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TMI Blog2023 (2) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... lar of CBEC on 23.02.2021 also make it amply clear that the remedy of attachment being by itself very extra ordinary needs to be resorted to with at most circumspection and maximum care and caution, which in the instant case appear to have been missing and hence, that order needs to be quashed and set aside - At the same time being aware of the inquiry which has been made against M/s. Arsh Enterprise and the purchase having been made by the present petitioner in 2018-19 from M/s. Arsh Enterprise for the goods worth Rs.37,21,420/-.However, striking the balance in wake of the details which have come on record of M/s. Arsh Enterprise it would be apt to release the Bank account by directing the Bank to not permit the petitioner to operate so far as the tax amount of Rs.3,95,568/- for the year 2018- 19 and tax amount of Rs.1,72,104/- for the year 2019-20. The amount of tax amount of Rs.3,95,568/- for the year 2018-19 and tax amount of Rs.1,72,104/- for the year 2019- 20 which the Bank is directed not to part with, let the said amount be parted once there is a direction subject to the crystallization of this liability of the petitioner and subject to the order of the Appellate Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the request of adjournment was made on 11.01.2022. 2.6 A detailed letter was addressed to the respondent No.2 as no new date was given on 11.02.2022 submitting all documents. The petitioner again served with a letter from respondent No.2 being the letter dated 10.03.2022 calling upon the petitioner to submit details of freehold immovable property, property card, index copy, etc. The respondent failed to indicate any live link with the document sought as well as with the inquiry which the summons under section 70 of the Act was issued. 2.7 It is averred by the petitioner that respondent No.2 had taken extreme coercive steps, whereby his entire business came to a grinding halt by attaching the Bank account without any pending proceedings. With communication on 18.05.2022, FORM GST DRC-22 was issued on the Bank under section 83 of the Act. 2.8 On 21.05.2022, request was made by the petitioner to the respondent No.2 to release the Bank account, however, till date the Bank account is not released and hence, this petition with the following prayers: 7 (A) YOUR LORDSHIPS may be pleased to admit and allow this petition. (B) YOUR LORDSHIPS may kindly be pleased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s noticed that M/s. Arsh Enterprise had wrongly availed and utilized the Input Tax Credit amounting to Rs.6,03,77,363/-. 4.4 M/s. Arsh Enterprise being the supplier of goods to the petitioner and since it was found to have availed the Input Tax Credit wrongly without any actual supply of goods and the registration also has been cancelled by means of fraud and by willful misstatement. The respondent authority issued a summons under section 70(1) of the Act intimating the proprietor of petitioner firm to give a statement on 04.01.2022 and produce the sale and purchase registers along with purchase invoices from effective date of GST registration. 4.5 M/s. Arsh Enterprise did not possess any godown/warehouse to restore the goods. The proprietor of the firm remained present and gave a statement on 23.02.2022 that he was not ready to pay any amount of tax along with interest and penalty arising out of the tax activities with M/s. Arsh Enterprise. 4.6 On 10.03.2022, a communication was issued upon the proprietor of the petitioner firm to give the details regarding the freeholds property of the firm and to attach the same under section 83 of the Act in order to protect the Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been issued after about six to seven months period. The officer concerned is also conscious of the Circular No. CBEC-20/16/05/2021-GST/359. 7. Having thus heard the learned advocates on both the sides and having also perused the material on the record, it clearly appears that there had been a cancellation of registration of M/s. Arsh Enterprise. M/s. Arsh Enterprise is found to be receiving bogus bills and invoices without actual supply of goods. It did not have the godown/warehouse to store the goods. The officer was, therefore, of the prima facei opinion that the company was involved in availing and utilizing the Input Tax Credit without there being any actual supply of goods from the supplier. The petitioner company since did not have any freehold property and there was nothing, it could have offered pursuant to the summons issued by the respondent authorities, it had chosen to provisionally attache the Bank account for protecting the interest of revenue. 8. Undoubtedly, the powers exercise under section 83 of the Act are serious and harsh in nature. This Court in Special Civil Application No.2787 of 2022 in case of Arya Metacast (supra) had an occasion to deal with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uidelines 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 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). 3.1.2 Perusal of the above provision of the law suggests that the followings grounds must exist for resorting to provisional attachment of property under the provisions of section 83 of the Act. (i) There must be pendency of a proceeding against a taxable person under the sections mentioned in sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chment 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 Commissioner is satisfied that the property was or is no longer liable for attachment, he may release such property by issuing an order in FORM GST DRC-23. 3.2.4 Even in cases where objection is not filed within the time prescribed under Rule 159(5) of CGST Rules, the Commissioner may take the grounds mentioned in the said objection/representation on record and pass a reasoned order. Where the Commissioner is satisfied that the property was or is no longer liable for attachment, he may release such property by issuing an order in FORM GST DRC-23. 3.2.5 Each such provisional attachment shall cease to have effect after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 provisional attachment of property shall be to the extent it is required to protect the interest of revenue, that is to say, the value of attached property should be as near as possible to the estimated amount of pending revenue against such person, 3.4.2 More than one property may be attached in case value of one property is not sufficient to cover the estimated amount of pending revenue against such person. Further, different properties of the taxpayer can be attached at different points of time subject to the conditions specified in section 83 of the Act. 3.4.3 It may be noted that the provisional attachment can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, 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 shall come into effect only from a date to be notified in future. The present guidelines, which are based on the existing provisions of section 83 of the Act, shall stand modified according to the amended provisions of section 83, once the said amendment comes into effect. 5. Difficulty, if any, in the implementation of the above guidelines may please be brought to the notice of the Board. Sd/- (Sanjay Mangal) Commissioner (GST) 9. On bare reading of the contents of the aforesaid instructions, we find that the respondent no.2, inspite of repeated reminder by this Court in various decisions has once again overlooked the aforesaid gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 : The Hon ble HP High Court has erred in dismissing the writ petition on the ground that it was not maintainable; 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 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 Commissioner must for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 in Special Civil Application No.188 of 2022 in the case of M/s. Utkarsh Ispat LLP Vs. State of Gujarat had an occasion to deal with the similar facts whereby the respondent authorities have provisionally attached goods, stock and receivables and also bank accounts. This Court did not approve the provisional attachment of the goods, stock and receivables, more particularly, when the entire stock and receivables have been pledged and a floating charge has been created in favour of the Kalupur Commercial Bank Limited for the purpose of availing the cash credit facility with the provisional attachment of the goods, stock and receivables the entire business will come to a standstil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage, which provides for the provisional attachment to protect the revenue in certain cases. 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 order in writing attach provisionally any Property, including bank account, belonging to the taxable person in such manner as may be prescribed. 9.3 The powers are given to the Commissioner, when it is of the opinion that for protecting the interest of the Government Revenue, there is a need for attaching provisionally the property including the Bank account belonging to the taxable person. However, this being a very harsh powers, the recourse is to be made sporadically and consciously for which the detailed guidelines have been issued by the CBEC itself and the same has already been considered by this Court in case of Arya Metacast Pvt. Ltd. (supra). The Court having noticed that the provisional attachment of the property of taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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