2022 (2) TMI 998 - HC - GST

Provisional attachment of three individual bank accounts of the writ-applicant - Section 83 of the CGST Act - power to levy a provisional attachment - HELD THAT - Prima-facie, it appears on plain reading of the three orders of the provisional attachment that the same does not record any satisfaction that it is necessary to provisionally attach the bank accounts so as to protect the interest of the revenue. Mr. Shah would submit that it is not just necessary for the concerned authority to point out such satisfaction from the original file or from the notings. Such satisfaction should be reflected in the very order passed by the authority - second limb of Mr. Shah s submission is that at a point of time, when the powers under section-83 of the Act came to be exercised, the proceedings of the search under Section-67 of the Act had already come to an end. He would submit that as on date, there are no proceedings pending. Mr. Shah says so because till this date, the Department has not even thought fit to issue any show-cause notice. In such circumstances, according to Mr. Shah, the orders of provisional attachment cannot remain in force. Let Notice be issued to the respondents, returnable on 16.02.2022. Direct service to the respondents nos.2 to 5 is permitted. The respondent no.1 shall be served at the earliest by Email.

Summary

Issues:
1. Challenge to provisional attachment of bank accounts under Section-83 of the CGST Act.
2. Requirement of formation of opinion by the Commissioner to protect government revenue.
3. Compliance with procedural safeguards under Rule 159(5) for the person whose property is attached.
4. Lack of satisfaction recorded in the orders for provisional attachment.
5. Continuation of provisional attachment without pending proceedings or show-cause notice.

Analysis:

1. The judgment deals with a challenge against the provisional attachment of three bank accounts of the writ-applicant under Section-83 of the CGST Act. The writ-applicant, engaged in trading of bullion and agricultural commodities, contests the action taken by respondent no.2 in passing the attachment orders. The crux of the issue lies in the legality and procedural correctness of the provisional attachment exercised by the Commissioner.

2. The primary contention raised by the learned senior counsel is the necessity for the Commissioner to form an opinion before ordering a provisional attachment to safeguard the government revenue. Citing legal precedents, it is emphasized that the power to levy provisional attachment is draconian and must strictly adhere to the conditions prescribed by the statute. The judgment highlights the importance of tangible material forming the basis of the Commissioner's opinion to prevent abuse of power.

3. Another crucial aspect addressed in the judgment is the compliance with procedural safeguards under Rule 159(5) for the person whose property is attached. The ruling emphasizes the entitlement of the affected party to submit objections and be granted an opportunity to be heard, stressing the mandatory nature of these safeguards. Any deviation from these procedural requirements could render the provisional attachment illegal.

4. The judgment notes a lack of satisfaction recorded in the orders for provisional attachment, indicating a potential flaw in the decision-making process. It is highlighted that the authority must explicitly reflect the necessity to provisionally attach the bank accounts in the order itself, rather than relying on implicit satisfaction from other sources.

5. Lastly, the judgment raises concerns regarding the continuation of provisional attachment in the absence of pending proceedings or a show-cause notice. The argument presented suggests that without ongoing proceedings or formal communication from the Department, the validity of maintaining the provisional attachment is called into question. This aspect adds a temporal dimension to the assessment of the attachment's legitimacy.

In conclusion, the judgment delves into the procedural intricacies and substantive requirements surrounding the provisional attachment of bank accounts under the CGST Act, emphasizing the need for a well-founded opinion by the Commissioner, adherence to procedural safeguards, explicit satisfaction in the orders, and relevance of ongoing proceedings for the attachment's validity.