{"id":21521,"date":"2020-01-25T11:29:08","date_gmt":"2020-01-25T05:59:08","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=21521"},"modified":"2020-01-25T11:29:08","modified_gmt":"2020-01-25T05:59:08","slug":"kaish-impex-private-limited-vs-uoi-bombay-high-court-s-83-cgst-act-power-to-provisionally-attach-bank-accounts-is-a-drastic-power-considering-the-consequences-that-ensue-from-provisional-attachment","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/kaish-impex-private-limited-vs-uoi-bombay-high-court-s-83-cgst-act-power-to-provisionally-attach-bank-accounts-is-a-drastic-power-considering-the-consequences-that-ensue-from-provisional-attachment\/","title":{"rendered":"Kaish Impex Private Limited vs. UOI (Bombay High Court)"},"content":{"rendered":"

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
\nORDINARY ORIGINAL CIVIL JURISDICTION
\nWRIT PETITION NO. 3145 OF 2019
\nKaish Impex Private Limited
\n(Through its Director \u2013 Deepak Kumar
\nGoyal), 201, 2nd floor, Makers Chamber-5,
\nNariman Point, Mumbai, Maharashtra
\n400 021 .. Petitioner
\nVersus
\n1. The Union of India, through the
\nSecretary, Department of Legal Affairs,
\nMinistry of Law & Justice, Branch
\nSecretariat, Aaykar Bhavan, Marine
\nLines, Mumbai.
\n2. The Principal Chief Commissioner
\nCGST & Central Excise, 115, New
\nCentral Excise Bldg., M.K.Road,
\nChurchgate, Mumbai.
\n3. Assistant Commissioner of CGST
\nRange (IV), 110, Ganges Ink, Building,
\nL.B.S.Marg, Vikhroli (West), Mumbai-
\n400 083.
\n4. Additional Director General,
\nDirectorate General of GST
\nIntelligence, Bhopal Zonal Unit,
\n4th Floor, ChinarrIncube Business Centre,
\nHoshangabad Road, Bhopal .. Respondents
\n2 6 WP 3145-2019 Or-Ord.e.doc
\nMs.Anjali Jha Manish a\/w Mr.Priyadarshi Manish a\/w Mr.Sagar
\nKasar, for the Petitioner.
\nMr.Pradeep S.Jetly a\/w Mr.J.B.Mishra, for the Respondents.
\nCORAM : NITIN JAMDAR &
\nM.S.KARNIK , JJ.
\nDate : 17 January 2020.
\nOral Judgment : (Per Nitin Jamdar, J.)
\nRule. Rule made returnable forthwith. Respondents
\nwaive service. Taken up for final disposal.
\n2. The Petitioner has challenged the action of the
\nauthorities under the Central Goods and Service Tax, Mumbai of
\nattaching the Petitioner\u2019s bank account in State Bank of India.
\n3. The Petitioner-Kaish Impex Private Limited is a
\nCompany incorporated under the Companies Act, 1956. The
\nPetitioner Company is engaged in the export of perfumes and
\ncompound fragrance oil. The Petitioner is registered under the
\nGoods and Service Tax Act, 2017 ( the \u2018Act\u2019). The Petitioner, in
\npursuant of its activity of export, had carried out various transactions
\nwith different entities.
\n4. The Respondent-Authorities under the Act initiated an
\n3 6 WP 3145-2019 Or-Ord.e.doc
\ninquiry against an export firm in Delhi – M\/s.Maps Global. The
\nRespondent-authorities suspected that M\/s.Maps Global was
\ninvolved in fraudulent availing of Input Tax Credit, and this Input
\nTax Credit was utilised for payment of export goods, and later a
\nrefund was sought. The Respondent-authorities scrutinized the
\nbank account of M\/s.Maps Global and noticed that an amount of
\nRs.28,50,000\/- was transferred to one M\/s.Balajee Enterprises, on 19
\nJune 2019 and 12 July 2019. The Respondent-authorities suspected
\nthese transactions were fictitious and no material was supplied to
\nM\/s.Maps Global. Further, according to Respondent-authorities
\nM\/s.Balajee Enterprises transferred an amount of Rs.1,63,00,000\/- to
\nthe account of the Petitioner on 17 October 2019.
\n5. The Directorate General of GST Intelligence issued a
\nsummons to the Petitioner on 22 October 2019 to attend on 5
\nNovember 2019, referring to inquiry against M\/s.Maps Global. The
\nsummons stated that the authorities had reason to believe that the
\nPetitioner had facts and documents material for the inquiry. The
\nPetitioner was summoned under section 70 of the CGST Act to give
\nevidence and produce documents in the office of the Directorate
\nGeneral of GST Intelligence. On the same day, the Directorate
\nGeneral issued a communication to the State Bank of India informing
\nthe Bank Manager of proceedings being initiated against the
\nPetitioner and a provisional attachment of bank account is necessary
\nunder section 83 of the CGST Act. Accordingly, the Bank Manager
\n4 6 WP 3145-2019 Or-Ord.e.doc
\nwas directed that no debit be allowed to be made from the said
\naccount or any other account operated by the Petitioner. The
\nPetitioner received a communication from the State Bank of India on
\n5 November 2019 regarding attachment by the Respondent-
\nAuthorities. Challenging this action of attachment under Section 83
\nof the Act, the Petitioner has moved the present Petition.
\n6. We have heard Ms.Anjali Jha Manish, learned Counsel
\nappearing for the Petitioner and Mr.Pradeep Jetly, learned Counsel
\nfor Respondents.
\n7. Ms. Manish, learned Counsel for the Petitioner
\ncontended as follows. The action of the Respondent-authorities is
\nbeyond the power conferred under section 83 of the Act. Only if all
\nparameters laid down in this Section are satisfied that the action of
\nattaching a bank account can be taken. The contingencies in which
\nan order of provisional attachment can be made are enumerated in
\nsection 83 namely, the pendency of proceedings under section 62,
\n63, 64, 67, 73 and 74 of the Act. No proceedings have been initiated
\nor pending against the Petitioner under these Sections. Only a
\nsummons under section 70 of the Act was issued to the Petitioner.
\nSection 70 is not referred to in section 83 of the Act. The action of
\nprovisional attachment is regulated under Rule 159(1) of the CGST
\nRules and a format provided for the issuance of such notice.
\nAssuming for the sake of argument if proceedings are initiated against
\n5 6 WP 3145-2019 Or-Ord.e.doc
\nM\/s.Maps Global under these sections, provisional attachment can be
\nof the bank accounts of M\/s.Maps Global, and not of Petitioner.
\nEven according to the Respondents, the amount transferred by
\nM\/s.Maps Global to M\/s.Balajee Enterprises was on 12 June 2019
\nand 19 June 2019 and if it was allegedly transferred by M\/s.Balajee
\nEnterprises to the Petitioner on 17 October 2019, then during this
\nperiod M\/s.Balajee Enterprises could have entered into various other
\ntransactions. The statements made by the Petitioner have been
\ncorroborated by M\/s.Balajee Enterprises. Accordingly to it is prayed
\nthat the impugned order be quashed.
\n8. Mr.Jetly opposing the Petition submitted as follows. The
\npower of provisional attachment is conferred to protect interests of
\nRevenue, and this was a fit case where this power had to be exercised.
\nInvestigation is in progress. Money trail is traced from M\/s.Maps
\nGlobal to the Petitioner and inquiry is underway. Action is taken
\nagainst M\/s.Maps Global under section 67 which referred to under
\nsection 83 of the Act. The language of section 83 indicates that
\nduring the pendency of any proceedings (in this case under section
\n67 of the Act) if a summons is issued under section 70 to further the
\ninquiry to other taxable persons provisional attachment of bank
\naccount of other taxable persons also is permissible and
\ncontemplated. He submitted that thus the Petition be dismissed.
\n9. Under the scheme of Act, levy and collection of tax are
\n6 6 WP 3145-2019 Or-Ord.e.doc
\nprovided for in Chapter III, Assessment is under Chapter XII and
\nInspection, Search, Seizure and Arrest are dealt with under Chapter
\nXIV. Chapter XV which deals with Demand and Recovery. This
\nchapter provides for provisional attachment under section 83.
\nSection 83, under which the power is exercised reads thus :-
\n\u2018Provisional attachment to protect revenue in
\ncertain cases. \u2014 (1) Where during the pendency of
\nany proceedings under section 62 or section 63 or
\nsection 64 or section 67 or section 73 or section 74,
\nthe Commissioner is of the opinion that to protect the
\ninterest of the Government revenue, it is necessary so
\nto do, he may, by order in writing attach provisionally
\nany property, including bank account, belonging to
\nthe taxable person in such manner as may be
\nprescribed’.
\nTherefore, during the pendency of any proceedings under section 62,
\n63, 64, 67, 73 and 74, the Commissioner can provisionally attach any
\nproperty including bank account belonging to the taxable person. For
\nthis purpose the Commissioner has to form an opinion that it is
\nnecessary to do so for protecting the interest of the government
\nRevenue. These steps have to be taken in such manner as prescribed.
\nRule 159(1) of CGST Rules, 2017 deals with provisional attachment
\nof property. This Rule reads thus :-
\n(1) Where the Commissioner decides to attach any
\nproperty, including bank account in accordance with
\nthe provisions of section 83, he shall pass an order in
\nFORM GST DRC-22 to that effect mentioning
\ntherein, the details of property which is attached.
\n7 6 WP 3145-2019 Or-Ord.e.doc
\nRule 159(1) states that when the Commissioner decides to attach any
\nproperty including the bank account, he shall pass an order in form
\nGST DRC-22. Various forms have been appended to the GST Rules
\n2017. Form GST DRC-22 lays down the format in which the order
\nhas to be issued provisionally attaching the property and the
\ncommunication thereof to the financial institution. The form is
\nreproduced hereinbelow for ready reference.
\nFORM GST DRC – 22
\n[See rule 159(1)]
\nDate:
\nReference No.:
\nTo
\n——————Name
\n___________ Address
\n(Bank\/Post Office\/Financial Institution\/Immovable
\nproperty registering authority)
\nProvisional attachment of property under section 83
\nIt is to inform that M\/s.———————– (name)
\nhaving principal place of business at ————–
\n(address) bearing registration number as —————
\n(GSTIN\/ID), PAN ———- is a registered taxable
\nperson under the <> Act. Proceedings
\nhave been launched against the aforesaid taxable
\nperson under section <<-------- \u2192> of the said Act to
\ndetermine the tax or any other amount due from the
\nsaid person. As per information available with the
\ndepartment, it has come to my notice that the said
\n8 6 WP 3145-2019 Or-Ord.e.doc
\nperson has a –
\n<> account
\nin your << bank\/ post office\/ financial institution >>
\nhaving account no. << A\/c no. >>;
\nor
\nproperty located at << property ID & location >>.
\nIn order to protect the interests of revenue and in
\nexercise of the powers conferred under section 83 of
\nthe Act, I ———————- (name)———————
\n(designation), hereby provisionally attach the aforesaid
\naccount \/ property.
\nNo debit shall be allowed to be made from the said
\naccount or any other account operated by the aforesaid
\nperson on the same PAN without the prior permission
\nof this department.
\nor
\nThe property mentioned above shall not be allowed to
\nbe disposed of without the prior permission of this
\ndepartment.
\nSignature
\nName
\nDesignation
\nCopy to –
\nThe form of the order shows that it is to be addressed to the taxable
\nperson. The Sections under which the proceedings are launched
\nagainst such a taxable person are to be referred and then a direction is
\n9 6 WP 3145-2019 Or-Ord.e.doc
\nto be issued for not allowing any debit.
\n10. Section 83 of the Act refers to the pendency of
\nproceeding under Section 62, 63, 64, 67, 73 and 74. Section 63
\ndeals with the assessment of unregistered persons. Section 64 is
\nregarding a summary assessment in respect of certain special cases.
\nSection 67 falls in Chapter XIV and refers to the power of inspection,
\nsearch and seizure. Section 73 is in Chapter XV wherein it deals
\nwith the determination of tax not paid or short paid or erroneously
\nrefunded or wrongly availed, utilised for any reason other than fraud
\nor any willful mis-statement made on suppression of facts. Section 70
\nconfers power on the proper officer to summon any person whose
\nattendance he considers necessary to give evidence or to produce
\ndocuments or any other thing in any inquiry. Such inquiry is
\ndeemed to be a judicial proceeding under Indian Penal Code.
\n11. The order of provisional attachment of the Petitioner\u2019s
\nbank account is placed on record by the Respondents by way of
\naffidavit in reply. It reads as under :-
\n\u2018To,
\nThe Bank Manager,
\nState Bank of India,
\nAlamal House, Jamnalal Bajaj Marg,
\nNariman Point, Mumbai (MH) 400021.
\nProvisional attachment of property under
\nsection 83.
\n10 6 WP 3145-2019 Or-Ord.e.doc
\nIt is to inform that M\/s. Kaish Impex Pvt. Ltd.
\nHaving principal place of business at 201, 2nd Floor,
\nMAKER CHAMBER 5, NARIMAN POINT,
\nMUMBAI \u2013 400 021 having registration number
\n27AAGCK9660D1ZC and PAN AAGCK9660D is a
\nregistered taxable person under the SGST\/CGST
\nAct. Proceedings have been launched against the
\naforesaid taxable person under section 67 & 70 of the
\nsaid Act to determine the tax or any other amount
\ndue from the said person. As per information
\navailable with the department, it has come to my
\nnotice that the said person has a current account in
\nyour bank having account no.38530527339.
\nIn order to protect the interests of revenue and in
\nexercise of the powers conferred under section 83 of
\nthe Act, Ajay Kumar Pandey, Additional Director
\nGeneral hereby provisionally attach the aforesaid
\naccount \/ property.
\nNo debit shall be allowed to be made from the said
\naccount or any other account operated by the
\naforesaid person on the same PAN without the prior
\npermission of this department.
\nFurther, it is also requested to inform the
\naforementioned Tax Payer about the same after debit
\nfreezing their bank account.\u2019
\n(emphasis supplied)
\nThis order refers to Petitioner as a registered taxable person. It then
\nrefers to proceedings having been launched against the Petitioner as
\naforesaid taxable person under section 67 & 70 of the Act. Thereafter
\nthe authorities have proceeded to issue the order.
\n11 6 WP 3145-2019 Or-Ord.e.doc
\n12. The impugned order dated 22 October 2019 proceeds
\non the assertion that proceedings have been launched against the
\nPetitioner under section 67 section 70 of the Act. As far as section
\n67, i.e. search is concerned, it is an uncontroverted position that no
\nproceedings have been initiated against the Petitioner under section
\n67 of the Act. On the date of provisional attachment of the bank
\naccount, only a summons under of the Act was issued to the
\nPetitioner. Section 70 is not mentioned in Section 83 of the Act. No
\nproceedings were pending against the Petitioner under section 62,
\n63, 64, 73 and 74 of the Act. Thus the Petitioner contends that
\npower under section 83 could not have been invoked against the
\nPetitioner.
\n13. Primary defence of the Respondents is that even if
\nsection 62, 63, 64, 67, 73 and 74 mentioned in section 83 of the Act
\nare not referable to the case of the Petitioner, since a summons is
\nissued to the Petitioner in pursuant to the inquiry initiated against
\nM\/s.Maps Global under section 67 of the Act, by the issuance of
\nsummons the proceedings get extended to the Petitioner also.
\n14. The analysis of section 83 of the Act will show that such
\ninterpretation is not permissible and not contemplated by the
\nlegislature. Section 83 read with Rule 159(1), and the form GST
\nDRC-22, lay down a scheme as to how provisional attachment in
\ncertain cases is to be levied. Section 83 though uses the phrase
\n12 6 WP 3145-2019 Or-Ord.e.doc
\n\u2018pendency of any proceedings\u2019, the proceedings are referable to
\nsection 62, 63, 64, 67, 73 and 74 of the Act and none other. The
\nbank account of the taxable person can be attached against whom the
\nproceedings under the sections mentioned above are initiated.
\nSection 83 does not provide for an automatic extension to any other
\ntaxable person from an inquiry specifically launched against a taxable
\nperson under these provisions. Section 83 read with section 159(2),
\nand the form GST DRC-22 show that a proceeding has to be
\ninitiated against a specific taxable person, an opinion has to be
\nformed that to protect the interest of Revenue an order of provisional
\nattachment is necessary. The format of the order, i.e. the form GST
\nDRC-22 also specifies the particulars of a registered taxable person
\nand which proceedings have been launched against the aforesaid
\ntaxable person indicating a nexus between the proceedings to be
\ninitiated against a taxable person and provisional attachment of bank
\naccount of such taxable person.
\n15. Power to provisionally attach bank accounts is a drastic
\npower. Considering the consequences that ensue from provisional
\nattachment of bank accounts, the Courts have repeatedly emphasized
\nthat this power is not to be routinely exercised. Under Section 83,
\nthe legislature has no doubt conferred power on the authorities to
\nprovisionally attach bank accounts to safeguard government revenue,
\nbut the same is within well-defined ambit. Only upon contingencies
\nprovided therein that the power under section 83 can be exercised.
\n13 6 WP 3145-2019 Or-Ord.e.doc
\nThis power is to be used in only limited circumstances and it is not an
\nomnibus power.
\n16. It is therefore not possible to accept the submission of the
\nRespondents that even though specified proceedings have been
\nlaunched against one taxable person, bank account of another taxable
\nperson can be provisionally attached merely based on the summons
\nissued under section 70 to him.
\n17. In view of our discussion as above, we hold that the order
\ndated 22 October 2019 provisionally attaching the bank account of
\nthe Petitioner was without jurisdiction and is liable to be quashed and
\nset aside.
\n18. The Petitioner also advanced various contentions to
\ndemonstrate how the Petitioner is not involved in the money trail or
\nis not guilty of the offences under the Act. We do not have to go into
\nthat question because of our conclusion of the absence of power with
\nthe Authorities to provisional attach the bank account of the
\nPetitioner in the facts.
\n19. The Petition succeeds. Rule is made absolute in terms of
\nprayer clause Para 21(i), (ii) and (iii) of the provisional attachment on
\nthe bank account specified in the prayers clause stands lifted. The
\nconcerned bank authorities will act upon the same. All parties to act
\n14 6 WP 3145-2019 Or-Ord.e.doc
\non the authenticated copy of the order.
\n20. At this stage, Mr. Jetly, the learned Counsel for the
\nRespondents prays that this direction is stayed for some period. The
\nmandate we have issued will come into effect two weeks after the
\norder is uploaded on the server of this Court.
\nM.S.KARNIK, J. NITIN JAMDAR, J.<\/p>\n","protected":false},"excerpt":{"rendered":"

Power to provisionally attach bank accounts is a drastic power. Considering the consequences that ensue from provisional attachment of bank accounts, the Courts have repeatedly emphasized that this power is not to be routinely exercised. Under Section 83, the legislature has no doubt conferred power on the authorities to provisionally attach bank accounts to safeguard government revenue, but the same is within well-defined ambit. Only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power<\/p>\n

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