TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 992
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....the appellant had objected to such provisional attachment orders by submitting a representation dated 1st May, 2024 as permitted by Rule 159(5) of the Central Goods and Services Tax Rules, 2017 CGST Rules; that the respondent, despite receipt of such representation, did not decide the same and kept the same pending; that, in terms of sub-section (2) of Section 83 of the CGST Act, the provisional attachment orders dated 17th October, 2023 and 26th October, 2023 lapsed upon expiry of a year, i.e., with effect from 18th October, 2024, and 27th October, 2024, respectively; and that, despite having no jurisdiction conferred by law, the respondent proceeded to pass fresh provisional attachment orders dated 13th November, 2024 and 18th December, 2024 terming it as a 'RENEWAL' of the earlier orders. Accordingly, it was prayed that the provisional attachment orders dated 13th November, 2024 and 18th December, 2024 be quashed and set aside and the attachment lifted to enable the appellant operate its bank accounts. 3. The Gujarat High Court, while spurning the appellant's challenge, held in the impugned order that the law does not place any embargo for a second provisional attachment order ....
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.... of Range-I, Ghatak-3, Ahmedabad but the respondent, having jurisdiction at Vadodara, exercised jurisdiction beyond his authority and as such, the action is null and void. 9. Mr. Dave then contends that perusal of the satisfaction notes prior to issuance of the initial and the later provisional attachment orders would show no significant differences. The appellant having objected to the satisfaction note by its representation dated 1st May, 2024 in terms of sub-rule (5) of Rule 159 of the CGST Rules, it was obligatory for the respondent to dispose of such representation. However, failure or omission to dispose of such representation on the one hand followed by issuance of the impugned provisional attachment orders based on more or less the same satisfaction note earlier issued amounts to gross misuse of powers by the respondent. 10. Finally, Mr. Dave contends that there is a cleavage of opinion on interpretation of Section 83 of the CGST Act. In Additional Director General & anr. v. Ali K. & ors. 2025 SCC OnLine Ker 758, the view taken by the High Court of Kerala at Ernakulam Kerala High Court is at variance with the view taken in the impugned order by the Gujarat High Court as w....
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....terials placed on record are perused together with the decisions cited at the bar. 14. The question of law arising for decision in this appeal is: whether the CGST Act or any other law in force permits issuance of a second provisional attachment order under sub-section (1) of Section 83 of the CGST Act after the initial provisional attachment order issued thereunder ceases, by reason of efflux of a year from the date of its issuance, in terms of sub-section (2) thereof? 15. Our attention has been drawn to Section 83 of the CGST Act and Rule 159 of the CGST Rules. 16. Section 83 of the CGST Act reads: 83. Provisional attachment to protect revenue in certain cases (1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, 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 or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed. (2) Every such provisional attachment shall cease to have effect after ....
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....e underscoring the draconian nature of the provision, observed thus: 49. Now in this backdrop, it becomes necessary to emphasise 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 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 languag....
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....is open to an authority, which is required to adhere to the CGST Act and the CGST Rules scrupulously while exercising the draconian power of attaching a bank account, to act in any manner for issuing a second provisional attachment order on the specious ground that there is no embargo placed by the statute in that behalf. 21. We may profitably refer to certain decisions of this Court for guidance. 22. State of Odisha v. Satish Kumar Ishwardas Gajbhiye (2021) 17 SCC 90 is not a decision relatable to powers of taxation but to holding of a preliminary inquiry, prior to initiation of disciplinary proceedings. However, we refer to this decision because it has approvingly quoted the dictum of the High Court at Calcutta of ancient vintage in Maniruddin Bepari v. Chairman of the Municipal Commissioners 1935 SCC OnLine Cal 296. We prefer to quote the relevant passage from this Court's decision hereunder: 12. ... A statutory authority can do only such acts which are permissible under the statute and the authority cannot be permitted to do something which is not provided in law. This principle was formulated by the Calcutta High Court nine decades ago in Maniruddin Bepari v. Chairman of t....
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....enumerated in List II of Seventh Schedule. The authority also extends to the Concurrent List except as provided in the Constitution itself or in any law passed by Parliament. Similarly, Article 73 provides that the executive powers of the Union shall extend to matters with respect to which Parliament has power to make laws and to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or any agreement. The proviso engrafted on clause (1) further lays down that although with regard to the matters in the Concurrent List the executive authority shall be ordinarily left to the State it would be open to Parliament to provide that in exceptional cases the executive power of the Union shall extend to these matters also. Neither of these articles contain any definition as to what the executive function is and what activities would legitimately come within its scope. They are concerned primarily with the distribution of the executive power between the Union on the one hand and the States on the other. They do not mean, as Mr Pathak seems to suggest, that it is only when Parliament or the State Legislature has legislated o....
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....hat does not mean that till statutory rules are framed in this behalf the Government cannot issue administrative instructions regarding the principle to be followed in promotions of the officers concerned to selection grade posts. It is true that Government cannot amend or supersede statutory rules by administrative instructions, but if the rules are silent on any particular point Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed. (emphasis ours) 28. Bearing these principles in mind, we now proceed to answer the question noted in paragraph 14 above based on our understanding that for an authority to exercise a power, it must either be empowered by the statute or authorized by executive instructions; if the power is not conferred by statute, executive instructions or any other instrument which is law within the meaning of Article 13, it cannot be justified by arguing that the exercised power is neither prohibited by the statute nor by executive instructions. 29. Not to speak of a statutory conferment of power, there is a complete absence of any executive instruction consistent with the legislative polic....
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....n to filling old wine in a new bottle. 32. Besides, a reading of the statute in its entirety would reveal that the provisional attachment is a pre-emptive measure to protect the interests of government revenue. It cannot function as a recovery measure; for that, the statue has other provisions. Certainly, a period of one year, as ordained by the legislature, is enough for the revenue authorities to conclude its investigation; if not, the legislature could have provided for a renewal or an extended period as in the Excise Act and the Customs Act. Sub-section (2) of Section 83 does not provide for any exception to the rule. Any explanation given by the respondent for issuing a renewal would be in the teeth of the established procedure. Once the inquiry culminates into a final demand, recourse must be had to the provisions under the section which provide for recovery of the assessed tax, penalty, interest, etc. This also provides opportunity to the assessee to challenge the same before the appropriate authority. Short-circuiting the procedure by pursuing a provisional attachment as a means to recover the tax due, as a natural consequence, would frustrate the intent and purpose of the....
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.... Policy Wing took up the next agenda regarding provisional attachment of the property of the taxpayers. He stated that Section 83(2) of CGST Act, 2017 states that the provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order i.e. provisional attachment order in the form of FORM GST DRC-22. However, as per Rule 159(2) of CGST Rules, 2017, provisional attachment of a property shall be removed only on the written instructions from the Commissioner to that effect. But, even after completion of 1 year, the property is not released as the banks and other agencies with which the property is provisionally attached unless they receive written instructions from the Tax Authorities. Therefore, it appeared that the CGST Rules, 2017 were not in alignment with the CGST Act, 2017. This misalignment between Rules and Act was observed by the Hon'ble Delhi Court in the case of M/s. Balaji Enterprises vs. Pr. ADG, DGGI and therefore, the Hon'ble Court had ordered to adopt a procedure for defreezing the bank accounts. 4.31 He mentioned that the issue was deliberated by the Law Committee and the Law Committee recommended amendment in sub-r....