IN THE HIGH COURT AT CALCUTTA
\nConstitutional Writ Jurisdiction
\nAppellate Side
\nPresent:
\nThe Hon\u2019ble Justice Shekhar B. Saraf
\nW. P. No. 18429 (W) of 2019
\nM\/s. Amazonite Steel Pvt. Ltd. & Anr.
\nVersus
\nUnion of India & Ors.
\nWith
\nW.P. No. 18431 (W) of 2019
\nM\/s. Corandum Impex Pvt. Ltd. & Anr.
\nVersus
\nUnion of India & Ors.
\nWith
\nW.P. No. 18433 (W) of 2019
\nM\/s. Cuprite Marketing Pvt. Ltd. & Anr.
\nVersus
\nUnion of India & Ors.
\nWith
\nW. P. No. 21272 (W) of 2019
\nM\/s. Amazonite Steel (P) Ltd. & Anr.
\nVersus
\nUnion of India & Ors.
\nWith
\nW. P. No. 21273 (W) of 2019
\nM\/s. Corandum Impex Pvt. Ltd. & Anr.
\nVersus
\nUnion of India & Ors.
\nWith
\nW.P. No. 21274 (W) of 2019
\nM\/s. Cuprite Marketing Pvt. Ltd. & Anr.
\n2
\nVersus
\nUnion of India & Ors.
\nFor the Petitioners
\nFor The UOI
\nFor the Respondent No. 2.
\nFor the Respondent Nos. 3 & 4.
\n: Mr. Arijit Chakrabarti
\nMr. Nilotpal Chowdhury
\nMr. Prabir Bera
\n: Mr. Bhaskar Prasad Banerjee
\nMr. Sujit Mitra
\n: Mrs. Sanjukta Gupta
\nMr. Sabnam Basu
\n: Mr. Vivek Basu
\nMr. Jaydeb Brahmachari
\nHeard on : 20.11.2019, 27.11.2019, 08.01.2020, 15.01.2020, 22.01.2020, 05.02.2020 &
\n19.02.2020
\nJudgment on : 04.03.2020
\nShekhar B. Saraf, J.:
\n1. The grievances raised and issues involved in all the six writ petitions are
\ncommon, and accordingly they were heard together and are being decided
\nconjointly. This is an application under Article 226 of the Constitution of
\nIndia wherein the writ petitioners are aggrieved by the orders passed by
\nthe Directorate General of Goods and Services Tax Intelligence, Kolkata
\nZonal Unit [hereinafter referred to as \u201cDGGI\u201d], to provisionally attach the
\ncurrent bank accounts of the writ petitioner under Section 83 of the
\nCentral Goods and Services Tax Act, 2017.
\n3
\n2. For the purpose of convenience, the facts in writ petition W.P. No.
\n21272(W) of 2019 are being taken into consideration and are
\nchronologically delineated hereinbelow:
\na. The writ petitioner no. 1 is a private limited company duly
\nincorporated under the Companies Act, 2013, under the name of
\nAmazonite Steels Private Limited [hereinafter referred to as the \u201csaid
\ncompany\u201d] whereas petitioner no. 2 is the director of the said
\ncompany. The said company is duly registered under the Central
\nGoods and Services Tax Act, 2017 [hereinafter referred to as \u201cCGST
\nAct, 2017\u201d] and West Bengal Goods and Services Tax Act, 2017,
\nhaving its registration number as 19AAPCA2903C1ZW.
\nb. The said company carries on its business transactions through the
\ncurrent account registered with M\/s. Lakshmi Vilas Bank, New
\nAlipur Branch [hereinafter referred to as the \u201csaid bank\u201d] having
\naccount no. 0125360000002129 [hereinafter referred to as the \u201csaid
\naccount\u201d].
\nc. On 5th June, 2018, the Additional Director General, Directorate
\nGeneral of Goods & Services Tax Intelligence (hereinafter referred
\n\u201cADGGI\u201d) passed an Order to provisionally attach the current
\naccount of the writ petitioner maintained in the said bank under
\n4
\nSection 83 of the CGST Act, 2017, through FORM GST DRC \u2013 22
\n[hereinafter referred to as the \u201csaid first Order\u201d]. The said first Order
\nof the ADGGI was addressed to the Branch Manager of the said
\nbank in order to freeze the functioning of the said account of the
\npetitioners. The relevant extract of the said Order is delineated
\nbelow:
\n\u201cIt is to inform that M\/s. Amazonite Steels Pvt. Ltd. having principal
\nplace of business at 23 MSBK Mitra Road, Baranagar, Kolkata-
\n700036 bearing GST registration number as 19AAPCA2903C1ZW,
\nPAN- AAPCA2903C is a registered taxable entity under the CGST Act,
\n2017. Proceedings have been launched against the aforesaid taxable
\nperson under Section 67 of the said Act to determine the tax or any
\nother amount due from the said entity. As per information available
\nwith the department, it has come to my notice that the said entity has
\nthe following bank account at your bank.
\nName as per the Account:- Amazonite Steels Pvt. Ltd.
\nAccount No:- 0125360000002129
\nIn order to protect the interests of the revenue and in exercise of the
\npowers conferred under Section 83 of the Act, I, Ataur Rahman,
\nAdditional Director General, hereby provisionally attach the aforesaid
\naccount.
\nNo debit shall be allowed to be made from the said account or any
\nother account operated by the aforesaid entity on the same PAN
\nwithout the prior permission of this department.\u201d
\nd. The said bank through a letter dated 11th June, 2018, informed the
\nwrit petitioner about the Order passed by the ADGGI which directed
\nthe bank to freeze the current account of the petitioners.
\n5
\ne. After more than a year, on 19th July, 2019, the said company by
\nway of a letter made representation before the ADGGI, requesting to
\nde-freeze the current account of the company which was earlier
\nprovisionally attached under Section 83 of the CGST Act, 2017.
\nf. The petitioner company on 20th July, 2019 informed the said bank
\nregarding the appointment of new directors in the company, which
\nwas duly acknowledged by the said bank.
\ng. On 31st July, 2019, the petitioner company wrote to the said bank
\npraying for immediate de-freezing of the said account. The relevant
\nportion of the letter is delineated below:
\n\u201cIn this connection it is to inform you that although during the
\npendency of any proceedings under Section 67, the concerned
\nauthority had power to provisionally attach the bank account under
\nsub-section (1) of Section 83 of the CGST Act, 2017 but under Section
\n83(2) of the CGST Act, 2017, such provisional attachment \u2018shall cease
\nto have effect after one year from the date of the order made under
\nsub-section (1)\u2019.
\nThe letter for provisional attachment was issued by the DGGI, GOI on
\n05-06-2018 and in terms of Section 83(2) the period of provisional
\nattachment expired on 05-06-2019.
\nIn such circumstances, you are requested to immediately de-freeze the
\nsaid account and allow the operation of the account forthwith.\u201d
\n6
\nh. Thereafter, several other representations were made by the writ
\npetitioner before the said bank as well as the ADGGI respectively
\npraying to de-freeze the said current account but there was no
\nresponse to the representations by either of the parties.
\ni. Being aggrieved and dissatisfied with the inaction on the part of the
\nrespondents the writ petitioner preferred a writ application before
\nthis Court bearing W.P. No. 18429(W) of 2019 [hereinafter referred
\nto as \u201cearlier writ petition\u201d]. The main prayers made by the writ
\npetitioner in the earlier writ petition are delineated below:
\n\u201c(a) Writ in the nature of Mandamus directing the respondents and\/or
\ntheir men, servants, agents, assigns, etc. to withdraw\/ cancel\/
\nrescind the order of provisional attachment of the Current Account No.
\n0125360000002129 of the petitioner no. 1 company maintained with
\nM\/s. Lakshmi Vilas Bank, New Alipur Branch, Kolkata;
\n(b) Writ in the nature of Mandamus directing the respondents and\/or
\ntheir men, servants, agents, assigns, etc. to forthwith allow the
\npetitioners to operate the Current Account No. 0125360000002129 of
\nthe petitioner no. 1 company maintained with M\/s. Lakshmi Vilas
\nBank, New Alipur Branch, Kolkata in terms of Section 83(2) of the
\nCGST Act, 2017\u201d
\nj. The earlier writ petition which was filed by the writ petitioners came
\nup for hearing and a co-ordinate bench of this Court passed an
\nOrder dated 1st October, 2019, directing the parties to file affidavits
\nwithin a prescribed time.
\n7
\nk. Thereafter, on 31st October, 2019, the Principal Additional Director
\nGeneral, Directorate General of Goods & Services Tax Intelligence
\n(hereinafter referred to as \u201cPDDGI\u201d) passed a fresh provisional
\norder directing the said bank to provisionally attach the said
\ncurrent account of the petitioner. The said order was annexed to the
\naffidavit-in-opposition filed in the earlier writ petition.
\nl. Assailing the above fresh order of provisional attachment a fresh
\nwrit was filed being W.P. 21272 (W) of 2019.
\n3. The facts in W. P. No. 18431 (W) of 2019 and W. P. No. 18433 (W) of 2019
\nare identical to W. P. No. 18429 (W) of 2019, and accordingly, all these
\nthree writ petitions are hereinafter referred to as \u2018earlier writ petitions\u2019.
\nFurthermore, the facts in W.P. 21274 (W) of 2019 and W.P. 21273 (W) of
\n2019 are identical to W.P. 21272(W) of 2019, and accordingly, all these
\nthree writ petitions are hereinafter referred to as \u201cpresent writ petitions\u201d.
\nThe legal issues which need to be addressed in the above writ petitions
\nare as follows:
\nA. Whether the Principal Additional Director General, DGGI and
\nAdditional Director General, DGGI are competent to pass
\norders under Section 83 of the CGST Act, 2017?
\nB. Whether an order passed under Section 83 of the CGST Act,
\n2017, remains valid after the expiry of one year from the date
\nof the order?
\n8
\nC. Whether the authorities can issue fresh order of provisional
\nattachment\/multiple orders under Section 83 of the CGST
\nAct, 2017?
\nIssue A:
\n4. In relation to the first issue, Mr. Arijit Chakrabarti, counsel on behalf of
\nthe petitioner submitted that Section 83 of the CGST Act, 2017 read with
\nRule 159 of the Central Goods and Services Tax Rules, 2017 (hereinafter
\nreferred to as \u2018CGST Rules, 2017\u2019) only empowers the \u2018Commissioner\u2019 to
\nattach any property including bank account provisionally for the purpose
\nof protecting the interest of the Revenue. He placed Section 2(24) of CGST
\nAct, 2017 to indicate that \u2018Commissioner\u2019 means Commissioner of Central
\nTax and includes Principal Commissioner of Central Tax appointed under
\nSection 3 and the Commissioner of Integrated Tax appointed under the
\nIntegrated Goods and Service Tax Act, 2017. Ergo, he submitted that the
\n\u2018Principal Additional Director General\u2019 and Additional Director General are
\nnot \u2018Commissioner of Central Tax\u2019 or \u2018Principal Commissioner of Central
\nTax\u2019 or \u2018Commissioner of Integrated Goods & Service Tax\u2019. Hence, power
\nvested under Section 83 of the CGST Act, 2017 cannot be exercised by the
\nrespondent no. 2 and 3 herein.
\n5. Mrs. Sanjuka Gupta, counsel on behalf of the respondent authorities
\n(hereinafter referred to as \u2018Revenue\u2019) placed Section 2(24), Section 3(c),
\n9
\nSection 3(d) and Section 5(2) to submit that Section 3(c) and 3(d) make it
\nclear that \u2018Principal Commissioner of Central Tax\u2019 and \u201cCommissioner of
\nCentral Tax\u2019 are equivalent to \u2018Principal Additional Directors General of
\nCentral Tax\u2019 and \u2018Additional Directors General of Central Tax\u2019. She further
\nsubmitted that Section 5(2) allows an officer of central tax to exercise the
\npowers and discharge the duties conferred or imposed under this Act on
\nany other officer of central tax who is subordinate to him. She submitted
\nthat the definition of \u2018Commissioner\u2019 in Section 2(24) has to be read in
\nconjunction with Section 3. In light of the same, she submitted that the
\norders passed by the respondent nos. 2 and 3 are absolutely legal and
\nwithin the scope of the officers who have passed these orders.
\n6. For a better understanding of the issue, Section 2(24), Section 3 and
\nSection 5 of the CGST Act, 2017 are delineated below:-
\n\u201cSection 2 (24):- \u201cCommissioner\u201d means the Commissioner of
\ncentral tax and includes the Principal Commissioner of central tax
\nappointed under section 3 and the Commissioner of integrated tax
\nappointed under the Integrated Goods and Services Tax Act;
\nSection 3:- Officers under this Act:-
\nThe Government shall, by notification, appoint the following classes of
\nofficers for the purposes of this Act, namely:-
\n(a) Principal Chief Commissioners of Central Tax or Principal Directors
\nGeneral of Central Tax,
\n10
\n(b) Chief Commissioners of Central Tax or Directors General of Central
\nTax,
\n(c) Principal Commissioners of Central Tax or Principal Additional
\nDirectors General of Central Tax,
\n(d) Commissioners of Central Tax or Additional Directors General of
\nCentral Tax,
\n(e) Additional Commissioners of Central Tax or Additional Directors of
\nCentral Tax,
\n(f) Joint Commissioners of Central Tax or Joint Directors of Central
\nTax,
\n(g) Deputy Commissioners of Central Tax or Deputy Directors of
\nCentral Tax,
\n(h) Assistant Commissioners of Central Tax or Assistant Directors of
\nCentral Tax, and
\n(i) any other class of officers as it may deem fit:
\nProvided that the officers appointed under the Central Excise Act,
\n1944 (1 of 1944) shall be deemed to be the officers appointed under
\nthe provisions of this Act.
\n\u201cSection 5:- \u201cPowers of officers\u201d
\n11
\n(1) Subject to such conditions and limitations as the Board may impose,
\nan officer of central tax may exercise the powers and discharge the
\nduties conferred or imposed on him under this Act.
\n(2) An officer of central tax may exercise the powers and discharge the
\nduties conferred or imposed under this Act on any other officer of
\ncentral tax who is subordinate to him.
\n(3) The commissioner may, subject to such conditions and limitations as
\nmay be specified in this behalf by him, delegate his powers to any
\nother officer who is subordinate to him.
\n(4) Notwithstanding anything contained in this section, an Appellate
\nAuthority shall not exercise the powers and discharge the duties
\nconferred or imposed on any other officer of central tax.\u201d
\n7. On a bare perusal of the CGST Act, 2017, it is absolutely clear that
\nSection 3 equates the \u2018Principal Commissioner of Central Tax\u2019 as the
\n\u201cPrincipal Additional Director of Central Tax\u2019 and the \u201cCommissioner of
\nCentral Tax\u2019 as the \u2018Additional Director General of Central Tax\u2019. One need
\nnot quibble with the wording as the meaning is plain and unambiguous.
\nFurthermore, the fresh orders of provisional attachment has been passed
\nby \u2018Principal Additional Director of Central Tax\u2019 who is the superior officer
\nand therefore, as per Section 5(2) of the CGST Act, 2017 she possesses
\nthe power to pass the provisional attachment orders under Section 83.
\nHence, the first issue is answered in favour of the Revenue.
\nIssue B:
\n12
\n8. Mr. Arijit Chakrabarti learned counsel appearing on behalf of the
\npetitioner company submitted in relation to the earlier writ petitions that
\nthe writ petitioners are aggrieved by the illegal and highhanded actions on
\nthe part of the respondent authorities. He submitted that the current
\naccounts that were used by the petitioner companies for its daily business
\ntransactions was provisionally attached by the order dated 5th June,
\n2018, and ceased to have any effect after one year according to Section
\n83(2) of the CGST Act, 2017.
\n9. Mr. Chakrabarti further argued that various representations were made to
\nthe respondent authorities praying before them to defreeze the said
\naccounts of the petitioners but to no avail. He further submits that the
\nfresh orders dated 31st October, 2019, passed by respondent no. 3 was
\nnot even served personally upon the petitioner, in fact, it was annexed
\nalong with the Affidavit-in-Opposition filed by the respondent No. 3 in the
\nearlier writ petitions.
\n10. Counsel on behalf of the respondent submitted that the non issue of the
\nfresh orders within time was an error on the part of the authorities. She
\nfurther submitted that since the investigation with regard to the entire
\ntransactions that involved several companies was in progress, the
\nauthorities may have inadvertently failed to issue the fresh orders of
\nprovisional attachment within time.
\n13
\n11. Upon hearing both parties on the second issue, it is obvious that the
\nauthorities have acted in a blatantly highhanded and illegal manner by
\nkeeping the provisional attachments in a state of continuance for the
\nperiod from 5th June, 2019 (when the first order of provisional attachment
\nceases to operate) till 31st October, 2019 (when fresh order for provisional
\nattachment was passed). Section 83(2) is crystal clear that the provisional
\nattachment shall cease upon expiry of one year. It was therefore
\nincumbent on the authorities to either release the provisional attachment
\nby informing the bank or by issuing a fresh order of provisional
\nattachment, if the law so allowed. The failure to do the above is nothing
\nshort of being an act of highhandedness. Such actions of the authorities
\nis an obloquy and reprehensible. No explanation has been provided for the
\nsame either in the affidavits filed in the earlier writ petitions or by counsel
\nappearing on behalf of the respondent authorities during hearing of
\narguments. In my view the above action is clearly in violation of the
\npetitioners\u2019 rights for carrying on business under Article 19(1) of the
\nConstitution of India and under Article 300A of the Constitution of India
\nwherein the petitioners have been deprived of their property without
\nauthority of law. Ergo, the issue is decided in favour of the petitioners.
\nIn my view the actions of the Revenue in acting in contravention of
\nSection 83(2) is condemnable, and accordingly costs are required to be
\nimposed. In light of the same, I direct the concerned respondent
\nauthorities to pay costs of Rs. 5 Lakhs to each of the three petitioner
\n14
\ncompanies. These amounts should be deposited in the current account
\nthat are provisionally attached within a period of four weeks from date.
\nIssue C:
\n12. Mr. Chakraborty drew the court\u2019s attention to the Calcutta High Court
\njudgment in Falguni Chakraborti Vs. The State of West Bengal and
\nOthers1 and the Supreme Court judgment in Indian National Congress
\n(I) Vs. Institute of Social Welfare and Others2 to bring home the point
\nthat an authority cannot act beyond the powers conferred by the statute.
\nHe submitted that in fiscal statutes, the Supreme Court has time and
\nagain held that strict interpretation is required to be followed and no
\nliability of tax can be imposed dehors the statute. He further relied on the
\nSupreme Court judgments in CIT Bombay Vs. Gwalior Rayon Silk
\nManufacturing Company Ltd.3 and State of Jharkhand and others
\nVs. Ambay Cements and another4 to buttress the argument that when
\nthe language is plain and unambiguous and the provision penal in
\nnature, the same must be strictly construed and the courts should not do
\nviolence to the provision by reading and\/or adding something that is not
\nintended by the legislature.
\n1 2002 LAB I.C. 65
\n2 (2002) 5 SCC 685
\n3 (1992) 3 SCC 326
\n4 AIR 2005 SC 4168
\n15
\n13. Mr. Chakraborty further relied on judgements of the Punjab and Haryana
\nHigh Court, Calcutta High Court and Andhra Pradesh High Court in PML
\nIndustries Ltd. Vs. Commissioner of Central Excise5, I.C.I. India Ltd.
\nVs. Collector of Customs6 and Commissioner of Customs & Central
\nExcise, Hyderabad \u2013IV Vs. Sunder Ispat Ltd.7 respectively to submit
\nthat the respondent authorities are creatures of statute and can only
\nexercise power that has been specifically entrusted upon them and
\ncannot under any circumstances travel beyond the scope of the statute.
\n14. Mr. Chakraborty further relied on judgements passed in relation to
\nSection 281B of the Income Tax Act, 1961 (a similar provision for
\nprovisional attachment) in Shrimati Majjo Vs. Assistant Commissioner
\nof Income-Tax and Another8, Sukhpal Singh (HUF) Vs. Commissioner
\nof Income-Tax and Another9, VLS Finance Limited and Others Vs.
\nThe Assistant Commissioner of Income Tax & Another10 and Electro
\nZavod (India) Pvt. Ltd. and Others Vs. Commissioner of Income-Tax
\nand Others11 to highlight the drastic nature of a provision for provisional
\nattachment and the scope and limitation of the same.
\n5 2013 (290) ELT 3 (P & H)
\n6 1992 (60) ELT 529 (Cal)
\n7 2015 (316) ELT 238 (AP)
\n8 (1991) 187 ITR 642
\n9 (1985) 156 ITR 480
\n10 2012 SCC Online Del 1363
\n11 (2005) 278 ITR 187
\n16
\n15. Mr. Chakraborty also relied on the judgments of the Gujarat High Court
\nin Valerius Industries v. Union of India of India12 wherein the Court
\nhad held that initiation of proceedings under Section 67 of the CGST Act,
\n2017 by itself is not sufficient to provisionally attach the property for the
\npurpose of protecting the interest of the government revenue. The counsel
\nthen relied on Pranit Hem Desai v. Additional Director General &
\nothers (Special Civil Application No. 9392 of 2019) wherein the court
\nobserved the nature of drastic power under Section 83 and highlighted
\nthe rationale of exercising such power.
\n16. Relying heavily on the above judgements, he submitted that Section 83 of
\nthe CGST Act, 2017 does not provide either for any extension of an order
\nof provisional attachment or for issuance of any fresh order of provisional
\nattachment. According to him, the Revenue being a branch of the
\nExecutive cannot assume such jurisdiction. He submitted that if a fresh
\norder of provisional attachment on the same property of the petitioner in
\nthe same case is allowed, the same would make redundant Sub-section
\n(2) of Section 83 of the CGST Act, 2017, and accordingly, that cannot be
\nthe intention of the Legislature. He further submitted that since the
\nprovisional attachment of the bank account of the petitioners creates
\nembargo on the rights of the petitioners as guaranteed under Article
\n19(1)(g), 300A and 301 of the Constitution of India, the order of
\nprovisional attachment during pendency of investigation cannot continue
\nfor an indefinite period, and it is for that reason the Legislature had
\n12 2019 (3) G.S.T.L. 15 (Guj.)
\n17
\nprovided the period of one year for completion of such investigation and
\nadjudication of alleged demand, if any, and in the interregnum,
\nprovisional attachment would be in operation.
\n17. Mrs. Sanjukta Gupta, counsel appearing on behalf of the respondents
\nsubmitted that in the instant case investigation has been initiated under
\nSection 67 of the CGST Act, 2017 and the demand will be made under
\nSection 74 of the CGST Act, 2017. The counsel submits that the fresh
\norder of provisional attachment was issued on the grounds that the
\ninvestigation authorities have come across fresh evidences against the
\nwrit petitioners and also that there is no bar under Section 83 of the
\nCGST Act, 2017, preventing a fresh order of provisional attachment.
\n18. The learned counsel relied on the case of Shrimati Priti v. State of
\nGujarat13 wherein the Court interpreted the scope of Section 45 of the
\nGujarat Value Added Tax Act, 2003 (provisional attachment similar to
\nSection 83) and held that on one hand Section 45 requires the competent
\nofficer to review the situation compulsorily at least upon completion of the
\nperiod, while so doing, does not limit his discretion to exercise such
\npowers again if the situation so arises. Mrs. Gupta referred to another
\nunreported judgment delivered by the Gujarat High Court in the matter of
\nKaithal Timber Pvt. Ltd. vs. State of Gujarat and Ors. [Special Civil
\nApplication No. 14039 of 2017] wherein the Court held that Section 45
\nof the Gujarat Value Added Tax Act has not barred fresh issue of
\n13 2011 SCC Online Guj 1869
\n18
\nprovisional attachment order and that such order could be passed for
\nprotecting the interest of government revenue.
\n19. Thereafter, Mrs. Gupta drew the Court\u2019s attention towards Rule 159(3) of
\nthe CGST Rules, 2017 which provides for release of provisional
\nattachment on payment of amount equivalent to the market price of such
\nproperty or the amount that is or may become payable by the taxable
\nperson, whichever is lower. She further refers to Rule 159(5) of the CGST
\nAct to which she submits that any person whose property is attached
\nmay, within seven days of the attachment under sub-rule (1), file an
\nobjection to the effect that the property attached was or is not liable to
\nattachment, and the Commissioner may, after affording an opportunity of
\nbeing heard to the person filing the objection, release the said property.
\nShe submitted that the petitioner never made any application under Rule
\n159, and therefore, it was clear that the petitioners\u2019 business was not
\nimpacted in any manner whatsoever.
\n20. Counsel on behalf of the respondent thereafter submitted that the
\npetitioner companies are shell companies that have no business of trading
\nor manufacturing whatsoever. Relying on the affidavit filed by the
\nauthorities, she submitted that a company M\/s Mecon Engineering
\nWorks, Raniganj simply engaged in issuance of fake invoices without
\nsupplying any goods and\/services leading to fraudulent utilization of
\n19
\ninput credit that has resulted in massive evasion of GST and fraudulent
\navailment and utilization of input tax credit. The above company M\/s
\nMecon Engineering Works, Raniganj had supplied several fake invoices to
\nthe petitioner companies. Investigation had revealed that the three
\npetitioner companies had also made several fake transactions with
\nvarious iron and steel manufacturing units and passed on fake input tax
\ncredit to these companies. She further submitted that the petitioner
\ncompanies were nonexistent at their registered address and on search
\ncarried out by the officers of DGGI on Shri Sanjay Kr. Bhuwalka and Shri
\nNeeraj Jain various incriminating documents had been recovered and
\nseized. She further submitted that these two persons were controlling
\nseveral companies including the petitioner companies and had passed on
\napproximately Rs. 40 crores of fake input tax credit. She submitted that
\nthese persons had been arrested on May 12, 2018 and have been
\npresently enlarged on bail on furnishing personal bond of Rs. 50 lakhs
\neach by an order of the High Court dated October 9, 2018. Mrs. Gupta
\nhighlighted the factual aspect that the erstwhile directors (directors at the
\ntime of search and seizure) of the three petitioner companies had made
\nstatements to the investigating authorities that they were dummy
\ndirectors who are unemployed and had simply submitted copies of their
\npersonal documents to Shri Bhuwalka who operated the bank accounts of
\nthe three petitioner companies. She further highlighted that investigations
\nhad been started by the authorities with respect to the companies that
\nhad received the fake input tax credit and new material is being
\n20
\nunearthed in the course of investigations that are presently being pursued
\nby the DGGI.
\n21. Mrs. Gupta finally submitted that the investigation is a continuing
\nprocess against several companies that have issued fake invoices and the
\nrecipient of the same that have availed unauthorised input tax credit. She
\nsubmits that out of the estimated 40 crores, Rs. 12 crores have been
\nreversed by the companies that had received the bogus invoices.
\nAccording to her, in the absence of the provisional attachment, the money
\nlying in the accounts of the three petitioners would vanish into thin air.
\nOn the legal aspect, she submitted that the GST Act, 2017 provides for 5
\nyears for completion of the investigation, issuance of show cause notice
\nand adjudication. She placed sub-Section (1), (2), (9) and (10) of Section
\n74 to highlight the above point. She submitted that when the legislature
\nhas given a period of 4 and half years for issuance of show cause notice, it
\nclearly contemplated that investigations for such complex fraudulent
\ntransactions may take the aforesaid time. Accordingly, she submitted that
\nSection 83 of the GST Act 2017 cannot be read in a manner detrimental to
\nthe interest of the Revenue. She further submitted that the words \u201cevery
\nsuch\u201d in sub-Section (2) of Section 83 makes it clear that multiple
\nprovisional attachment orders may be issued by the Revenue, if the need
\nso arises.
\n21
\n22. Before moving directly to answer the legal issue in hand it is germane to
\nproduce few of the relevant provisions of the CGST Act, 2017 and CGST
\nRules, 2017.
\n\u201cSection 67:- Power of inspection, search and seizure: \u2013
\n1) Where the proper officer, not below the rank of Joint Commissioner,
\nhas reasons to believe that \u2013
\n(a) a taxable person has suppressed any transaction relating to
\nsupply of goods or services or both or the stock of goods in hand, or
\nhas claimed input tax credit in excess of his entitlement under this Act
\nor has indulged in contravention of any of the provisions of this Act or
\nthe rules made thereunder to evade tax under this Act; or
\n(b) any person engaged in the business of transporting goods or an
\nowner or operator of a warehouse or a godown or any other place is
\nkeeping goods which have escaped payment of tax or has kept his
\naccounts or goods in such a manner as is likely to cause evasion of
\ntax payable under this Act,
\nhe may authorise in writing any other officer of central tax to inspect
\nany places of business of the taxable person or the persons engaged
\nin the business of transporting goods or the owner or the operator of
\nwarehouse or godown or any other place.
\n(2) Where the proper officer, not below the rank of Joint Commissioner,
\neither pursuant to an inspection carried out under sub-section (1) or
\notherwise, has reasons to believe that any goods liable to confiscation
\nor any documents or books or things, which in his opinion shall be
\nuseful for or relevant to any proceedings under this Act, are secreted
\nin any place, he may authorise in writing any other officer of central
\ntax to search and seize or may himself search and seize such goods,
\ndocuments or books or things:
\nProvided that where it is not practicable to seize any such goods, the
\nproper officer, or any officer authorised by him, may serve on the
\nowner or the custodian of the goods an order that he shall not remove,
\npart with, or otherwise deal with the goods except with the previous
\npermission of such officer:
\n22
\nProvided further that the documents or books or things so seized shall
\nbe retained by such officer only for so long as may be necessary for
\ntheir examination and for any inquiry or proceedings under this Act.
\n(3) The documents, books or things referred to in sub-section (2) or
\nany other documents, books or things produced by a taxable person
\nor any other person, which have not been relied upon for the issue of
\nnotice under this Act or the rules made thereunder, shall be returned
\nto such person within a period not exceeding thirty days of the issue
\nof the said notice.
\n(4) The officer authorised under sub-section (2) shall have the power
\nto seal or break open the door of any premises or to break open any
\nalmirah, electronic devices, box, receptacle in which any goods,
\naccounts, registers or documents of the person are suspected to be
\nconcealed, where access to such premises, almirah, electronic
\ndevices, box or receptacle is denied.
\n(5) The person from whose custody any documents are seized under
\nsub-section (2) shall be entitled to make copies thereof or take extracts
\ntherefrom in presence of an authorised officer at such place and time
\nas such officer may indicate in this behalf except where making such
\ncopies or taking such extracts may, in the opinion of the proper officer,
\nprejudicially affect the investigation.
\n(6) The goods so seized under sub-section (2) shall be released, on a
\nprovisional basis, upon execution of a bond and furnishing of a
\nsecurity, in such manner and of such quantum, respectively, as may
\nbe prescribed or on payment of applicable tax, interest and penalty
\npayable, as the case may be.
\n(7) Where any goods are seized under sub-section (2) and no notice in
\nrespect thereof is given within six months of the seizure of the goods,
\nthe goods shall be returned to the person from whose possession they
\nwere seized:
\nProvided that the period of six months may, on sufficient cause being
\nshown, be extended by the proper officer for a further period not
\nexceeding six months.
\n(8) The Government may, having regard to the perishable or
\nhazardous nature of any goods, depreciation in the value of the goods
\nwith the passage of time, constraints of storage space for the goods or
\n23
\nany other relevant considerations, by notification, specify the goods or
\nclass of goods which shall, as soon as may be after its seizure under
\nsub-section (2), be disposed of by the proper officer in such manner as
\nmay be prescribed.
\n(9) Where any goods, being goods specified under sub-section (8),
\nhave been seized by a proper officer, or any officer authorised by him
\nunder sub-section (2), he shall prepare an inventory of such goods in
\nsuch manner as may be prescribed.
\n(10) The provisions of the Code of Criminal Procedure, 1973 (2 of
\n1974), relating to search and seizure, shall, so far as may be, apply to
\nsearch and seizure under this section subject to the modification that
\nsub-section (5) of section 165 of the said Code shall have effect as if
\nfor the word \u201cMagistrate\u201d, wherever it occurs, the word
\n\u201cCommissioner\u201d were substituted.
\n(11) Where the proper officer has reasons to believe that any person
\nhas evaded or is attempting to evade the payment of any tax, he may,
\nfor reasons to be recorded in writing, seize the accounts, registers or
\ndocuments of such person produced before him and shall grant a
\nreceipt for the same, and shall retain the same for so long as may be
\nnecessary in connection with any proceedings under this Act or the
\nrules made thereunder for prosecution.
\n(12) The Commissioner or an officer authorised by him may cause
\npurchase of any goods or services or both by any person authorised
\nby him from the business premises of any taxable person, to check
\nthe issue of tax invoices or bills of supply by such taxable person, and
\non return of goods so purchased by such officer, such taxable person
\nor any person in charge of the business premises shall refund the
\namount so paid towards the goods after cancelling any tax invoice or
\nbill of supply issued earlier.
\nSection 74:- Determination of tax not paid or short paid or
\nerroneously refunded or input tax credit wrongly availed or
\nutilised by reason of fraud or any wilful-misstatement or
\nsuppression of facts: \u2013
\n(1) Where it appears to the proper officer that any tax has not been
\npaid or short paid or erroneously refunded or where input tax credit
\nhas been wrongly availed or utilised by reason of fraud, or any wilfulmisstatement
\nor suppression of facts to evade tax, he shall serve
\n24
\nnotice on the person chargeable with tax which has not been so paid
\nor which has been so short paid or to whom the refund has
\nerroneously been made, or who has wrongly availed or utilised input
\ntax credit, requiring him to show cause as to why he should not pay
\nthe amount specified in the notice along with interest payable thereon
\nunder section 50 and a penalty equivalent to the tax specified in the
\nnotice.
\n(2) The proper officer shall issue the notice under sub-section (1) at
\nleast six months prior to the time limit specified in sub-section (10) for
\nissuance of order.
\n(3) Where a notice has been issued for any period under sub-section
\n(1), the proper officer may serve a statement, containing the details of
\ntax not paid or short paid or erroneously refunded or input tax credit
\nwrongly availed or utilised for such periods other than those covered
\nunder sub-section (1), on the person chargeable with tax.
\n(4) The service of statement under sub-section (3) shall be deemed to
\nbe service of notice under sub-section (1) of section 73, subject to the
\ncondition that the grounds relied upon in the said statement, except
\nthe ground of fraud, or any wilful-misstatement or suppression of
\nfacts to evade tax, for periods other than those covered under subsection
\n(1) are the same as are mentioned in the earlier notice.
\n(5) The person chargeable with tax may, before service of notice under
\nsub-section (1), pay the amount of tax along with interest payable
\nunder section 50 and a penalty equivalent to fifteen per cent. of such
\ntax on the basis of his own ascertainment of such tax or the tax as
\nascertained by the proper officer and inform the proper officer in
\nwriting of such payment.
\n(6) The proper officer, on receipt of such information, shall not serve
\nany notice under sub-section (1), in respect of the tax so paid or any
\npenalty payable under the provisions of this Act or the rules made
\nthereunder.
\n(7) Where the proper officer is of the opinion that the amount paid
\nunder sub-section (5) falls short of the amount actually payable, he
\nshall proceed to issue the notice as provided for in sub-section (1) in
\nrespect of such amount which falls short of the amount actually
\npayable.
\n25
\n(8) Where any person chargeable with tax under sub-section (1) prays
\nthe said tax along with interest payable under section 50 and a
\npenalty equivalent to twenty-five per cent. of such tax within thirty
\ndays of issue of the notice, all proceedings in respect of the said notice
\nshall be deemed to be concluded.
\n(9) The proper officer shall, after considering the representation, if
\nany, made by the person chargeable with tax, determine the amount
\nof tax, interest and penalty due from such person and issue an order.
\n(10) The proper officer shall issue the order under sub-section (9)
\nwithin a period of five years from the due date for furnishing of
\nannual return for the financial year to which the tax not paid or short
\npaid or input tax credit wrongly availed or utilised relates to or within
\nfive years from the date of erroneous refund.
\n(11) Where any person served with an order issued under sub-section
\n(9) pays the tax along with interest payable thereon under section 50
\nand a penalty equivalent to fifty per cent. of such tax within thirty
\ndays of communication of the order, all proceedings in respect of the
\nsaid notice shall be deemed to be concluded.
\nExplanation 1. \u2013 For the purpose of section 73 and this section,-
\n(i) the expression \u201call proceedings in respect of the said notice\u201d shall
\nnot include proceedings under section 132;
\n(ii) where the notice under the same proceedings is issued to the main
\nperson liable to pay tax and some other persons, and such
\nproceedings against the main person have been concluded under
\nsection 73 or section 74, the proceedings against all the persons liable
\nto pay penalty under sections 122, 125, 129 and 130 are deemed to
\nbe concluded.
\nExplanation 2.- For the purposes of this Act, the expression
\n\u201csuppression\u201d shall mean non-declaration of facts or information
\nwhich a taxable person is required to declare in the return, statement,
\nreport or any other document furnished under this Act or the rules
\nmade thereunder, or failure to furnish any information on being asked
\nfor, in writing, by the proper officer.
\n26
\nSection 83. Provisional attachment to protect revenue in
\ncertain cases: \u2013
\n(1) Where during the pendency of any proceedings under section 62 or
\nsection 63 or section 64 or section 67 or section 73 or section 74, the
\nCommissioner is of the opinion that for the purpose of protecting the
\ninterest of the Government revenue, it is necessary so to do, he may,
\nby order in writing attach provisionally any property, including bank
\naccount, belonging to the taxable person in such manner as may be
\nprescribed.
\n(2) Every such provisional attachment shall cease to have effect after
\nthe expiry of a period of one year from the date of the order made
\nunder sub-section (1).
\nRule 159: Provisional Attachment of Property
\n(1) Where the Commissioner decides to attach any property, including
\nbank account in accordance with the provisions of section 83, he shall
\npass an order in FORM GST DRC-22 to that effect mentioning therein,
\nthe details of property which is attached.
\n(2) The Commissioner shall send a copy of the order of attachment to
\nthe concerned Revenue Authority or Transport Authority or any such
\nAuthority to place encumbrance on the said movable or immovable
\nproperty, which shall be removed only on the written instructions from
\nthe Commissioner to that effect.
\n(3) Where the property attached is of perishable or hazardous nature,
\nand if the taxable person pays an amount equivalent to the market
\nprice of such property or the amount that is or may become payable
\nby the taxable person, whichever is lower, then such property shall be
\nreleased forthwith, by an order in FORM GST DRC-23, on proof of
\npayment.
\n(4) Where the taxable person fails to pay the amount referred to in
\nsub-rule (3) in respect of the said property of perishable or hazardous
\nnature, the Commissioner may dispose of such property and the
\n27
\namount realized thereby shall be adjusted against the tax, interest,
\npenalty, fee or any other amount payable by the taxable person.
\n(5) Any person whose property is attached may, within seven days of
\nthe attachment under sub-rule (1), file an objection to the effect that
\nthe property attached was or is not liable to attachment, and the
\nCommissioner may, after affording an opportunity of being heard to
\nthe person filing the objection, release the said property by an order in
\nFORM GST DRC-23.
\n(6) The Commissioner may, upon being satisfied that the property
\nwas, or is no longer liable for attachment, release such property by
\nissuing an order in FORM GST DRC-23.\u201d
\n23. At this juncture, it is important to examine the relevant judgments to
\nadjudicate the legal issue at hand. In the judgment cited by the petitioner
\nin Valerius Industries (Supra), the Gujarat High Court held that
\ninitiation of proceedings under Section 67 of the CGST Act, 2017 by itself
\nis not sufficient to provisionally attach the property for the purpose of
\nprotecting the interest of the government revenue. The relevant extract of
\nthe judgment is delineated below:
\n\u201c52. Our final conclusions may be summarized as under:
\n(1) The order of provisional attachment before the assessment order is
\nmade, may be justified if the assessing authority or any other
\nauthority empowered in law is of the opinion that it is necessary to
\nprotect the interest of revenue. However, the subjective satisfaction
\nshould be based on some credible materials or information and also
\nshould be supported by supervening factor. It is not any and every
\nmaterial, howsoever vague and indefinite or distant remote or
\nfarfetching, which would warrant the formation of the belief.
\n(2) The power conferred upon the authority under Section 83 of the Act
\nfor provisional attachment could be termed as a very drastic and farreaching
\npower. Such power should be used sparingly and only on
\nsubstantive weighty grounds and reasons.
\n28
\n(3) The power of provisional attachment under Section 83 of the Act
\nshould be exercised by the authority only if there is a reasonable
\napprehension that the assessee may default the ultimate collection of
\nthe demand that is likely to be raised on completion of the
\nassessment. It should, therefore, be exercised with extreme care and
\ncaution.
\n(4) The power under Section 83 of the Act for provisional attachment
\nshould be exercised only if there is sufficient material on record to
\njustify the satisfaction that the assessee is about to dispose of wholly
\nor any part of his\/her property with a view to thwarting the ultimate
\ncollection of demand and in order to achieve the said objective, the
\nattachment should be of the properties and to that extent, it is
\nrequired to achieve this objective.
\n(5) The power under Section 83 of the Act should neither be used as a
\ntool to harass the assessee nor should it be used in a manner which
\nmay have an irreversible detrimental effect on the business of the
\nassessee.
\n(6) The attachment of bank account and trading assets should be
\nresorted to only as a last resort or measure. The provisional
\nattachment under Section 83 of the Act should not be equated with
\nthe attachment in the course of the recovery proceedings.
\n(7) The authority before exercising power under Section 83 of the Act
\nfor provisional attachment should take into consideration two things:
\n(i) whether it is a revenue neutral situation (ii) the statement of \u201coutput
\nliability or input credit\u201d. Having regard to the amount paid by
\nreversing the input tax credit if the interest of the revenue is
\nsufficiently secured, then the authority may not be justified in
\ninvoking its power under Section 83 of the Act for the purpose of
\nprovisional attachment.\u201d
\n24. The counsel for petitioner has also cited VLS Finance Limited (supra)
\nwherein the court has made an observation about not extending the time
\nof provision attachment after a period of time as prescribed under Section
\n29
\n281B of the Income Tax Act, 1961. Relevant paragraph of the judgement
\nis presented below:
\n\u201c9. Sub-section 1 to Section 281B stipulates that an order
\nprovisionally attaching any property of the assessee can be passed
\nduring pendency of any proceedings for assessment\/reassessment, if
\nthe Assessing Officer is of the opinion that such an order is necessary
\nfor purpose of protecting interest of the Revenue. The order can be
\nonly passed with the previous approval of the Chief Commissioner,
\nCommissioner, Director General or Director. The order has to be in
\nwriting. Sub-section 2 to Section 281B states that the order for
\nprovisional attachment under sub-section (1) shall cease to have effect
\nafter six months. Thus, sub-section 2, provides the period during
\nwhich an order of provisional attachment remains in force, i.e., six
\nmonths. The first proviso to Section 281B states that the Chief
\nCommissioner, Commissioner, Director General, Director may for
\nreasons recorded in writing extend the said period or periods, which
\nshall not exceed two years. Thus, the total period for which extension
\ncan be granted is two years, after the first order of provisional
\nattachment, which is valid for six months, comes to an end. The
\nperiod of provisional attachment, therefore, cannot be for more than
\ntwo years and six months. The said period in the present case, as the
\nfirst attachment order was issued on 28th July, 2005, came to an end
\non 24th January, 2008.\u201d
\n25. Another case presented by the petitioner is Shrimati Majjo (supra)
\nwherein it was held that the extension of provisional attachment period is
\nnot allowed after a certain period of time as per the provisions of Section
\n281B of the Income Tax Act, 1961. Relevant extract of the judgement is
\ndelineated below:
\n\u201c6. We do not, however, think it necessary to examine the said
\ncontention for the reason that the total period for which extensions
\ncan be granted under section 281B is two years and that period has
\nalso expired on and with August 19, 1989. It is thus clear that the
\nattachment under section 281B cannot survive beyond the said date,
\nnamely, beyond August 19, 1989. The petitioner shall be entitled to
\nencash or withdraw the amounts concerned subject, of course, to any
\ndemand for any tax due as on today. Even if there is any such
\ndemand, the amount equal to such demand shall be retained and the
\nremaining amount returned to the petitioner.\u201d
\n30
\n26. Counsel for Revenue has relied on Shrimati Priti (supra) for buttressing
\nthe argument that fresh issue of provisional attachment orders is
\npermissible even after the expiry of one-year period as prescribed under
\nthe Act. The relevant paragraph of the judgement is as follows:
\n\u201c13. Contention that an order of provisional attachment can last only
\nfor one year and that no further order thereafter, can be passed is not
\nborne out from statutory provisions contained in Section 45 of the Act.
\nIt is undoubtedly true that sub-section(2) of Section 45 statutorily
\nprovides for maximum life of a provisional order to last not beyond
\none year from the date of order. There is nothing in the language used
\nin the said section to suggest that upon completion of such a period,
\nno fresh order could be passed. Reading any such requirement or
\nlimitation would amount to supplying words not used in the section
\nitself. Section 45 of the Act aims to protect Revenue’s interest pending
\nassessment proceedings by empowering the competent authority to
\npass provisional attachment order. To obviate, obvious inconvenience
\nto an assessee, such provisional attachment order cannot be effective
\nbeyond one year. However, that by itself does not mean that if
\nassessment proceedings are not completed within the said period and
\nwhere the satisfaction of the Commissioner or his delegate that such
\nattachment is required to safeguard interest of the Revenue looking to
\nthe dues of the dealer, no such fresh order could be passed. The
\nsection thus on one hand, require the competent officer to review the
\nsituation compulsorily at-least upon completion of the period, while so
\ndoing, does not limit his discretion to exercise such powers again if
\nsituation so arises. Contention of the petitioner that upon completion
\nof maximum period prescribed under sub-section(2) of Section 45, no
\nfresh order of provisional attachment could be passed, therefore
\ncannot be accepted.\u201d
\n27. While deciding the issue of provisional attachment under Section 45 of the
\nVAT Tax Act, the court in Kaithal Timber Pvt. Ltd. (supra) has held that
\nthe interest of government revenue must be given importance while
\ninterpreting the section for provisional attachment. It further held that
\n31
\nafter a provisional order ceases to remain in force, a fresh order under the
\nsame provision could be passed. Relevant paragraph of the judgement is
\nattached below:
\n\u201c5. The statute has not provided any prohibition on fresh order of
\nattachment being passed. Sub-section (2) of section 45 would, in any
\ncase, ensure that even if the Commissioner or the authority in whom
\nthe power of the Commissioner under sub- section (1) of section 45
\nhave been delegated is of the opinion that the attachment should
\ncontinue, it would be necessary that a fresh order be passed. This
\nwould ensure that the authority would examine the current position
\nand would take a fresh decision that to protect the interest of
\nGovernment revenue, it is necessary to pass fresh order of provisional
\nattachment and that the earlier order of attachment would not
\nmechanically continue indefinitely.\u201d
\n28. \u201c\u201cBad facts make bad cases\u201d \u2013 the court crafts its decision to create an
\noutcome dictated by the facts, instead of an outcome based on a proper
\nlegal analysis\u201d – I am very well aware of the above adage and do not intend
\nto fall prey to the same. Ergo, the interpretation of Section 83 of the CGST
\nAct, 2017 is not based on the facts that have been presented by the
\nrespondents in their affidavits, but on the legal principles of interpretation
\nof fiscal statutes and examination of the precedents cited by parties. Upon
\nhearing both the parties on the third issue, the Court is of the opinion
\nthat the powers conferred under Section 83 are drastic and extraordinary
\nin nature. The Court also believes that the powers under this section
\nshould not be invoked routinely and must be exercised with due caution,
\ncircumspection and deliberation. The judgments relied on by the learned
\ncounsel for petitioners in Valerius Industries (supra) and Pranit Hem
\nDesai (supra) can be distinguished on the grounds that they only
\nhighlight the rationale and nature of the powers conferred under Section
\n32
\n83. These judgements do not deliberate upon the point of fresh issue of an
\norder for provisional attachment which is of principal relevance to this
\ncase. The judgments relied by the learned counsel for respondents, that
\nis, Shrimati Priti (supra) and Kaithal Timber Pvt. Ltd. (supra)
\ninterprets a similar provision of provisional attachment in the Gujarat
\nValue Added Tax Act, 2003. The Court in both cases while dealing with a
\nprovision that is pari materia to the present Section 83, has categorically
\nheld that fresh order for provisional attachment can be issued after the
\nexpiry of the time as prescribed under the Act.
\n29. Mr. Chakraborty learned counsel on behalf of the petitioners relied on the
\nDelhi High Court judgement in VLS Finance Limited (supra) to support
\nthe argument that extending the time of provisional attachment after a
\ncertain period of time as prescribed in the statute is not permissible. The
\nCourt while appreciating this finding, would also like to note another
\nobservation of the Delhi High Court wherein it has categorically
\nmentioned that they have not considered and examined whether the
\nRevenue can pass a fresh order under Section 281B of the Income Tax
\nAct, 1961. In my view this observation is pertinent to the issue in hand.
\nThe relevant extract has been cited below:
\n\u201c15. We wish to further clarify as a matter of abundant caution and
\nstate that we have not considered and examined whether the
\nRevenue can pass a fresh order under Section 281B in view of the
\nthird proviso to the said Section introduced\/inserted by Finance (No.
\n2) Act of 2009 with retrospective effect from 1st April, 1988. If
\nrequired, the said issue and question will be examined in case the
\nRevenue passes any such order. We have not barred or prohibited the
\n33
\nRevenue from passing any such order or expressed any opinion
\nwhether any such order should be or could be passed. These aspects
\ncan be examined by the respondents. It will be premature to decide
\nthese contentions now. We do not want to express any opinion in
\nvacuum on the assumption that an order may be passed. This caveat
\nis necessary least there be any confusion\u2026..\u201d
\n30. Mr. Chakraborty further relied on Shrimati Majjo (supra), Electro Zavod
\n(India) Pvt. Ltd. (supra) & Sukhpal Singh (supra) to contend that
\nextension of provisional attachment beyond the time-period prescribed is
\nnot permitted by the statute. It is to be noted that Section 83 of the CGST
\nAct, 2017 does not have a provision for extension of an order for
\nprovisional attachment. The contention in hand is with respect to issue of
\nfresh order of provisional attachment and not extension of the same. On
\nthis note, the case laws referred to by the learned counsel shall not be
\napplicable to the issue in hand.
\n31. One need not join issue with regard to the judgments cited by the
\npetitioner with respect to interpretation of fiscal statutes, as I am firmly of
\nthe view that Section 83 has to be construed literally and strictly. On a
\nperusal of Section 83, it is evident that Section 83 does not provide for an
\nextension of an order for provisional attachment and any such extension
\nshall be dehors the statute. Section 83 empowers the competent authority
\nto issue an order for provisional attachment of property including bank
\naccounts if it is of the opinion that such a step is necessary for protecting
\nthe interest of government revenue. It is palpably clear that Section 83(2)
\n34
\npermits continuation of a provisional attachment order for a period of one
\nyear from the date of order after which it ceases to remain in effect.
\nHowever, there is nothing in the section which indicates that upon
\ncompletion of the prescribed period, a fresh order cannot be issued. To
\nsay this would amount to supplying such requirements into the section
\nwhich would go against the well-established principles of interpretation of
\nstatutes. In the view point of the Court, after the expiry of the time period,
\nthe appropriate authority may be of the opinion that such an attachment
\nis further required to protect the interest of government revenue, and may
\ntherefore, issue a fresh order upon compliance of the formalities in
\nSection 83(1).
\n32. One may also examine the scheme of the GST Act, 2017 in relation to
\nprovisional attachment. Section 83 of the CGST Act, 2017 has to be read
\nwith Sections 67 and 74 of the CGST Act, 2017 and Rule 159 of the CGST
\nRules, 2017. As is evident from Section 74, the time limit for issue of show
\ncause notice is four and half years, while the adjudication is required to
\nbe completed within five years of the particular evasion of tax \/ fraudulent
\ntransaction. At this juncture, I ask myself this question as to whether the
\nLegislature would have intended to allow the investigation to be continued
\nfor a period of four and half years but only allowed protection to the
\ngovernment revenue for a period of one year. Section 83(2) provides for a
\nperiod for cessation of the provisional attachment. This provision does
\nnot in any manner prevent the authorities to issue a fresh order of
\n35
\nprovisional attachment if the requirements under Section 83(1) are
\nmet. The period of one year has been provided only to bring about a
\nbalance between the rights of the assessee and the interest of the
\nRevenue.
\n33. I make it clear that the Court has not gone into the sufficiency of reasons
\nwith respect to the fresh order of provisional attachment under section 83
\nas the writ petitions filed challenging the same do not raise that point at
\nall. In fact, the counsel on behalf of the petitioner has categorically stated
\nin Court that the petitioners are not challenging the sufficiency of reasons
\nand are only challenging the legality of issue of the fresh order of
\nprovisional attachment. Based on the above submissions, no affidavits
\nwere called on from the Respondents to explain the sufficiency of reasons
\nfor issue of the fresh order of provisional attachment. However, it may be
\nnoted that Mrs. Gupta, counsel on behalf of the respondents has
\ncategorically submitted in Court that apart from the reasons provided in
\nthe affidavits filed in the earlier writ petitions, fresh material has also
\nbeen unearthed by the DGGI.
\n34. However, given the far-reaching consequences of provisional attachment
\nunder Section 83, the Court is of the opinion that an issuance of a fresh
\norder under Section 83 of the CGST Act, 2017 will require a fresh review
\nand assessment of the circumstances in hand. In no manner, a fresh
\n36
\norder should be issued in the garb of an extension of the earlier order
\nwithout actually evaluating and analysing the requirement of doing so.
\n35. Another point raised by the petitioner is with respect to non-service of the
\nfresh order personally upon the petitioner. Section 83 of the CGST Act,
\n2017 read with Rule 159 of the CGST Rules, 2017 does not provide for
\nsupply of an order of provisional attachment of a bank account to the
\nassessee concerned. Accordingly, there is no requirement on the part of
\nthe respondent to serve such an order under Section 83 personally upon
\nthe petitioners.
\n36. In light of the discussions made hereinabove, the third issue is decided
\nin favour of the Revenue.
\n37. I would like to summarize the issues that have been answered by this
\nCourt for an easier understanding of the parties;
\nIssue A: Whether the Principal Additional Director General, DGGI and
\nAdditional Director General, DGGI are competent to pass orders under
\nSection 83 of the CGST Act, 2017?
\nAnswer: Both the officers that have passed the orders under Section 83 of
\nthe CGST Act, 2017 are competent to pass the same, and accordingly, the
\nissue is answered in favour of the Revenue.
\n37
\nIssue B: Whether an order passed under Section 83 of the CGST Act,
\n2017, remains valid after the expiry of one year from the date of the
\norder?
\nAnswer: The actions of the respondent authorities in continuing with the
\nprovisional attachment beyond the period of one year and without
\ninforming the bank that the provisional attachment seizes to operate after
\na period of one year is an act that is reprehensible and absolutely contrary
\nto law. Such an arbitrary action has clearly resulted in violation of the
\npetitioners\u2019 rights for carrying on business under Article 19(1) of the
\nConstitution of India and under Article 300A of the Constitution of India
\nwherein the petitioners have been deprived of their property without
\nauthority of law. Accordingly, the issue is answered in favour of the
\npetitioners and the respondent authorities are directed to pay costs of
\nRs. 5 lakhs to each of the three petitioners. This amount should be
\ndeposited in the current accounts that have provisionally attached within
\na period of four weeks from date.
\nIssue C: Whether the authorities can issue fresh order of provisional
\nattachment\/multiple orders under Section 83 of the CGST Act, 2017?
\nAnswer: Section 83 empowers the competent authority to issue an order
\nfor provisional attachment of property including bank accounts if it is of
\nthe opinion that such step is necessary for protecting the interest of the
\n38
\nRevenue. It is palpably clear that Section 83(2) permits continuation of a
\nprovisional attachment order for a period of one year from the date of
\norder after which it ceases to remain in effect. However, there is nothing
\nin the section which indicates that upon completion of the prescribed
\nperiod, a fresh order cannot be issued. To say this would amount to
\nsupplying such requirements into the section which would go against the
\nwell-established principles of interpretation of statutes. In the view point
\nof the Court, after the expiry of the time period, the appropriate authority
\nmay be of the opinion that such an attachment is further required to
\nprotect the interest of Revenue, and may therefore, issue a fresh order
\nupon compliance of the formalities in Section 83(1). Accordingly, the
\nissue is answered in favour of the Revenue.
\nEPILOGUE:
\n\u201cA tax collector should collect taxes from a tax payer just like a bee collects
\nhoney from a flower in an expert manner without disturbing its petals\u201d \u2013
\nKautilya in Arthashastra.
\n38. The new regime under the GST Act, 2017 is a new legislative creation by
\nwhich the Union Government along with all the State Governments have
\nstreamlined various statutes under which tax was earlier collected to
\nenhance the ease of doing business by preventing multi-point taxation
\nthat was extremely cumbersome and time consuming for the citizens of
\nIndia. The raison d\u2019etre of the GST Act, 2017 is to reduce the burden of
\n39
\ntax and also to simplify the procedures. This, however, is coupled with
\ncertain far reaching and drastic measures that would be applicable on
\npersons who evade the payment of such taxes. One need not stress the
\nimportance of the responsibility that comes upon the government officials
\nwho take such drastic measures upon the citizens of this country.
\nNonetheless, these drastic provisions come with a purpose, and that is to
\nensure collection of taxes so that the inequities in society may be reduced
\nby the Government. Provisions such as provisional attachment are
\nnecessary to ensure that persons who intend to evade taxes and\/or are a
\npart of a mechanism to defraud the Government are nipped in the bud
\nand appropriate taxes can be collected from such persons.
\n39. I would like to show my appreciation to Mr. Chakrabarti and Mrs. Gupta
\nfor their diligent work in assisting the Court.
\n40. In view of the above conclusion, all the writ petitions are disposed of.
\nUrgent photostat certified copy of this order, if applied for, should be
\nmade available to the parties upon compliance with the requisite
\nformalities.
\n(Shekhar B. Saraf, J.)<\/p>\n","protected":false},"excerpt":{"rendered":"
The failure to do the above is nothing short of being an act of highhandedness. Such actions of the authorities is an obloquy and reprehensible. No explanation has been provided for the same either in the affidavits filed in the earlier writ petitions or by counsel appearing on behalf of the respondent authorities during hearing of arguments. In my view the above action is clearly in violation of the petitioners\u2019 rights for carrying on business under Article 19(1) of the Constitution of India and under Article 300A of the Constitution of India wherein the petitioners have been deprived of their property without authority of law. Ergo, the issue is decided in favour of the petitioners. In my view the actions of the Revenue in acting in contravention of Section 83(2) is condemnable, and accordingly costs are required to be imposed. In light of the same, I direct the concerned respondent authorities to pay costs of Rs. 5 Lakhs to each of the three petitioner companies.<\/p>\n