TaxTMI 
TaxTMI 
2026 (1) TMI 256
X X X X Extracts X X X X
X X X X Extracts X X X X
....GST/CGST Act, 2017 dated 27/06/2024 issued by the Respondent No. 1 on 27/06/2024, bearing Reference No. DCCT(A)-6.5/GSTINS No. 3169&3179/2023-24 and Reference No. MA290624218787C in Form GST DRC22 and enclosed as Annexure C. c. And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity." 2. Heard learned counsel for the petitioner and learned HCGP for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that the respondent has passed the impugned order dated 24.01.2024 by invoking Section 83 of the CGST/KGST Act, 2017, which reads as under: "Section 83. Provisional attachment to protect revenue in certain cases. ^1 [(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 p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....piry of a period of one year from the date of the order made under sub- section (1). The manner and mode of attachment to be carried out under Section 83 of the CGST Act has been prescribed under Rule 159 of the CGST Rules. Rule 159 of the CGST Rules reads: Rule 159. Provisional attachment of property. - (1) Where the Commissioner decides to attach any property, including bank account in accordance with the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of property which is attached. (2) The Commissioner shall send a copy of the order of attachment in FORM GST DRC-22 to the concerned Revenue Authority or Transport Authority or any such Authority to place encumbrance on the said movable or immovable property, which shall be removed only on the written instructions from the Commissioner to that effect. (3) Where the property attached is of perishable or hazardous nature, and if the person, whose property has been attached pays an amount equivalent to the market price of such property or the amount that is or may become payable by such person, whichever is lower, then such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ory 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 property of the taxable person; and fifth, the observance by the Commissioner of the provisions contained in the rules in regard to the manner of attachment. Each of these components of the statute are integral to a valid exercise of power. In other words, when the exercise of the power is challenged, the validity of its exercise will depend on a strict and punctilious observance of the statutory preconditions by the Commissioner. While conditioning the exercise of the power on the formation of an opinion by the Commissioner that "for the purpose of protecting the interest of the government revenue, it is necessary so to do", it is evident that the statute has not left the formation of opinion to an unguided subjective discretion of the Commissioner....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovided in law. This principle was formulated by the Calcutta High Court nine decades ago in Maniruddin Bepari v. Chairman of the Municipal Commissioners, in which it was inter alia held: "It is a fundamental principle of law that a natural person has the capacity to do all lawful things unless his capacity has been curtailed by some rule of law. It is equally a fundamental principle that in the case of a statutory corporation it is just the other way. The corporation has no power to do anything unless those powers are conferred on it by the statute which creates it." (emphasis ours) 23. The principle of yesteryears, considered to be of immense substance and worth that a statutory authority, without statutorily conferred power, has no power to act in a particular manner, however, has to be read, in the present context, in light of what the Constitution of India ordains. Ever since the Constitution was enacted and with the march of administrative law, we feel that the age-old principle may not hold good in all circumstances. 24. An instructive passage is found in the decision of the Constitution Bench of this Court in Rai Sahib Ram Jawaya Kapur v. State ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 on certain items appertaining to their respective lists, that the Union or the State executive, as the case may be, can proceed to function in respect to them. On the other hand, the language of Article 172 clearly indicates that the powers of the State executive do extend to matters upon which the State Legislature is competent to legislate and are not confined to matters over which legislation has been passed already. The same principle underlies Article 73 of the Constitution. These provisions of the Constitution therefore do not lend any support to Mr Pathak's contention." 25. This proposition finds considerable support from another Constitution Bench decision of this Court in Lohia Machines Ltd. v. Union of India- wherein it was held that the legislature having exercised its essential function, a certain margin of latitude is always allowed to the executive in working out the details of exemption in a taxing statute. This Court referred to Pt. Banarsi Das Bhanot v. State of Madhya Pradesh - AIR....
X X X X Extracts X X X X
X X X X Extracts X X X X
....either 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 policy and intendment of the CGST Act authorizing renewal of a lapsed provisional attachment order. Viewed from either angle, issuance of the provisional attachment orders by the respondent under challenge before the Gujarat High Court appears to be indefensible as rightly contended by Mr. Dave. 30. That apart, having regard to the draconian nature of power conferred on the revenue by sub-section (1) of Section 83 of the CGST Act to levy a provisional attachment, the terms of the entire section have to be construed in a manner so that sub-section (2) of Section 83 is not effectively reduced to a dead letter. We are reminded of the maxim ut res magis valeat quam pereat. It is an interpretive doctrine that a legal text, specially a statute, should be interpreted in a way that gives the document force rather than makes it fail. Conceding power to the revenue to issue a fresh provisional order of attachment after the initial order has lapsed by operation of law or t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 statute. 33. We have looked at the order passed by this Court in RHC Global Exports Private Limited (supra). We are mindful of the fact that the order sought to be relied upon was passed while disposing of an interim application and that the special leave petition itself is pending adjudication. However, nothing much turns on it. The view taken by this Court therein, though not based on elaborate reason, has our respectful concurrence in view of our aforesaid discussions. 34. Noticing the argument of Mr. Dave of there being a cleavage of opinion, we have read the decision of the Kerala High Court in Ali. K. (supra). The view taken in Ali. K. (supra) appears to us to be acceptable and we approve it. 35. In fact, despite the statute having provided for a lapse after one year, it has been observed that debit-freeze continues for long after that, compelling the citizens to approach the high courts for an order....
X X X X Extracts X X X X
X X X X Extracts X X X X
....refore, 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-rule (2) of rule 159 of CGST Rules and in FORM GST DRC-22, as below to align the provisions of CGST Rules with that of section 83 of CGST Act.: Amendment in sub-rule (2) of Rule 159: To insert the words "or on expiry of a period of one year from the date of issuance of order in FORM GST DRC-22, whichever is earlier," after the words "to that effect", to clearly provide that order issued under FORM GST DRC-22 shall cease to have effect after expiry of period of one year from the date of issuance. Amendment in FORM GST DRC-22: To insert the words "This order shall cease to have effect, on the date of issuance of order in FORM GST DRC-23 by the Commissioner, or on the expiry of a period of one year from the date of issuance of this order, whichever is earlier." (emphasis in original) 38. The Council while being conscious of the difficulties, has recommended necessary amendments to align the extant procedure under Rule ....