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2020 (3) TMI 1179 - HC - GSTProvisional attachment of Current Bank Accounts - Jurisdiction to pass order - Section 83 of the Central Goods and Services Tax Act, 2017 - time limitation of validity of order passed. Whether the Principal Additional Director General, DGGI and Additional Director General, DGGI are competent to pass orders under Section 83 of the CGST Act, 2017? - HELD THAT - On a bare perusal of the CGST Act, 2017, it is absolutely clear that Section 3 equates the Principal Commissioner of Central Tax as the Principal Additional Director of Central Tax and the Commissioner of Central Tax as the Additional Director General of Central Tax . One need not quibble with the wording as the meaning is plain and unambiguous. Furthermore, the fresh orders of provisional attachment has been passed by Principal Additional Director of Central Tax who is the superior officer and therefore, as per Section 5(2) of the CGST Act, 2017 she possesses the power to pass the provisional attachment orders under Section 83 - the issue answered in favour of the Revenue. Whether an order passed under Section 83 of the CGST Act, 2017, remains valid after the expiry of one year from the date of the order? - HELD THAT - The authorities have acted in a blatantly highhanded and illegal manner by keeping the provisional attachments in a state of continuance for the period from 5th June, 2019 (when the first order of provisional attachment ceases to operate) till 31st October, 2019 (when fresh order for provisional attachment was passed). Section 83(2) is crystal clear that the provisional attachment shall cease upon expiry of one year. It was therefore incumbent on the authorities to either release the provisional attachment by informing the bank or by issuing a fresh order of provisional attachment, if the law so allowed. 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 - the action is clearly in violation of the petitioners 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 - the actions of the Revenue in acting in contravention of Section 83(2) is condemnable, and accordingly costs are required to be imposed. Whether the authorities can issue fresh order of provisional attachment/multiple orders under Section 83 of the CGST Act, 2017? - HELD THAT - On a perusal of Section 83, it is evident that Section 83 does not provide for an extension of an order for provisional attachment and any such extension shall be dehors the statute. Section 83 empowers the competent authority to issue an order for provisional attachment of property including bank accounts if it is of the opinion that such a step is necessary for protecting the interest of government revenue. It is palpably clear that Section 83(2) permits continuation of a provisional attachment order for a period of one year from the date of order after which it ceases to remain in effect. However, there is nothing in the section which indicates that upon completion of the prescribed period, a fresh order cannot be issued - In the view point of the Court, after the expiry of the time period, the appropriate authority may be of the opinion that such an attachment is further required to protect the interest of government revenue, and may therefore, issue a fresh order upon compliance of the formalities in Section 83(1). Petition disposed off.
Issues Involved:
1. Competence of the Principal Additional Director General, DGGI, and Additional Director General, DGGI to pass orders under Section 83 of the CGST Act, 2017. 2. Validity of an order passed under Section 83 of the CGST Act, 2017, after the expiry of one year. 3. Authority to issue fresh or multiple orders of provisional attachment under Section 83 of the CGST Act, 2017. Issue-wise Detailed Analysis: Issue A: Competence of Officers to Pass Orders under Section 83 of the CGST Act, 2017 Arguments by Petitioners: - The petitioners argued that Section 83 of the CGST Act, 2017, read with Rule 159 of the CGST Rules, 2017, only empowers the 'Commissioner' to attach property provisionally. - They contended that 'Commissioner' as defined in Section 2(24) of the CGST Act, 2017, does not include the Principal Additional Director General or Additional Director General. Arguments by Respondents: - The respondents argued that Section 3(c) and 3(d) of the CGST Act, 2017, equate the 'Principal Commissioner of Central Tax' with the 'Principal Additional Director General of Central Tax' and the 'Commissioner of Central Tax' with the 'Additional Director General of Central Tax'. - They further argued that Section 5(2) allows an officer of central tax to exercise the powers conferred on any other officer subordinate to him. Court's Analysis: - The court found that Section 3 of the CGST Act, 2017, clearly equates the positions of the Principal Commissioner and Principal Additional Director General, as well as the Commissioner and Additional Director General. - Section 5(2) allows the superior officer to exercise the powers of a subordinate officer, thus validating the orders passed by the Principal Additional Director General and Additional Director General. Conclusion: - The court held that both officers are competent to pass orders under Section 83 of the CGST Act, 2017, and the issue was decided in favor of the Revenue. Issue B: Validity of an Order Passed under Section 83 of the CGST Act, 2017, After the Expiry of One Year Arguments by Petitioners: - The petitioners argued that the provisional attachment order dated 5th June 2018 ceased to have any effect after one year, as per Section 83(2) of the CGST Act, 2017. - They contended that the authorities acted illegally by not de-freezing the accounts after one year and by issuing a fresh order on 31st October 2019 without proper service. Arguments by Respondents: - The respondents admitted the error of not issuing fresh orders within time but argued that the investigation was ongoing, and the delay was inadvertent. Court's Analysis: - The court found that the authorities acted illegally by keeping the provisional attachments in effect beyond the one-year period without issuing a fresh order or informing the bank. - Such actions violated the petitioners' rights under Article 19(1) and Article 300A of the Constitution of India. Conclusion: - The court held that the actions of the authorities were illegal and imposed costs of ?5 lakhs on the respondent authorities to be paid to each of the three petitioner companies. Issue C: Authority to Issue Fresh or Multiple Orders of Provisional Attachment under Section 83 of the CGST Act, 2017 Arguments by Petitioners: - The petitioners argued that Section 83 does not provide for the issuance of fresh orders of provisional attachment after the expiry of one year. - They relied on various judgments to support the argument that fiscal statutes should be strictly interpreted. Arguments by Respondents: - The respondents argued that there is no bar under Section 83 preventing the issuance of fresh orders of provisional attachment. - They cited judgments from the Gujarat High Court, which allowed fresh orders of provisional attachment under similar provisions of the Gujarat Value Added Tax Act, 2003. Court's Analysis: - The court distinguished the judgments cited by the petitioners, noting that they did not address the issue of fresh orders of provisional attachment. - The court agreed with the respondents' interpretation, noting that Section 83 does not explicitly prohibit fresh orders after the expiry of one year. - The court emphasized that a fresh order should be issued only after a fresh review and assessment of the circumstances. Conclusion: - The court held that fresh orders of provisional attachment could be issued under Section 83 of the CGST Act, 2017, and the issue was decided in favor of the Revenue. Summary of Court's Findings: 1. The Principal Additional Director General and Additional Director General are competent to pass orders under Section 83 of the CGST Act, 2017. 2. The provisional attachment order ceases to be effective after one year, and the authorities' failure to de-freeze the accounts or issue a fresh order within this period was illegal. 3. Fresh orders of provisional attachment can be issued under Section 83 of the CGST Act, 2017, after the expiry of the initial one-year period, provided there is a fresh review and assessment of the circumstances. Epilogue: The court emphasized the importance of balancing the drastic measures under the GST Act, 2017, with the rights of the taxpayers, and highlighted the responsibility of government officials to act within the bounds of the law.
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