2022 (12) TMI 297 - HC - GST

Imposition of costs on the Department - keeping the provisional attachment in state of continuance for a period from 5th June, 2019 when the first order of provisional attachment ceased to operate, till October, 2019 when fresh order of provisional attachment was passed - HELD THAT - The imposition of costs on the department is purely a discretion of the Court and technically we are not required to hear the party concerned as to whether at all costs has to be imposed on the Department. In any event, a fine question of law has been raised by the assesses in their appeal arising out of the very same common order and the present appeals filed by the Revenue is confined only to that extent where cost has been imposed. Therefore, in the facts and circumstances of the case, we are of the view that it is not a case where cost has to be imposed, as directed by the learned writ Court. The appeals filed by the Revenue are allowed to the extent by deleting and vacating the observations, which led to imposition of cost as also the cost which has been imposed - Appeal allowed.

Summary

Issues:
Appeal against order directing payment of costs to writ petitioners.

Analysis:
The appeals were directed against an order passed in a batch of writ petitions, with the appellant revenue succeeding on a legal issue initially. The appeals were filed by the revenue against the portion of the order directing the Department to pay costs to the writ petitioners. The learned single Bench reprimanded the Revenue and imposed costs based on the illegal action of authorities in keeping the provisional attachment in force beyond the prescribed period. The Court interpreted Section 83(2) of the Act, emphasizing that the provisional attachment shall cease after one year unless a fresh order is issued. It was held that the competent authority can issue subsequent provisional attachment orders if necessary to protect the Revenue's interest. The Court clarified that after the prescribed period, a fresh order can be issued if deemed necessary to safeguard the Revenue's interest, thus ruling in favor of the Revenue on this issue.

The assessees challenged this finding by filing individual appeals, focusing on the imposition of costs. The Court opined that when an issue is decided in favor of the Revenue, imposing costs of Rs.5,00,000 on each assessee is unwarranted. The respondents argued that the Revenue displayed high-handedness by keeping the attachment order in force despite its legal effect ceasing. The Court emphasized that the imposition of costs is at the discretion of the Court, and since the appeals were limited to the cost imposition issue, it was deemed unnecessary to impose costs on the Department. The appeals filed by the Revenue were allowed by deleting the observations leading to cost imposition and vacating the imposed costs.

The Court clarified that the correctness of the single Bench's order would be decided on other grounds in the appeals filed by the assessees. The assessees were granted the right to challenge the continuation of attachment despite its legal effect ceasing after one year. The appeals were allowed, and the connected applications were disposed of. The Court directed the expeditious provision of a certified copy of the order to the parties upon completing all legal formalities.