2021 (5) TMI 767 - HC - GST

Power u/s 83 as well as under Section 5(3) off KGST Act - designation of proper officer in terms of Sections 83(1) and 5(3) of the Act be adjudicated upon - Power to attach bank accounts - Invoice was not available for claiming Input Tax Credit - HELD THAT - Statement is made by the learned Additional Government Advocate that on the basis of the material available necessary report would be sent to the concerned to initiate assessment proceedings as per law and that they do not intend to further proceed with the proceedings under Section 67 of the Act and such submission is stated to be made under instructions of the respondent No.3. The petitioner may be called upon to secure the interest of the revenue. In light of the said stand by putting the petitioner on terms while noticing the absence of the invoice, at the present point in time as regards to the claim of credit for input tax, the Court is of the view that the petitioner on furnishing bank guarantee of ₹ 7,00,000/- the order of attachment may be lifted. It must be noted that in light of disposal of the main petition while recording the statement of the Government Advocate stated to be made upon instructions that proceedings under Section 67 of the Act will not be proceeded with on the basis of the material made available by the assessee to the department, entering in to the question of validity of the order at Annexure-A and the challenge as regards delegation under Section 83 of the Act by the Commissioner to other person would remain an academic question which need not be adjudicated in the present case and may be dealt with in an appropriate case. Further when the petition is itself being disposed off without the necessity of adjudication there is no warrant to embark upon further adjudication of the legal contention raised. The request of the petitioner for continuing with the present proceedings is rejected - Petition disposed off.

Summary

Issues:
Challenge to impugned order under Section 5(3) of KGST Act, 2017/CGST Act, 2017 and Section 83 of CGST Act, 2017; Delegation of power under Section 5(3) of GST Act; Impermissibility of delegation principles; Initiation of proceedings under Section 67 of KGST Act, 2017; Attachment of bank account under Section 83 and Section 5(3) of KGST Act; Clarification requirements for furnishing information; Assessment proceedings initiation; Claim of credit for input tax; Court's view on lifting attachment order; Adjudication of challenge to orders at Annexure-A; Disposal of main petition and non-proceeding with Section 67 proceedings; Academic question of delegation under Section 83; Rejection of continuing present proceedings request; Setting aside of order at Annexure-L; Requirement to maintain balance as security till assessment proceedings conclusion.

Analysis:
The petitioner challenged the impugned order under Section 5(3) of the KGST Act, 2017/CGST Act, 2017 and Section 83 of the CGST Act, arguing that the power of attachment must be exercised by the commissioner for protecting the government revenue. Reference was made to a judgment of the High Court of Gujarat emphasizing the importance of the designated officer's satisfaction under Section 83. The petitioner also contended that delegation of power under Section 5(3) of the GST Act is absent, highlighting the principles against impermissible delegation set by the Gujarat High Court.

Proceedings were initiated against the petitioner under Section 67 of the KGST Act, 2017, requiring the submission of specific documents. Despite the petitioner's reply to the notice, the bank account was attached under Section 83 read with Section 5(3) of the KGST Act. The petitioner was directed to clarify further information requirements during the proceedings, and the government advocate stated that assessment proceedings would be initiated based on available material, indicating a halt to Section 67 proceedings.

The Court, considering the absence of invoices for a credit claim, proposed lifting the attachment order upon the petitioner furnishing a bank guarantee. However, the Court noted that the challenge to the delegation under Section 83 and Section 5(3) would remain an academic question due to the disposal of the main petition and the government's decision not to proceed with Section 67 proceedings based on the material provided.

Ultimately, the Court rejected the petitioner's request to continue the proceedings, keeping the contentions open but disposing of the petition. The order at Annexure-L was set aside, with a requirement for the petitioner to maintain a specified balance in the account as security until the assessment proceedings conclude.