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TMI Blog2020 (1) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... to adjudicate controversy involved as emerging from record are that the Petitioner is manufacturing lead ingots, red oxide and grey oxide. On 27.03.2018, officials of Respondent/GST Directorate searched premises of the Petitioner and during search seized record. The Respondent time to time directed Petitioner to supply different documents which Petitioner supplied but failed to provide transporter bilty and weighment slips. The Respondent recorded statements of officials of Petitioner and conducted further investigation. The Respondent during investigation found that Petitioner has purchased scrap batteries from different suppliers which included 16 suppliers, who are not traceable. The Petitioner during July' 2017 to March' 2018 had availed Input Tax Credit (for short 'ITC') amounting to Rs. 13.38 Crore on the basis of invoices of 16 suppliers, who are not traceable. The Respondent vide order dated 10.07.2019 (Annexure P-8) provisionally attached Over Cash Credit (for short 'OCC') Account of the Petitioner, which they are maintaining with Lakshmi Vilas Bank, Karol Bagh, New Delhi. The Petitioner in terms of Rule 159 of CGST Rules, 2017 made a representation to the Respondent, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing unit and account in question is a OCC account having debit balance of Rs. 6.42 Crore. The investigation is going on and show cause notice under Section 73 or 74 would be issued after its completion. The Respondent in exercise of power under Section 83 of CGST Act, 2017 has attached bank account to safeguard interest of revenue. 7. After having scrutinized record of the case and hearing arguments of Counsel of both sides, we find that Respondent has power to attach property and bank account of any taxable person to protect interest of revenue. Person aggrieved may make representation against attachment of property or bank account and Commissioner after affording opportunity of hearing is bound to decide representation in one or another way. Section 83 of CGST Act and Rule 159 of CGST Rules are reproduced as under: SECTION 83. Provisional attachment to protect revenue in certain cases. - (1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , search and seizure) or Section 73 (determination of tax not paid otherwise than fraud) or Section 74 (determination of tax not paid on account of fraud), the Commissioner may provisionally attach any property including bank account. The power of attachment is not absolute. The attachment is subject to following safeguards: i) Order should be passed by Commissioner; ii) Proceeding under Section 62 or 63 or 64 or 67 or 73 or 74 should be pending; iii) Commissioner must form an opinion iv) Order should be passed to protect interest of revenue. v) It must be necessary to attach property. Expression 'is of the opinion' or 'has reason to believe' are of same connotation and are indicative of subjective satisfaction of Commissioner, which depends upon facts and circumstances of each case. It is settled law that 'opinion' must have a rational connection with or relevant bearing on the formation of the opinion. Rational connection postulates that there must be a direct nexus or live link between the protection of interest and available property which might not be available at the time of recovery of taxes after final adjudication of the dispute.. The opinion must be forme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral or Director General or Principal Director or Director, by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule. It is clear from a plain reading of the above Section that it is intended to empower the Assessing Officer to make a provisional attachment of any property of the assessee during the pendency of any proceedings or assessment or reassessment of any income, even though there is no demand outstanding against the assessee, if he is of the opinion that it is necessary to do so to protect the interests of the Revenue. To ensure that this power is not misused, a number of safeguards have been provided in the Section itself. It is not necessary for us, at this stage, to examine the same. One thing is clear that this power should be exercised by the Assessing Officer only if there is a reasonable apprehension that the assessee may thwart the ultimate collection of the demand that is likely to be raised on completion of the assessment. The power of attachment under this Section is in the nature of attachment before judgment under the Code of Civil Procedure. It is a drastic power. It should, therefore, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequently hold money for or on account of the assessee to pay to the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. (ii) A notice under this sub section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub section, the shares of the joint holders in such account shall be presumed, until the controversy is proved, to be equal. (iii) ... ... ... ... ... (iv) Save as otherwise provided in this sub section every person to whom a notice is issued under this sub section shall be bound to comply with such notice and in particular where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground, referring to similar provisions contained in Section 46 of the Income Tax Act, 1922, it was observed as under: ' It will be seen that this provision is analogous to an attachment of a debt or what is commonly terms a garnishee summons. The classes of persons to whom such notice could be served are two: (i) any person from whom money is due or may become due to the assessee; and (2) any person who holds or may subsequently hold money for or on account of the assessee. The question which arises for consideration in the present case is, as to whether a bank, which has afforded overdraft facilities to its customer, holds the amount, specified as that up to which the customer may draw as either "a debtor" of the customer or holds that money on behalf of or on account of the customer.' 8. This decision was followed by the learned Single Judge of Bombay High Court in reported judgement of Calcutta High Court in case of Jugal Kishore Das v. Union of India [W.P. No. 22899 of 2013, dated 8-10-2013]. In the said case, the Assessing Officer had tried to recover the tax dues of the assessee in exercise of powers under Section 226(3) of the Act by attaching the cash credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the authority only if there is a reasonable apprehension that the assessee may default the ultimate collection of the demand that is likely to be raised on completion of the assessment. It should, therefore, be exercised with extreme care and caution. 4. The power under Section 83 of the Act for provisional attachment should be exercised only if there is sufficient material on record to justify the satisfaction that the assessee is about to dispose of wholly or any part of his / her property with a view to thwarting the ultimate collection of demand and in order to achieve the said objective, the attachment should be of the properties and to that extent, it is required to achieve this objective. 5. The power under Section 83 of the Act should neither be used as a tool to harass the assessee nor should it be used in a manner which may have an irreversible detrimental effect on the business of the assessee. 6. The attachment of bank account and trading assets should be resorted to only as a last resort or measure. The provisional attachment under Section 83 of the Act should not be equated with the attachment in the course of the recovery proceedings. 7. The autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of business which cannot be permitted unless and until running of business itself is prohibited by law. The contention of Respondent that they have power to attach bank account irrespective of nature of account cannot be countenanced. We are of the opinion that Respondent can attach an account only if there is some balance in the form of FDR or savings. The power of attachment of bank account cannot be exercised as per whims and caprices of the Authority. The Commissioner is bound to ensure that by attachment of property or bank account, interest of revenue is going to be protected. In case a property is mortgaged with bank and value of property is less than outstanding dues of bank, provisional attachment is meaningless and action remains only on paper. In the absence of record showing that interest of revenue is protected by attaching property or bank account, action deserves to be declared as taken without application of mind and formation of opinion on the basis of cogent material. Thus, attachment of current account having debit balance does not protect interest of revenue, instead merely ruins the business of a dealer. Such an action of attachment of "over cash credit" a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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