2022 (6) TMI 359 - HC - GST

Validity of orders of attachment of bank accounts passed by the respondent/Revenue - Section 83 of the Central Goods and Service Tax Act, 2017 - HELD THAT - Though an argument was advanced by the learned Standing Counsel appearing for Revenue that based on the tangible materials, which are available with the Revenue, they can very well sustain the order of attachment, this Court however feels that, the present order shall not stand in the legal scrutiny as it does not reveal any such tangible material. Therefore, if these orders are set aside, it does not preclude the Revenue to proceed further by once again invoke Section 83 of the Act. The impugned orders are set aside - it is open to the respondent/Revenue to invoke Section 83 of the Act once again, if they have tangible materials at their hands - Petition disposed off.

Issues Involved:
1. Legality of the attachment orders of bank accounts under Section 83 of the Central Goods and Service Tax Act, 2017.
2. Adequacy of reasons provided for the attachment.
3. Applicability of the Supreme Court's judgment in M/s. Radha Krishnan Vs. State of Himachal Pradesh to the present case.

Detailed Analysis:

1. Legality of the Attachment Orders:

The petitioner challenged the attachment of five different bank accounts by the respondent/Revenue under Section 83 of the Central Goods and Service Tax Act, 2017. The primary contention was that the orders lacked specific reasons based on tangible material, merely stating that they were issued "in order to protect the interest of the Revenue."

2. Adequacy of Reasons Provided:

The court examined whether a one-line reason, "in order to protect the interest of the Revenue," was sufficient for invoking Section 83. The petitioner’s counsel argued that such a cryptic reason was inadequate, relying on the precedent set in M/s. Sree Meenashi Industries Vs. The Additional Chief Secretary & Ors., which followed the Supreme Court's dictum in M/s. Radha Krishnan Vs. State of Himachal Pradesh.

The respondent's counsel contended that Section 83 does not require detailed reasons to be provided in the attachment order itself. The tangible materials and conclusions drawn by the Revenue need not be revealed in the order but are available in the files.

3. Applicability of the Supreme Court's Judgment:

The court referred extensively to the Supreme Court's judgment in M/s. Radha Krishnan, which laid down mandatory guidelines for the exercise of power under Section 83. The key points from the Supreme Court’s judgment included:

- The power to order provisional attachment is draconian and must be strictly fulfilled.
- The Commissioner must form an opinion based on tangible material that the assessee is likely to defeat the demand.
- The opinion must be based on tangible material bearing on the necessity of the attachment.
- The Commissioner must deal with objections to the attachment by passing a reasoned order.

The court found that the impugned orders did not meet these criteria. The orders merely stated that the attachment was to protect the interest of the Revenue without indicating any tangible material or the formation of an opinion by the Commissioner.

Conclusion:

The court concluded that the impugned orders did not stand up to legal scrutiny as they failed to meet the mandatory guidelines set by the Supreme Court. The court set aside the attachment orders but allowed the Revenue to invoke Section 83 again if they had tangible materials and followed the proper procedures.

Order:

1. The impugned orders of attachment are set aside.
2. The respondent/Revenue is permitted to invoke Section 83 again if they have tangible materials, as indicated in the precedent case of M/s. Sree Meenashi Industries.
3. The writ petitions are disposed of accordingly, with no costs. Connected miscellaneous petitions are closed.

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