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TMI Blog2022 (4) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... th extreme care and caution. The Court held that power under section 83 of the act should not be used as a tool to harass the assessee nor should it be used in as manner which may have irreversible detrimental effect on the business of the assessee . In the facts of the case, undisputedly, the respondent no.2 has not only provisionally attached the stock of goods lying at the factory premise of the writ applicants, at the same time, the respondent No.2 has also provisionally attached the demat account and current account of the writ applicants. These are the valuable assets of the writ applicants, more particularly, raw material and the finished goods are valuables which are otherwise necessary for running of the business of the applicants. Even operating the demat account and current account are essentially required for the routine business of the writ applicants. Time and again, this Court as well as even the instructions instructions issued by the higher authority of the respondents, has directed the proper officer to ensure that their action of the provisional attachment should not hamper normal business activities of the taxable person - This Court did not approve the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. In support, the writ applicants have placed on record regularly maintained record of the purchase transactions, which include invoices, e-way bill, weightment slips, photographs of material being unloaded and material received inspection report etc. 2.3 It appears that the office of the Deputy Commissioner of State Tax, Vadodara, suspected that the writ applicant had shown purchase from fictitious firms, which are otherwise non existent. The respondent launched the proceedings against the writ applicants whereby search was carried out at the business premises of the writ applicants as per the procedure prescribed under Section 67 of the GST Act. 2.4 It appears that pursuant to the said search, the dispute arose with regard to the claim for input tax credit availed by the writ applicants on the ground that the Firm from whom the writ applicants had made purchase, were not found to be genuine. 2.5 The writ applicants during such search had cooperated with the respondent authority. Pursuant to such search, the writ applicants were served with three form GST DRC-22 dated 27.11.2021, whereby the respondent authority had passed an order of provisional attachment of var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Mr. Utkarsh Sharma, the learned AGP for the respondent State Authorities. 4. Mr. Sheth, the learned counsel appearing for the writ applicants has drawn attention of this Court to the subjective satisfaction arrived at by the Assistant Commissioner of the State Tax (4), Enforcement Division -5, Vadodara. He has contended that exercise of power for ordering the provisional attachment must be preceded by 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 . He further submitted that while exercising such power of provisional attachment of the properties of the taxable person including bank account, demat account is draconian in the nature and such condition of forming opinion by the Commissioner should be strictly adhered to before passing order of provisional attachment. Mr. Sheth therefore argued that upon bare reading of the subjective satisfaction recorded by the Assistant Commissioner of State Tax (4), Enforcement Division -5, Vadodara, is without any base of tangible material and therefore, the action of the respondent authority of provisional attachment of the properties of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts so seized and has offered to retain the same in its original form. 7. On the other hand, Mr. Utkarsh Sharma, the learned AGP appearing for the respondent authorities has vehemently objected to grant to any of the reliefs so sought for by the writ applicants. Attention of this Court was drawn to the affidavit-in-reply filed by one Jaydipkumar Gadhavi, Assistant Commissioner of State Tax, Enforcement, Division -5 Vadodara and has contended that the writ applicants seems to be engaged in bogus billing by entering into purchase transaction with 15 fictitious firms which upon investigation are either found non-existent at the business place or the owners are not traceable and the firms are in the name of the persons of no means and the owners are not aware of such alleged business activities. Learned AGP has further referred to list of such 15 fictitious firms and has submitted that prima facie the investigation so far undertaken reveals that the writ applicants have wrongly availed the input tax credit worth ₹ 4,73,39,338/- which has ultimately resulted into tax evasion and as on date the total evasion of tax including penalty and interest comes to ₹ 10,76,61,243/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndency of any proceeding under section 62 or section 63 or section 64 or section 67 or section 73 or section 74 of the Act. 2. Doubts have been raised by the field formations on various issues pertaining to provisional attachment of property under the provisions of section 83 of the Act read with rule 159 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST Rules ). Besides, in a number of cases, Hon'ble Courts have also made observations on the modalities of implementation of provisions of section 83 of the Act by the tax officers. In view of the same, the following guidelines are hereby issued with respect to the exercise of power under section 83 of the Act. 3.1 Grounds for provisional attachment of property 3.1.1 Section 83 of the Act is reproduced hereunder. 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 order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld, thereafter, pass an order in FORM GST DRC-22 with proper Document Identification Number (DIN) mentioning therein the details of property being attached. 3.2.2 A copy of the order of attachment should be sent to the concerned Revenue Authority or Transport Authority or Bank or the relevant Authority to place encumbrance on the said movable or immovable property. The property, thus attached, shall be removed only on the written instructions from the Commissioner. 3.2.3 A copy of such attachment order shall be provided to the said taxable person as early as possible so that objections, if any, to the said attachment can be made by the taxable person within the time period prescribed under rule 159 of the CGST Rules. If such objection is filed by the taxable person, Commissioner should provide an opportunity of being heard to the person filing the objection. After considering the facts presented by the person in his written objection as well as during the personal hearing, if any, the Commissioner should form a reasoned view whether the property is still required to be continued to be attached or not, and pass an order in writing to this effect. In case, the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c facts of the case: Where taxable person has: a. supplied any goods or services or both without issue of any invoice, in violation of the provisions of the Act or the rules made there under, with an intention to evade tax; or b. issued any invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made there under; or c. availed input tax credit using the invoice or bill referred to in clause (b) or fraudulently availed input tax credit without any invoice or bill, or d. collected any amount as tax but has failed to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; or e. fraudulently obtained refund; or f. passed on input tax credit fraudulently to the recipients but has not paid the commensurate tax 3.3.2 The above list is illustrative only and not exhaustive. The Commissioner, may examine the specific facts of the case and take a reasoned view in the matter. 3.4 Types of property that can be attached 3.4.1 It should be ensured that the value of property attached provisionally is not excessive. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty is resorted to protect the interests of the revenue and may also affect the working capital of the taxable person, it may be endeavored that in all such cases, the investigation and adjudication are completed at the earliest, well within the period of attachment, so that the due liability of tax as well as interest, penalty etc. arising upon adjudication can be recovered from the said taxable person and the purpose of attachment is achieved. 3.7 Share in property Where the property to be provisionally attached consists of the share or interest of the concerned taxable person in property belonging to him and another as co-owners, the provisional attachment shall be made by order to the concerned person prohibiting him from transferring the share or interest or charging it in any way. 3.8 Property exempt from attachment All such property as is by the Code of Civil Procedure, 1908 (5 of 1908), exempted from attachment and sale for execution of a Decree of a Civil Court shall be exempt from provisional attachment 4. It may be noted that an amendment to section 83 has been proposed in Finance Bill 2021. However, such proposed amendment shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue. 3.4.5 As far as possible, it should also be ensured that such attachment does not hamper normal business activities of the taxable person. This would mean that raw materials and inputs required for production or finished goods should not normally be attached by the Department . 10. Apart from the aforesaid guidelines, the above stated decision in the case of Valerius Industries ( supra), has been recognized in the recent pronouncement of the Supreme Court in the case of Radhe Krishan Industries vs. state of H.P. reported in (2021) 6 SCC 771 and has in detail has dealt with similar provision on statute book of Himachal Pradesh Goods and Service Tax act, 2017. The Supreme Court set aside the judgment passed by the Himachal Pradesh High Court and the orders of provisional attachment passed by the Joint commissioner. The Supreme Court held that, 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. The summary of findings recorded by the Supreme Court reads as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07(6) and Section 107(7) of the HPGST Act will come into operation in regard to the payment of the tax and stay on the recovery of the balance as stipulated in those provisions, pending the disposal of the appeal. 11. In the facts of the case, undisputedly, the respondent no.2 has not only provisionally attached the stock of goods lying at the factory premise of the writ applicants, at the same time, the respondent No.2 has also provisionally attached the demat account and current account of the writ applicants. These are the valuable assets of the writ applicants, more particularly, raw material and the finished goods are valuables which are otherwise necessary for running of the business of the applicants. Even operating the demat account and current account are essentially required for the routine business of the writ applicants. Time and again, this Court as well as even the instructions instructions issued by the higher authority of the respondents, has directed the proper officer to ensure that their action of the provisional attachment should not hamper normal business activities of the taxable person. Even thereafter this Court vide judgment dated 27.01.2022 passed i ..... 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