Radha Krishnan Industries Vs State of Himachal Pradesh & Ors
Forum-Supreme Court of India
Date-20th April,2021
Sub-Provisional attachment made under the State GST Act -challenged in a writ-Whether maintainable-Plea of Alternative remedy-Calcutta Discount case and other Income-tax cases reaffirmed and relied upon- Grounds for provisional attachment explained threadbare

This is a classic case of abuse of power by the tax authorities where the apex court came to the rescue of the appellant in whose case the GST Authorities (Commissioner) ordered provisional attachment of receivables from its debtors on account of alleged fraudulent input credit of Rs 5.03 crore on the basis of false invoices issued by its customer GM Powertech. An interesting issue to be noted is that even though the Commissioner is empowered to pass order of attachment, the said power was delegated by him to Joint Commissioner. The Appellant argued that even after delegation the order was deemed to have been passed by Commissioner against which appeal lies to GST Appellate Tribunal which was yet to be constituted and as such plea of alternative remedy was not maintainable based on *Calcutta Discount case (41 ITR 191). * The Apex court noted the law relating to alternative remedy as laid down in the case of *Seth Chand Ratan v Pandit Durga Prasad, Babubhai Muljibhai Patel v Nandlal Khodidas Barot and Rajasthan SEB v. Union of India, * among other decisions. Regarding provisional attachment, the apex court noted the decision of *Gujarat high court in the case of Valerius Industries v Union of India, * when the Gujarat High Court laid down the principles for the construction of Section 83 of the SGST/CGST Act. The High Court noted that a provisional attachment on the basis of a subjective satisfaction, absent any cogent or credible material, constitutes malice in law. The court also referred to various other decisions of other high courts in this regard. Finally the court noted the *marginal note to Section 83 of the Act which reads provisional atttachment to protect revenue in certain cases* . Marginal notes, it is well-settled, do not control a statutory provision but provide some guidance in regard to content. Put differently, a marginal note indicates the drift of the provision. The court thereafter noted that The power to levy a provisional attachment is draconian in nature. By the exercise of the power, a property belonging to the taxable person may be attached, including a bank account and as such there must be a formation of opinion on tangible material before such power can be exercised. Finally the court agreed with the appellant that when the Joint commissioner as a delegate passed the order, the same could not be said to be appealable under the law and as such there was no alternative remedy. Lastly, the court reproducing the order sheet of attachment,held the attachment of be ultra vires Section 83 of the Act.

This judgement is a landmark judgement which will be helpful in several ways in dealing with the plea of alternative remedy, the manner in which the power is to be exercised by the Commissioner and other issues.

Ramesh Patodia
21-04-2021