated during the 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 pr....
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....ealer and on the basis of some reliable information that the dealer is likely to defeat the claim of the Revenue in case any order is passed against the dealer under the VAT Act and/or the dealer is likely to sale his properties and/or sale and/or dispose of the properties and in case after the conclusion of the assessment/reassessment proceedings, if there is any tax liability, the Revenue may not be in a position to recover the amount thereafter, in such a case only, however, on formation of subjective satisfaction/opinion, the Commissioner may exercise the powers under Section 45 of the VAT Act." (emphasis supplied) 52. 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 [(2010) 2 SCC 723]. 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, ....