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TMI Blog2021 (4) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Joint Commissioner as a delegate of the Commissioner was not subject to an appeal under Section 107(1) and the only remedy that was available was in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution. The High Court was, therefore, clearly in error in declining to entertain the writ proceedings. The entire procedure which has been followed by the Joint Commissioner in the present case is contrary to the provisions contained in Section 83 read with Rule 159. The Joint Commissioner (acting on behalf of the Commissioner) has proceeded on an understanding that an opportunity of being heard to the person whose property is provisionally attached is a matter of discretion, the discretion of being that of the Commissioner. The Commissioner s understanding that an opportunity of being heard was at the discretion of the Commissioner is therefore flawed and contrary to the provisions of Rule 159(5). There has, hence, been a fundamental breach of the principles of natural justice. We are unable to accept the contention of the respondent that merely because proceedings were pending/concluded against another taxable entity, that is GM Powertech, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of these three components will need to be addressed in the course of interpreting the tax statute in the present case. 2 This appeal arises from a judgment and order dated 1 January 2021 of a Division Bench of the High Court of Himachal Pradesh. The High Court dismissed the writ petition instituted under Article 226 of the Constitution challenging orders of provisional attachment on the ground that an alternate remedy is available. The appellant challenged the orders issued on 28 October 2020 by the Joint Commissioner of State Taxes and Excise, Parwanoo "third respondent" provisionally attaching the appellant's receivables from its customers. The provisional attachment was ordered while invoking Section 83 of the Himachal Pradesh Goods and Service Tax Act, 2017 "HPGST Act" and Rule 159 of Himachal Pradesh Goods and Service Tax Rules, 2017 "HPGST Rules". While dismissing the writ petition on grounds of maintainability the High Court was of the view that the appellant had an 'alternative and efficacious remedy' of an appeal under Section 107 of the HPGST Act. 3 At issue in this case is whether the orders of provisional attachment issued by the third respondent against the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 7 The appellant received a memo by an e-mail dated 15 December 2018 from the third respondent directing it to be present on 17 December 2018 for explaining the allegedly illegal claim of ITC made during 2017-18 and 2018-19. By its letter dated 17 December 2018, the appellant contended that it had validly claimed ITC as it fulfilled the conditions under Section 16 and other provisions of the HPGST Act and the CGST Act. 8 On 9 January 2019, a notice ("SCN") was issued to Fujikawa Power, Bagbania, BBN Baddi, one of the customers of the appellant, for provisionally attaching an amount of ₹ 5 crores due to the appellant, under Section 83 of the HPGST Act. On 19 January 2019, the third respondent passed an order of provisional attachment in respect of receivables worth ₹ 5 crores due from Fujikawa Power. This order inadvertently referred to Sarika Industries instead of the appellant. The appellant responded by a representation dated 29 January 2019, claiming inter alia, that the order of attachment was without affording a hearing. The appellant also claimed that on 26 December 2018, they had noticed that the ITC had been blocked without prior notice. On 30 January 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of ₹ 5,03,82,554/- of M/s Radha Krishan Industries, Kala-Amb. Henceforth, no payment shall be allowed to be made from your company to M/s RadhaKrishan Industries without the prior permission of this department / office." A similar order was issued to Deepak International, noting that a payment of ₹ 2.91 crores was owed by it to the appellant. 12 On 4 November 2020, the appellant filed a representation and objections against the attachment and denied liability. By an order dated 6 November 2020, the third respondent rejected the objections of the appellant. The third respondent stated that collectively payments "only" worth ₹ 4.92 crores from both of the appellant's customers were attached. 13 On 27 November 2020, the third respondent issued a notice to show cause to the appellant under Section 74(1) of the HPGST Act for recovering the ITC, interest and penalty. The notice was issued on the basis that the appellant had claimed ITC on the supplies received from GM Powertech and since the inward supplies made by GM Powertech were found to be fake, the appellant's claim of ITC was also in question. 14 The orders of provisional attachment and the order passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated under Section 74. In response, the third respondent allowed the appellant to inspect the contents of the appellant's case file. According to the respondent, the appellant failed to exercise this option and did not reply to the show cause notice dated 27 November 2020. Thereafter, on 18 February 2021, an order under Section 74(9) of the HPGST Act was passed by the third respondent confirming a tax demand of ₹ 8,30,27,218. This order under Section 74(9) has been assailed by the appellant before the appellate authority under Section 107. The dismissal of the petition challenging the orders of provisional attachment is in question in the present proceedings. B Submissions 19 Mr Puneet Bali, learned senior counsel appearing on behalf of the appellant addressed the following submissions: B.1 Maintainability of the writ petition before the High Court: (i) No efficacious alternative remedy is available against the orders of provisional attachment passed under Section 83 of the HPGST Act. The jurisdiction to pass an order under Section 83 is conferred on the Commissioner of State Taxes. Although the power stands delegated to the third respondent, the order is still deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State as held in Rajasthan State Electricity Board v Union of India 2008 (5) SCC 632; and (vii) Reliance was placed on Calcutta Discount Co. Ltd. v Income Tax Officer, Companies District I, Calcutta AIR 1961 SC 372 and Commissioner of Income Tax, Gujarat v M/s A Raman and Co. AIR 1968 SC 49 to argue that the High Court can exercise its powers under Article 226 of the Constitution to issue an order prohibiting the tax officer from proceedings to assess the liability, if the conditions precedent to the exercise of such jurisdiction have not been met. B.2 Challenge on merits: improper invocation of Section 83 (i) The power of provisional attachment under Section 83 of the HPGST Act is a drastic power and must be exercised with extreme care and caution; (ii) The power under Section 83 of the HPGST Act cannot be exercised unless there is sufficient material on record to justify that the assessee is about to dispose of the whole or part of its property to thwart the ultimate collection of tax; (iii) The existence of relevant material is a pre-condition to the formation of an opinion by the Commissioner; (iv) The third respondent failed to show any material on record to indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he HPGST Act, once the tax demand becomes payable, an assessee can only challenge this demand in appeal after depositing 10% of the disputed amount and the remaining demand is stayed. In contrast, the provisional attachment of 100% of the alleged amount even before the finalisation of the tax demand is contrary to the legislative intent; (xvi) The third respondent has taken a contradictory stand with respect to collection of tax from the appellant. Even if it is admitted that the transaction between the appellant and GM Powertech was a fake transaction without actual movement of goods, it follows that the appellant cannot claim refund of ITC and nor would the appellant be liable to pay tax on outward supplies. However, the appellant has already paid ₹ 12.49 crores of tax on outward supplies; (xvii) The third respondent has raised a demand of ₹ 39 crores against GM Powertech for illegally availing ITC. Once the tax demand has been confirmed against GM Powertech, refusal to grant ITC to the appellant would amount to double collection of tax. 20 Opposing these submissions, Mr Akshay Amritanshu, learned counsel appearing on behalf of the State of Himachal Pradesh, subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant did not engage in the ITC fraud; (xi) There was no violation of the principles of natural justice as an order of provisional attachment does not require a prior notice to be issued to the assessee; (xii) The necessary prerequisites for triggering Section 83 of the HPGST Act were complied with; (xiii) The appellant had not sought any prior stay on the orders of provisional attachment and thus, it is not conceivable that the business of the appellant has become paralyzed due to these orders; (xiv) The provisional attachment is not only for the purpose of recovery, but is intended to safeguard the interests of the revenue while the proceedings are pending; and (xv) The legislature did not provide any quantum or percentage for the purpose of provisional attachment under Section 83 of the Act. Thus, a comparison with other provisions of the HPGST Act, including Section 107, is incorrect. C Legal Position 21 The following issues arise in the present case: (i) Whether a writ petition challenging the orders of provisional attachment was maintainable under Article 226 of the Constitution before the High Court; and (ii) If the answer to (i) is in the affirmative, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Part III of the Constitution but also for "any other purpose". 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field." (emphasis supplied) 26 Following the dictum of this Court in Whirlpool (supra), in Harbanslal Sahnia v Indian Oil Corpn. Ltd. (2003) 2 SCC 107, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion; and (vi) In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with. 28 These principles have been consistently upheld by this Court in Seth Chand Ratan v Pandit Durga Prasad (2003) 5 SCC 399, Babubhai Muljibhai Patel v Nandlal Khodidas Barot (1974) 2 SCC 706 and Rajasthan SEB v. Union of India, (2008) 5 SCC 632 among other decisions. C.2 Provisional Attachment 29 At this stage, we will advert to relevant precedents outlining the contours of the power of provisional attachment and specifically, in the context of provisions worded similarly to Section 83 of the HPGST Act. 30 The decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries v Union of India 2019 (30) GSTL 15 (Gujarat), the Gujarat High Court laid down the principles for the construction of Section 83 of the SGST/CGST Act. The High Court noted that a provisional attachment on the basis of a subjective satisfaction, absent any cogent or credible material, constitutes malice in law. It further outlined the principles for the exercise of the power: "52. […] The order of provisional attachment before the assessment order is made, may be justified if the assessing authority or any other authority empowered in law is of the opinion that it is necessary to protect the interest of revenue. However, the subjective satisfaction should be based on some credible materials or information…It is not any and every material, howsoever vague and indefinite or distant, remote or far-fetching, which would warrant the formation of the belief. (1) The power conferred upon the authority under Section 83 of the Act for provisional attachment could be termed as a very drastic and far-reaching power. Such power should be used sparingly and only on substantive weighty grounds and reasons. (3) The power of provisional attachment under Section 83 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Gujarat High Court cited two instances in which provisional attachment would be apposite, these being where the assessee is a 'fly by night operator' and if the assessee will not be able to pay its dues after assessment. 34 Similar to the decisions of the Gujarat High Court, other High Courts have recognized the restrictive nature of the power of provisional attachment under Section 83 of the SGST Act and the need for it to be based on adequate substantive material. The High Courts have also underscored the extraordinary nature of this power, necessitating due caution in its exercise. (Bindal Smelting Private Limited v Addl. Director General of GST Intelligence, 2020 (34 G.S.T.L 592 (P&H); Society for Integrated Development of Urban and Rural Areas v Commissioner of Income Tax, A.P. II, Hyd, 2001 (252) ITR 642; Vinod Kumar Murlidhar Prop. Of Chechani Trading Co v. State of Gujarat, Special Civil Application No. 12498 of 2020 dated 9 December 2020) 35 The Delhi High Court, in Proex Fashion Private Limited v Government of India WP(C) 11245 of 2020 dated 6 January 2021 outlined the following statutorily stipulated conditions for the invocation of Section 83 of the SGST Act: "i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson and which proceedings have been launched against the aforesaid taxable person indicating a nexus between the proceedings to be initiated against a taxable person and provisional attachment of bank account of such taxable person." (emphasis supplied) C.3 Delegation of authority under CGST Act 38 The learned counsel for the respondent State, during the course of his submissions, has also sought to justify the delegation of powers by the Commissioner to the Joint Commissioner by way of the impugned notification dated 21 October 2020 for the purpose of attachment of properties under Section 83 of the HPGST Act. In this regard, reliance was placed on Nathanlal Maganlal Chauhan v State of Gujarat, 2020 SCC Online Guj 1811 where the Gujarat High Court was considering the validity of a notification by which the Commissioner of State Tax had delegated all the functions under the SGST Act to the Special Commissioner and Additional Commissioners of State Tax. In rejecting a challenge to this notification, the High Court held that: "39. As pointed out by the Supreme Court in the case of Sahni Silk Mills [internal citation omitted], the courts should normally be rigorous while requirin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1)." 40 The marginal note to Section 83 provides some indication of Parliamentary intent. Section 83 provides for "provisional attachment to protect revenue in certain cases". The first point to note is that the attachment is provisional - provisional in the sense that it is in aid of something else. The second point to note is that the purpose is to protect the revenue. The third point is the expression "in certain cases" which shows that in order to effect a provisional attachment, the conditions which have been spelt out in the statute must be fulfilled. Marginal notes, it is well-settled, do not control a statutory provision but provide some guidance in regard to content. Put differently, a marginal note indicates the drift o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve effect upon the expiry of a period of one year of the order being passed under sub-Section (1). The power to levy a provisional attachment has been entrusted to the Commissioner during the pendency of proceedings under Sections 62, 63, 64, 67, 73 or as the case may be, Section 74. Section 62 contains provisions for assessment for non-filing of returns. Section 63 provides for assessment of unregistered persons. Section 64 contains provisions for summary assessment. Section 67 elucidates provisions for inspection, search and seizure. Before we dwell on Section 74, it would be material to note the provisions of Section 70 which are extracted below: "70. Power to summon persons to give evidence and produce documents. - (1) The proper officer under this Act shall have powers to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908, (5 of 1908). (2) Every such inquiry referred to in sub-section (1) shall be deemed to be a "judicial proceedings" within the meaning of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under sub-section (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) pays the said tax alongwith interest payable under section 50 and a penalty equivalent to twenty five per cent of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble with tax may pay the tax together with interest and a penalty equivalent to fifteen per cent of the tax on the basis of their own ascertainment of the tax or as ascertained by the proper officer and inform the proper officer of the payment having been made upon receipt of the information. Sub-Section (6) stipulates that the proper officer shall not serve any notice under sub-Section (1) in respect of the tax so paid or any penalty payable under the provisions of the Act or the Rules. 47 On the other hand, when the proper officer is of the opinion that the amount which has been paid under sub-Section (5) falls short of the amount which is actually payable, a notice under sub-Section (1) is to issue for the amount which falls short of what is actually payable. Sub-Section (8) contains a stipulation that where a person who is chargeable with tax under sub-Section (1) pays the tax together with interest and a penalty of twenty-five per cent of the tax within thirty days of the issuance of the notice, all proceedings in respect of the notice shall be deemed to be concluded. Under sub-Section (9), the proper officer after considering the representation of the person chargeable to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of the power is challenged, the validity of its exercise will depend on a strict and punctilious observance of the statutory pre-conditions by the Commissioner. While conditioning the exercise of the power on the formation of an opinion by the Commissioner that "for the purpose of protecting the interest of the government revenue, it is necessary so to do", it is evident that the statute has not left the formation of opinion to an unguided subjective discretion of the Commissioner. The formation of the opinion must bear a proximate and live nexus to the purpose of protecting the interest of the government revenue. 49 By utilizing the expression "it is necessary so to do" the legislature has evinced an intent that an attachment is authorized not merely because it is expedient to do so (or profitable or practicable for the revenue to do so) but because it is necessary to do so in order to protect interest of the government revenue. Necessity postulates that the interest of the revenue can be protected only by a provisional attachment without which the interest of the revenue would stand defeated. Necessity in other words postulates a more stringent requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of us (Hon'ble Mr Justice MR Shah) speaking for a Division Bench of the Gujarat High Court in Vishwanath Realtor v State of Gujarat Special Civil No. 7210 of 2015, decided on 29 April 2015 observed: "8.3. Section 45 of the VAT Act confers powers upon the Commissioner to pass the order of provisional attachment of any property belonging to the dealer during the pendency of any proceedings of assessment or reassessment of turnover escaping assessment. However, the order of provisional attachment can be passed by the Commissioner when the Commissioner is of the opinion that for the purpose of protecting the interest of the Government Revenue, it is necessary so to do. Therefore, before passing the order of provisional attachment, there must be an opinion formed by the Commissioner that for the purpose of protecting the interest of the Government Revenue during the pendency of any proceedings of assessment or reassessment, it is necessary to attach provisionally any property belonging to the dealer. However, such satisfaction must be on some tangible material on objective facts with the Commissioner. In a given case, on the basis of the past conduct of the dealer and on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecution under this Act in respect of such person, it may cause to be published such name and particulars in such manner as it thinks fit. (2) No publication under this section shall be made in relation to any penalty imposed under this Act until the time for presenting an appeal to the Appellate Authority under section 107 has expired without an appeal having been presented or the appeal, if presented, has been disposed of. Explanation. - In the case of firm, company or other association of persons, the names of the partners of the firm, directors, managing agents, secretaries and treasurers or managers of the company, or the members of the association, as the case may be, may also be published if, in the opinion of the Commissioner, or any other officer authorised by him in this behalf, circumstances of the case justify it." 53 Under sub-Rule (1) of Rule 159, an attachment of property by the Commissioner under Section 83 is effected by passing an order mentioning the details of the property which is attached. The form in which the order is to be made is prescribed in form GST DRC-22. This form is extracted below: 54 Under sub-Rule (5) of Rule 159, the person whose propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not open to the Commissioner, as has been stated in the present case, to hold the view that the only safeguard under sub-Rule 5 is to submit an objection without an opportunity of a personal hearing. Such a construction would be plainly contrary to sub-Rule 5 which contemplates both the submission of an objection to the attachment and an opportunity of being heard. The opportunity of being heard can be availed of as a matter of right by the person whose property is attached. Both the right to submit an objection and to be afforded an opportunity of being heard are valuable safeguards. The consequence of a provisional attachment is serious. It displaces the person whose property is attached from dealing with the property. Where a bank account is attached, it prevents the person from operating the account. A business entity whose bank account is attached is seriously prejudiced by the inability to utilize the proceeds of the account for the purpose of business. The dual procedural safeguards inserted in sub-Rule 5 of Rule 159 demand strict compliance. The Commissioner who hears the objections must pass a reasoned order either accepting or rejecting the objections. To allow the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting the appellant to appear on 9 October 2018 along with specific documents pertaining to the years 2017-18 and 2018-19. The notice stated that in the event that the appellant failed to appear, the Commissioner would be constrained to issue a notice to show cause under Section 74(1). On 9 October 2018, two partners of the appellant attended the hearing. On 10 October 2018, a 'detection case' under Section 74 of the HPGST Act and CGST Act read with Section 20 of the IGST Act was initiated against a supplier of the appellant, GM Power Tech by a search and seizure operation conducted under Section 67. On 15 October 2018, the partners of the appellant attended the case hearing and provided certain documents which were required by the department. The partners of GM Powertech were arrested under the provisions of Sections 69 and 132 of the HPGST Act on 3 December 2018, on the allegation that they had made fraudulent claims of ITC from fake/fictitious firms of Delhi and Kanpur. On 15 December 2018, the representatives of the appellant were directed to remain present on 17 December 2018 for explaining the allegedly illegal claim of ITC for 2017-18 and 2018-19. A representative of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed against GM Powertech on whom a demand had been raised, the ITC claimed by the appellant against supplies effected by GM Powertech was held to be inadmissible resulting in a provisional attachment of the payments due to the appellant to the extent of ₹ 5,03,82,554/-. A similar order was issued on 28 October 2020 under Section 83 to M/s Deepak International Limited. The appellant submitted a detailed representation under Rule 159 (5) to the Joint Commissioner. The representation was rejected on 6 November 2020 without affording an opportunity of being heard. Thereafter, on 27 November 2020, a notice to show cause was issued to the appellant under Section 74(1) recording that the appellant had shown inward supplies of lead ingots from GM Powertech and had claimed and utilized ITC on that basis. However, all suppliers from whom GM Powertech had shown inward supplies of goods were found to be fictitious, fake and non-existent. The GST registration of GM Powertech had been cancelled and by an order under Section 74(9), an additional demand of ₹ 39.48 crores was confirmed. The appellant was called upon to show cause as to why interest, tax and penalty should not be imposed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of satisfying himself as to the legality or propriety of the said decision or order and may, by order, direct any officer subordinate to him to apply to the Appellate Authority within six months from the date of communication of the said decision or order for the determination of such points arising out of the said decision or order as may be specified by the Commissioner in his order. Sub-Section (2) confers a revisional power on the Commissioner in regard to the legality or propriety of a decision or order passed by an adjudicating authority. The expression 'adjudicating authority' is defined by Section 2(4) in the following terms: "(4) "adjudicating authority" means any authority, appointed or authorized to pass any order or decision under this Act, but does not include the Commissioner, Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal;" 62 From the above definition, it is evident that the expression 'adjudicating authority' does not include among other authorities, the Commissioner. In the present case, the narration of facts indicates that on 21 October 2020, the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. Secondly, Rule 159(5) posits an opportunity of being heard. Both requirements are cumulative. The Commissioner's understanding that an opportunity of being heard was at the discretion of the Commissioner is therefore flawed and contrary to the provisions of Rule 159(5). There has, hence, been a fundamental breach of the principles of natural justice. 65 On 28 October 2020, the following order was recorded in the file noting by the Joint Commissioner purporting to justify the levy of a provisional attachment : 66 Ex facie, the above order passed by the Joint Commissioner does not indicate any basis for the formation of the opinion that the levy of a provisional attachment was necessary to protect the interest of the government revenue. The order in the file noting refers to the fact that the case of GM Powertech had been decided under Section 74 resulting in an additional demand of ₹ 39 crores on account of a fraudulent claim of ITC for FY 2017-18 and 2018-19. GM Powertech is alleged to have passed on the ITC to various Registered Tax Persons ("RTP") situated in Himachal Pradesh by issuing invoices inter alia to the appellant during 2018-19 for which a case under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessarily be interpreted restrictively. Given that there were no pending proceedings against the appellant, the mere fact that proceedings under Section 74 had concluded against GM Powertech, would not satisfy the requirements of Section 83. Thus, the order of provisional attachment was ultra vires Section 83 of the Act. 69 On 1 March 2021, the appellant has filed an appeal under Section 107 together with a deposit of ₹ 32,15,488 representing ten per cent of the tax due. Section 107(6) contains the following stipulation: "(6) No appeal shall be filed under sub-section (1), unless the appellant has paid- (a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and (b) a sum equal to ten per cent of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed." Sub-Section (7) stipulates that : "(7) Where the appellant has paid the amount under sub-section (6), the recovery proceedings for the balance amount shall be deemed to be stayed." 70 Clause (a) of sub-Section (6) provides that no appeal shall be filed without the payment in full, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of provisional attachment. E Summary of findings 72 For the above reasons, we hold and conclude that (i) The Joint Commissioner while ordering a provisional attachment under section 83 was acting as a delegate of the Commissioner in pursuance of the delegation effected under Section 5(3) and an appeal against the order of provisional attachment was not available under Section 107 (1); (ii) The writ petition before the High Court under Article 226 of the Constitution challenging the order of provisional attachment was maintainable; (iii) The High Court has erred in dismissing the writ petition on the ground that it was not maintainable; (iv) The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled; (v) The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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