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TMI Blog2025 (2) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... with the said Bank. The order then proceeds to state that provisional attachment is necessary for the purpose of protecting the interest of the revenue, i.e., a mere reproduction of Section 83 of the Act. It appears that the respondent was under the misconception that inititiation of proceedings under Chapter XII,XIV and XV of the Act, by itself would enable or rather warrant exercise of power under Section 83 of the Act. The impugned proceeding does not show application of mind by the respondent to the existence or otherwise, of the existence of the above jurisdictional elements/aspects, thereby vitiating the impugned proceeding. Section 83 of the Act is designed to provide for dealing with situations where it could brook no delay and immediacy of action is necessary to protect the interest of the revenue. In view of the above legislative intent and object, Section 83 of the Act, does not provide for pre-decisional hearing which is normally in compliance with natural justice but instead only provides for a post decisional hearing. It may be relevant to clarify that it is now judicially acknowledged that the necessity for speed may call for immediate action and the need for pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CGST Act, 2017 vide FORM GST DRC-22 dated 13.02.2024, on the premise that it suffers from manifest arbitrariness and in excess of the respondent's jurisdiction under Section 83 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the Act" or "the CGST Act"). 2. Brief Facts: 2.1. The petitioner is a proprietary concern. The petitioner is engaged in trading of Gold Bullion and Gold Jewellery. The petitioner has been in the above business since 2008. It is submitted by the petitioner that bullion was predominantly procured from M/s.LABH, Ahmedabad and a few other suppliers including M/s.SS Bullion, Chennai, M/s.Shiv Sahay Bullion, Chennai. The sales of such bullion was made primarily to M/s.Silver CZ Jewellers, Chennai, M/s.Vijay Bullion, M/s. Suresh Jewellery. The petitioner is registered as a taxable person under the GST Act. It is submitted that the petitioner had filed its returns and paid appropriate taxes under the GST Act. 2.2. While so, on 26.06.2023 the Senior Intelligence Officer, Directorate General of Goods and Service Tax, Intelligence (DGGI), attached to the 1st respondent issued summons to the petitioner under Section 70 of the CGST Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnan Industries reported in 2021 (6) SCC 771. d) The impugned order insofar as it fails to assign reasons in the order of attachment renders nugatory the opportunity of hearing mandated under Rule 159(5) of the CGST Rules, inasmuch as in the absence of reasons being disclosed, the petitioner would not even be aware of the case that he has to meet thereby rendering the opportunity if any illusory. e) The petitioner had vide letters dated 24.05.2024, 31.05.2024, 03.06.2024 and 07.06.2024, made repeated requests for lifting the provisional attachment, while also setting out the legal infirmities in the impugned proceedings, the respondent had failed to even consider the same thereby vitiating the impugned order of attachment under Section 83 of the Act, on the ground of non application of mind to material on record. 4. Case of the Respondent : a) On the basis of intelligence gathered by the office of DGGI, the respondents were prima facie of the view that petitioner was involved in clandestine removal of Gold Bullion without raising invoices and was involved in availment of ITC without actual receipt of goods. The petitioner had admitted to the clandestine removal and fraudulen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 83 of the Act was considered in Radha Krishan Industries v. State of H.P., reported in (2021) 6 SCC 771. The Apex Court found that Section 83 of the Act can be divided into 5 parts, the relevant portions in the judgment is extracted hereunder: "(i) The power to order a provisional attachment is entrusted during the pendency of proceedings under any one of six specified provisions: Sections 62, 63, 64, 67, 73 or 74. In other words, it is when a proceeding under any of these provisions is pending that a provisional attachment can be ordered. (ii) The power to order a provisional attachment has been vested by the legislature in the Commissioner. (iii) Before exercising the power, the Commissioner must be "of the opinion that for the purpose of protecting the interest of the government revenue, it is necessary so to do". (iv) The order for attachment must be in writing. (v) The provisional attachment which is contemplated is of any property including a bank account belonging to the taxable person. (vi) The manner in which a provisional attachment is levied must be specified in the rules made pursuant to the provisions of the statute." 7.1. The Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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." 7.2. The Supreme Court then proceeded to explain that the power under Section 83 of the Act, ought to be exercised as a last resort on finding that the above measure "is necessary so to do" and that is the only measure by which the interest of the revenue can be protected. The following observations are relevant in this regard: "50. By utilising the expression "it is necessary so to do" the legislature has evinced an intent that an attachment is authorised 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 requirement than a mere expediency. A provisional attachment under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopen an assessment must be conditioned on the existence of "tangible material" and that "reasons must have a live link with the formation of the belief". This principle was followed subsequently in a two- Judge Bench decision in CIT v. Techspan (India) (P) Ltd. [CIT v. Techspan (India) (P) Ltd., (2018) 6 SCC 685] While adverting to these decisions we have noticed that Section 83 of the HPGST Act uses the expression "opinion" as distinguished from "reasons to believe". However for the reasons that we have indicated earlier we are clearly of the view that the formation of the opinion must be based on tangible material which indicates a live link to the necessity to order a provisional attachment to protect the interest of the government revenue." ... 76.5. 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 form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, Special Civil Application No. 13132 of 2019, decided on 28th August, 2019, wherein this Court drew the following conclusion: "[1] 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 and also should be supported by supervening factor. 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. [2] 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) ................... (4) ..................... [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 atta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner, who passed the order under Section 83 of the Act. 30. The Commissioner in the impugned order under Section 83, merely says, in order to protect the interest of the Revenue and in exercise of the powers conferred under Section 83 of the TNGST Act, I Thiru.K.Phanindra Reddy, I.A.S, Additional Chief Secretary / Commissioner of State Taxes, Chennai - 600 005 hereby provisionally attach the aforesaid account. 31. On what basis, the Commissioner has decided to invoke Section 83 to go for a provisional attachment before which, whether the Commissioner has formed an opinion to do so, before forming such opinion, what are all the tangible material available before him or placed before him, so as to enable him to form such an opinion, all these aspects have not been even indicated in the order of provisional attachment. 32. This kind of exercise of power under Section 83, which, in the words of the Hon'ble Supreme Court, is a draconian one, cannot be approved as it does not meet the requirement of fair play and strict adherence of the provisions of the Act as interpreted by the Hon'ble Supreme Court in the judgment cited supra in Radhakrishnan case. 33. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 107(1). ..... 76.3. The High Court has erred in dismissing the writ petition on the ground that it was not maintainable. 76.4. 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. ..... 76.6. The expression "necessary so to do for protecting the government revenue" implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment. 76.7. The formation of an opinion by the Commissioner under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government revenue. 76.8. In the facts of the present case, there was a clear nonapplication of mind by the Joint Commissioner to the provisions of Section 83, rendering the provisional attachment illegal. 76.9. Under the provisions of Rule 159(5), the person whose property is attached is entitled to dual procedural safeguards: (a) An entitlement to submit objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by High Courts referred supra, leaves no room for any doubt that the order of provisional attachment under Section 83 of the Act must be on formation of opinion on the basis of tangible material that the provisional attachment is necessary for the purpose of protecting the interest of the revenue. Importantly, the same is a jurisdictional fact, in the absence of which the exercise would stand vitiated. Secondly, the proceedings must diclose the reasons which led to the formation of opinion that the provisional attachment is necessary for the purpose of protecting the interest of the revenue. 7.10. From a reading of the impugned order under Section 83 of the Act, this court is of the view that the impugned proceeding under Section 83 of the Act, does not disclose any tangible material which led to the formation of opinon that the provisional attachment is necessary for the purpose of protecting the interest of the revenue. The impugned order merely states that proceedings are initiated under Section 67 of the Act to determine the libaility of the petitioner. The only information it refers to is with reference to the account held by the petitioner with the said Bank. The order then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the relevance and importance of existence of jurisdictional facts and an application of mind as to its existence by the authority concerned before assuming jurisdiction. a. Shrisht Dhawan (Smt) v. Shaw Bros., reported in (1992) 1 SCC 534 : "19. ..................... What, then, is an error in respect of jurisdictional fact? A jurisdictional fact is one on existence or nonexistence of which depends assumption or refusal to assume jurisdiction by a court, tribunal or an authority. In Black's Legal Dictionary it is explained as a fact which must exist before a court can properly assume jurisdiction of a particular case. Mistake of fact in relation to jurisdiction is an error of jurisdictional fact. No statutory authority or tribunal can assume jurisdiction in respect of subject matter which the statute does not confer on it and if by deciding erroneously the fact on which jurisdiction depends the court or tribunal exercises the jurisdiction then the order is vitiated. Error of jurisdictional fact renders the order ultra vires and bad. [Wade, Administrative Law] In Raza Textiles [Raza Textiles Ltd. v. ITO, (1973) 1 SCC 633 : 1973 SCC (Tax) 327 : AIR 1973 SC 1362] it was held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow the mind is applied to the subject-matter for a decision whether it is purely administrative or quasi-judicial and reveal a rational nexus between the facts considered and conclusions reached. Reasons being harbinger between the mind of the maker of the order to the controversy in question and the decision or conclusion arrived at, it excludes the chances to reach arbitrary, whimsical or capricious decision or conclusion. The reasons assure an inbuilt support to the conclusion and decision reached. The requirement of giving reasons is based on sound principles. Exercise of power without disclosing reasons leave the party in the dark on the reasons which led the authority to initiating a proceeding. More important, permitting action without reasons is an open invitation to arbitrary action. Reasons must not be accompanied by obscure and unsatisfactory reasons. The need to give reasons cannot be discharged by the use of vague general words. What the decision-making authority must do is to state his reasons in sufficient detail to enable the reader to know the reasons which prompted the exercise of power. The extent and substance of the reasons must depend upon the circumstances. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tting out the reasons inasmuch as Form DRC 22 and the Portal does not enable the authority from setting out reason as there were restricitions in terms of space / number of characters that could be uploaded/filled in DRC 22. Having come to a conclusion that giving of reason is essential while making provisional attachment under Section 83 of the Act, the submission of the respondent, of deficiency either in Form DRC 22 or the portal for not supplying reason in the proceeding provisionally attaching the property under Section 83 of the Act cannot be a justification. I say so, for the cardinal principle of 'giving reason' as condition for decision-making cannot be martyred for the cause of immediacy nor inadequacy of provision in the form / portal to enabling disclosure of reasons. In any view, if the contention of the respondent were to be accepted, nevertheless, nothing prevented the respondent from serving the notice containing reasons by other modes provided under Section 169 of the Act, such as tendering, sending by post etc. Thus the impugned proceedings stands vitiated for not furnishing reasons which led to the formation of opinion that the provisonal attachment is ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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