2024 (11) TMI 1398 - HC - GST

Provisional attachment orders issued under Section 83 of the CGST/SGST Acts after the expiry of the prescribed period - detention of petiitoner on the allegation of fraudulent transactions, leading to the evasion of GST on a massive scale - HELD THAT - It is clear from the law laid down in Radha Krishnan Industries 2021 (4) TMI 837 - SUPREME COURT that while interpreting a taxing statute, the provisions must be construed on its plain terms and the Court must have regard to the purpose underlying the provision and an interpretation which effectuates the purpose must be preferred particularly when it is supported by the plain meaning of the words used - As can be seen from the provision of Section 83 (2) of the CGST/SGST Acts, an order of provisional attachment under Sub-section (1) of Section 83 will cease to have effect after the expiry of the period of one year from the date of the order made under Sub-section (1). As distinct from the provisions of Section 281B of the Income Tax Act, 1961, the provisions of Section 83 (2) of the CGST/SGST Acts do not even provide for the extension of the period of provisional attachment. Therefore, it must be held that on the plain meaning of the words used in Sub-section (2) of Section 83 of the CGST/SGST Acts, an attachment cannot extend beyond the period specified in Sub-section (2) of Section 83. It is clear that the provisions of Section 83 (2) read with the provisions of Rule 159 of the CGST Rules, 2017 indicate beyond doubt that a provisional attachment under sub-section (2) of Section 83 cannot extend beyond a period of one year from the date on which it was first made. To accept the contention of the Revenue in this case would be to do violence to the language of the statute and permit the Revenue to keep on issuing repeated orders of provisional attachment which would mean that the provisional attachment can continue for as long as the Revenue decides that it must continue. This, obviously, was not the intention of the legislature, for had the intention been different, the provisions of Sub-section (2) of Section 83 would have been worded differently. In Vodafone International Holdings BV v. Union of India 2012 (1) TMI 52 - SUPREME COURT , the Supreme Court considered whether the sale of certain shares by HTIL to Vodafone would amount to a transfer of a capital asset within the meaning of Section 2 (14) of the Income Tax Act. In interpreting the expression source of income in India used in Section 9 (1) (i), the Court approved the above observations in Ransom. These decisions are clear authority for the proposition that the Courts will not step in and supply words or give the provisions of a statute a different meaning even if they feel that such interpretation may be necessary in the larger public interest. It is not necessary to consider the contention that Ext. P6 series of orders also suffers from the vice of non-application of mind and is a verbatim reproduction of Ext. P2 series of orders. Ext. P6 series of orders will stand quashed. It is declared that the provisions of Section 83 of the CGST/SGST Acts do not contemplate or authorise the issuance of a fresh order of attachment after the period specified in Section 83 (2) of the CGST/SGST Acts - Petition allowed.

Summary

Issues Involved:

1. Legality of the provisional attachment orders issued under Section 83 of the CGST/SGST Acts after the expiry of the prescribed period.
2. Interpretation of Section 83 of the CGST/SGST Acts and Rule 159 of the CGST/SGST Rules regarding the duration and extension of provisional attachments.
3. Applicability and precedential value of the Supreme Court's judgment in Radha Krishnan Industries concerning the interpretation of Section 83.
4. The necessity and implications of provisional attachment in protecting government revenue.

Issue-wise Detailed Analysis:

1. Legality of Provisional Attachment Orders:

The petitioners challenged the validity of the provisional attachment orders (Ext. P6 series) issued after the expiration of the period specified in Sub-section (2) of Section 83 of the CGST/SGST Acts. The petitioners argued that such orders are beyond the jurisdiction of the 1st respondent, as the statutory time limit had lapsed. The court agreed with the petitioners, emphasizing that the language of Section 83(2) clearly stipulates that provisional attachments cease to have effect after one year from the date of the order, and there is no provision for extension beyond this period.

2. Interpretation of Section 83 and Rule 159:

The court interpreted Section 83 of the CGST/SGST Acts and Rule 159 of the CGST/SGST Rules, 2017, to determine the duration of provisional attachment orders. It was noted that the rule-making authority considered the time limit to be mandatory, as reflected in the amendment to Rule 159, which explicitly states that attachments expire after one year. The court rejected the respondents' argument that fresh orders could be issued after the period specified in Section 83(2), as this would contradict the statute's plain language and legislative intent.

3. Precedential Value of Radha Krishnan Industries Judgment:

The court referred to the Supreme Court's judgment in Radha Krishnan Industries, which emphasized that the power of provisional attachment under Section 83 is drastic and requires strict interpretation. The Supreme Court had clarified that provisional attachments are provisional and intended to protect revenue in specific cases, ceasing after one year. The High Court found that the amendments to Section 83 did not alter the precedential value of this judgment, as the substantive provisions remained unchanged.

4. Necessity and Implications of Provisional Attachment:

The respondents contended that provisional attachment was necessary to protect government revenue, especially given the serious allegations of fraudulent transactions against the petitioners. However, the court held that while the law must address fraudulent activities, it is not the court's role to modify statutory provisions to grant the revenue authorities powers not envisaged by the legislature. The court emphasized that policy-making is not within its purview, and it must interpret the law as it stands.

Conclusion:

The court concluded that the provisions of Section 83 of the CGST/SGST Acts do not authorize the issuance of fresh orders of attachment after the period specified in Section 83(2). Consequently, the Ext. P6 series of orders were quashed, and it was declared that the statutory framework does not permit extensions beyond the one-year period. The judgment underscores the importance of adhering to the plain language of the statute and the necessity for strict interpretation of provisions deemed draconian in nature.