2023 (7) TMI 101 - HC - GST

Provisional attachment of bank account of the Petitioner - Extension of one year, which has already expired - fresh order to attach the bank account - Non-communication of order to the petitioner - Section 83 of the CGST Act - HELD THAT - The order sheet records the date of the noting as 21st April 2022, wherein after narrating the facts it is stated that same is submitted for necessary orders under Section 83 of the MGST Act. It further states that we may consider taking action of provisional attachment under Section 83 in respect of this bank account and, thereafter, the Joint Commissioner (Investigation) has opined that this bank account is required to be attached. The said order sheet is dated 21st April 2022 and formed the basis for issue of first provisional attachment on 21st April 2022 and which, as observed above, has ceased to expire by operation of sub-section (2) of Section 83 - there are no fresh order having being passed by the Respondents to attach the bank account on 19th April 2023. In any view of the matter, mere notings in the file of the concerned Officer cannot constitute an order without a formal order as the law may mandate being passed and most importantly such order being communicated to the affected person, whose bank account is attached. The Respondents have not shown that such order was passed and served on the Petitioner much less prior to the provisional attachment order ceasing to operate by virtue of the provisions of Section 83(2) and/or the communication dated on 19th April 2023. Thus, it is held that the communication dated 21st April 2022 (Exhibit B to the petition) provisionally attaching the Petitioner s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated 19th April 2023 (Exhibit G-1 to the petition) is hereby quashed and set aside. Parties, including the bank, to act on authenticated copy of this order - writ petition stands allowed. Provisional attachment - jurisdiction to pass the provisional attachment order - Petitioner is in Chennai and the bank account, in respect of which the provisional attachment order is communicated, is also in Chennai - HELD THAT - Section 122(1-A), refers to any person , who has retained benefit of a transaction and in whose presence transaction is conducted. It does not contemplate of a situation where the person should be located within the State in which the transaction is carried out. Therefore, the Respondents have the jurisdiction to resort to the provisions of Section 83 of the Act with respect to the Petitioner located in Chennai. The provisions of Section 83, which are to be read with Section 122(1-A), would be required to be read in the context of the legislation itself namely the CGST Act. As Section 1(2) would mandate, the CGST Act is operational throughout the country. This would have relevance in construing the jurisdiction of the Commissioner who has been defined under Section 2(24) of the CGST Act, for the purposes of Section 83(2) of the Act. A cumulative reading of the provisions of Section 83(1) read with Section 122(1-A) of the Act makes it manifest that the Commissioner for the purposes of exercising power under Section 83 read with Section 122(1-A) of the CGST Act, would have a power to take action against any person as Section 122(1-A) mandates, even if such a person is outside his jurisdiction. However, as it is held that the communication dated 21st April 2022 (Exhibit C to the petition), provisionally attaching the Petitioner s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated 19th April 2023 (Exhibit H-1 to the petition) is hereby quashed and set aside.

Summary

Issues:
1. Challenge to provisional attachment of bank account under Section 83 of the CGST Act, 2017 and subsequent communication retaining the attachment.

Judgment Details:

Issue 1: Appealability of Order under Rule 159(5) of CGST Rules
- The Respondents argued that the order disposing of objections under Rule 159(5) is appealable under Section 107 of the Act. However, relying on a Supreme Court decision, it was held that such orders are not appealable but can be challenged through writ jurisdiction under Article 226.
- The Supreme Court precedent established that the only remedy available for such orders is through Article 226, not through appeal processes.

Issue 2: Provisional Attachment under Section 83 of the CGST Act
- Section 83 allows provisional attachment of property, including bank accounts, for protecting government revenue during certain proceedings.
- The provisional attachment ceases to have effect after one year from the date of the order. In this case, the attachment order expired by operation of law after one year.
- The continuation of the attachment through a communication was deemed invalid as no fresh order was passed after the expiry date. Mere notings in the file do not constitute a valid order.
- The Respondents' reliance on a Gujarat High Court decision was deemed inapplicable as there was no fresh attachment order in this case after the expiry date.

Issue 3: Jurisdiction of Authorities under Section 83
- Section 83 empowers the Commissioner to provisionally attach property, including bank accounts, of taxable persons or any person specified in Section 122(1-A) for protecting government revenue.
- The jurisdiction of authorities under Section 83 extends to persons outside their territorial jurisdiction, as long as the person is involved in transactions affecting government revenue.
- The legislative scheme of the CGST Act allows authorities to take action against any person, even if located outside their jurisdiction, to prevent tax evasion or violation of the Act.

Conclusion:
- The communication provisionally attaching the bank account was declared illegal and invalid due to the expiry of the attachment order by law.
- The extension of the attachment through a subsequent communication was quashed and set aside.
- Parties, including the bank, were directed to act on the authenticated copy of the order.