1 6 WP 3145-2019 Or-Ord.e.doc Sequeira IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3145 OF 2019 Kaish Impex Private Limited (Through its Director Deepak Kumar Goyal), 201, 2nd floor, Makers Chamber-5, Nariman Point, Mumbai, Maharashtra 400 021 .. Petitioner Versus 1. Union of India, through Secretary, Department of Legal Affairs, Ministry of Law & Justice, Branch Secretariat, Aaykar Bhavan, Marine Lines, Mumbai. 2. Principal Chief Commissioner CGST & Central Excise, 115, New Central Excise Bldg., M.K.Road, Churchgate, Mumbai. 3. Assistant Commissioner of CGST Range (IV), 110, Ganges Ink, Building, L.B.S.Marg, Vikhroli (West), Mumbai- 400 083. 4. Additional Director General, Directorate General of GST Intelligence, Bhopal Zonal Unit, 4th Floor, ChinarrIncube Business Centre, Hoshangabad Road, Bhopal .. Respondents 2 6 WP 3145-2019 Or-Ord.e.doc Ms.Anjali Jha Manish a/w Mr.Priyadarshi Manish a/w Mr.Sagar Kasar, for Petitioner. Mr.Pradeep S.Jetly a/w Mr.J.B.Mishra, for Respondents. CORAM : NITIN JAMDAR & M.S.KARNIK , JJ. Date : 17 January 2020. Oral Judgment : (Per Nitin Jamdar, J.) Rule. Rule made returnable forthwith. Respondents waive service. Taken up for final disposal. 2. Petitioner has challenged action of authorities under Central Goods and Service Tax, Mumbai of attaching Petitioner s bank account in State Bank of India. 3. Petitioner-Kaish Impex Private Limited is Company incorporated under Companies Act, 1956. Petitioner Company is engaged in export of perfumes and compound fragrance oil. Petitioner is registered under Goods and Service Tax Act, 2017 ( Act ). Petitioner, in pursuant of its activity of export, had carried out various transactions with different entities. 4. Respondent-Authorities under Act initiated 3 6 WP 3145-2019 Or-Ord.e.doc inquiry against export firm in Delhi - M/s.Maps Global. Respondent-authorities suspected that M/s.Maps Global was involved in fraudulent availing of Input Tax Credit, and this Input Tax Credit was utilised for payment of export goods, and later refund was sought. Respondent-authorities scrutinized bank account of M/s.Maps Global and noticed that amount of Rs.28,50,000/- was transferred to one M/s.Balajee Enterprises, on 19 June 2019 and 12 July 2019. Respondent-authorities suspected these transactions were fictitious and no material was supplied to M/s.Maps Global. Further, according to Respondent-authorities M/s.Balajee Enterprises transferred amount of Rs.1,63,00,000/- to account of Petitioner on 17 October 2019. 5. Directorate General of GST Intelligence issued summons to Petitioner on 22 October 2019 to attend on 5 November 2019, referring to inquiry against M/s.Maps Global. summons stated that authorities had reason to believe that Petitioner had facts and documents material for inquiry. Petitioner was summoned under section 70 of CGST Act to give evidence and produce documents in office of Directorate General of GST Intelligence. On same day, Directorate General issued communication to State Bank of India informing Bank Manager of proceedings being initiated against Petitioner and provisional attachment of bank account is necessary under section 83 of CGST Act. Accordingly, Bank Manager 4 6 WP 3145-2019 Or-Ord.e.doc was directed that no debit be allowed to be made from said account or any other account operated by Petitioner. Petitioner received communication from State Bank of India on 5 November 2019 regarding attachment by Respondent- Authorities. Challenging this action of attachment under Section 83 of Act, Petitioner has moved present Petition. 6. We have heard Ms.Anjali Jha Manish, learned Counsel appearing for Petitioner and Mr.Pradeep Jetly, learned Counsel for Respondents. 7. Ms. Manish, learned Counsel for Petitioner contended as follows. action of Respondent-authorities is beyond power conferred under section 83 of Act. Only if all parameters laid down in this Section are satisfied that action of attaching bank account can be taken. contingencies in which order of provisional attachment can be made are enumerated in section 83 namely, pendency of proceedings under section 62, 63, 64, 67, 73 and 74 of Act. No proceedings have been initiated or pending against Petitioner under these Sections. Only summons under section 70 of Act was issued to Petitioner. Section 70 is not referred to in section 83 of Act. action of provisional attachment is regulated under Rule 159(1) of CGST Rules and format provided for issuance of such notice. Assuming for sake of argument if proceedings are initiated against 5 6 WP 3145-2019 Or-Ord.e.doc M/s.Maps Global under these sections, provisional attachment can be of bank accounts of M/s.Maps Global, and not of Petitioner. Even according to Respondents, amount transferred by M/s.Maps Global to M/s.Balajee Enterprises was on 12 June 2019 and 19 June 2019 and if it was allegedly transferred by M/s.Balajee Enterprises to Petitioner on 17 October 2019, then during this period M/s.Balajee Enterprises could have entered into various other transactions. statements made by Petitioner have been corroborated by M/s.Balajee Enterprises. Accordingly to it is prayed that impugned order be quashed. 8. Mr.Jetly opposing Petition submitted as follows. power of provisional attachment is conferred to protect interests of Revenue, and this was fit case where this power had to be exercised. Investigation is in progress. Money trail is traced from M/s.Maps Global to Petitioner and inquiry is underway. Action is taken against M/s.Maps Global under section 67 which referred to under section 83 of Act. language of section 83 indicates that during pendency of any proceedings (in this case under section 67 of Act) if summons is issued under section 70 to further inquiry to other taxable persons provisional attachment of bank account of other taxable persons also is permissible and contemplated. He submitted that thus Petition be dismissed. 9. Under scheme of Act, levy and collection of tax are 6 6 WP 3145-2019 Or-Ord.e.doc provided for in Chapter III, Assessment is under Chapter XII and Inspection, Search, Seizure and Arrest are dealt with under Chapter XIV. Chapter XV which deals with Demand and Recovery. This chapter provides for provisional attachment under section 83. Section 83, under which power is exercised reads thus :- Provisional attachment to protect revenue in certain cases. (1) Where during pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, Commissioner is of opinion that to protect interest of Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to taxable person in such manner as may be prescribed'. Therefore, during pendency of any proceedings under section 62, 63, 64, 67, 73 and 74, Commissioner can provisionally attach any property including bank account belonging to taxable person. For this purpose Commissioner has to form opinion that it is necessary to do so for protecting interest of government Revenue. These steps have to be taken in such manner as prescribed. Rule 159(1) of CGST Rules, 2017 deals with provisional attachment of property. This Rule reads thus :- (1) Where Commissioner decides to attach any property, including bank account in accordance with provisions of section 83, he shall pass order in FORM GST DRC-22 to that effect mentioning therein, details of property which is attached. 7 6 WP 3145-2019 Or-Ord.e.doc Rule 159(1) states that when Commissioner decides to attach any property including bank account, he shall pass order in form GST DRC-22. Various forms have been appended to GST Rules 2017. Form GST DRC-22 lays down format in which order has to be issued provisionally attaching property and communication thereof to financial institution. form is reproduced hereinbelow for ready reference. FORM GST DRC - 22 [See rule 159(1)] Date: Reference No.: To ------------------Name ___________ Address (Bank/Post Office/Financial Institution/Immovable property registering authority) Provisional attachment of property under section 83 It is to inform that M/s.----------------------- (name) having principal place of business at -------------- (address) bearing registration number as --------------- (GSTIN/ID), PAN ---------- is registered taxable person under <> Act. Proceedings have been launched against aforesaid taxable person under section <<-------- > of said Act to determine tax or any other amount due from said person. As per information available with department, it has come to my notice that said 8 6 WP 3145-2019 Or-Ord.e.doc person has - <> account in your << bank/ post office/ financial institution >> having account no. << A/c no. >>; or property located at << property ID & location >>. In order to protect interests of revenue and in exercise of powers conferred under section 83 of Act, I ---------------------- (name)--------------------- (designation), hereby provisionally attach aforesaid account / property. No debit shall be allowed to be made from said account or any other account operated by aforesaid person on same PAN without prior permission of this department. or property mentioned above shall not be allowed to be disposed of without prior permission of this department. Signature Name Designation Copy to - form of order shows that it is to be addressed to taxable person. Sections under which proceedings are launched against such taxable person are to be referred and then direction is 9 6 WP 3145-2019 Or-Ord.e.doc to be issued for not allowing any debit. 10. Section 83 of Act refers to pendency of proceeding under Section 62, 63, 64, 67, 73 and 74. Section 63 deals with assessment of unregistered persons. Section 64 is regarding summary assessment in respect of certain special cases. Section 67 falls in Chapter XIV and refers to power of inspection, search and seizure. Section 73 is in Chapter XV wherein it deals with determination of tax not paid or short paid or erroneously refunded or wrongly availed, utilised for any reason other than fraud or any willful mis-statement made on suppression of facts. Section 70 confers power on proper officer to summon any person whose attendance he considers necessary to give evidence or to produce documents or any other thing in any inquiry. Such inquiry is deemed to be judicial proceeding under Indian Penal Code. 11. order of provisional attachment of Petitioner s bank account is placed on record by Respondents by way of affidavit in reply. It reads as under :- To, Bank Manager, State Bank of India, Alamal House, Jamnalal Bajaj Marg, Nariman Point, Mumbai (MH) 400021. Provisional attachment of property under section 83. 10 6 WP 3145-2019 Or-Ord.e.doc It is to inform that M/s. Kaish Impex Pvt. Ltd. Having principal place of business at 201, 2 nd Floor, MAKER CHAMBER 5, NARIMAN POINT, MUMBAI 400 021 having registration number 27AAGCK9660D1ZC and PAN AAGCK9660D is registered taxable person under SGST/CGST Act. Proceedings have been launched against aforesaid taxable person under section 67 & 70 of said Act to determine tax or any other amount due from said person. As per information available with department, it has come to my notice that said person has current account in your bank having account no.38530527339. In order to protect interests of revenue and in exercise of powers conferred under section 83 of Act, Ajay Kumar Pandey, Additional Director General hereby provisionally attach aforesaid account / property. No debit shall be allowed to be made from said account or any other account operated by aforesaid person on same PAN without prior permission of this department. Further, it is also requested to inform aforementioned Tax Payer about same after debit freezing their bank account. (emphasis supplied) This order refers to Petitioner as registered taxable person. It then refers to proceedings having been launched against Petitioner as aforesaid taxable person under section 67 & 70 of Act. Thereafter authorities have proceeded to issue order. 11 6 WP 3145-2019 Or-Ord.e.doc 12. impugned order dated 22 October 2019 proceeds on assertion that proceedings have been launched against Petitioner under section 67 section 70 of Act. As far as section 67, i.e. search is concerned, it is uncontroverted position that no proceedings have been initiated against Petitioner under section 67 of Act. On date of provisional attachment of bank account, only summons under of Act was issued to Petitioner. Section 70 is not mentioned in Section 83 of Act. No proceedings were pending against Petitioner under section 62, 63, 64, 73 and 74 of Act. Thus Petitioner contends that power under section 83 could not have been invoked against Petitioner. 13. Primary defence of Respondents is that even if section 62, 63, 64, 67, 73 and 74 mentioned in section 83 of Act are not referable to case of Petitioner, since summons is issued to Petitioner in pursuant to inquiry initiated against M/s.Maps Global under section 67 of Act, by issuance of summons proceedings get extended to Petitioner also. 14. analysis of section 83 of Act will show that such interpretation is not permissible and not contemplated by legislature. Section 83 read with Rule 159(1), and form GST DRC-22, lay down scheme as to how provisional attachment in certain cases is to be levied. Section 83 though uses phrase 12 6 WP 3145-2019 Or-Ord.e.doc pendency of any proceedings , proceedings are referable to section 62, 63, 64, 67, 73 and 74 of Act and none other. bank account of taxable person can be attached against whom proceedings under sections mentioned above are initiated. Section 83 does not provide for automatic extension to any other taxable person from inquiry specifically launched against taxable person under these provisions. Section 83 read with section 159(2), and form GST DRC-22 show that proceeding has to be initiated against specific taxable person, opinion has to be formed that to protect interest of Revenue order of provisional attachment is necessary. format of order, i.e. form GST DRC-22 also specifies particulars of registered taxable person and which proceedings have been launched against aforesaid taxable person indicating nexus between proceedings to be initiated against taxable person and provisional attachment of bank account of such taxable person. 15. Power to provisionally attach bank accounts is drastic power. Considering consequences that ensue from provisional attachment of bank accounts, Courts have repeatedly emphasized that this power is not to be routinely exercised. Under Section 83, legislature has no doubt conferred power on authorities to provisionally attach bank accounts to safeguard government revenue, but same is within well-defined ambit. Only upon contingencies provided therein that power under section 83 can be exercised. 13 6 WP 3145-2019 Or-Ord.e.doc This power is to be used in only limited circumstances and it is not omnibus power. 16. It is therefore not possible to accept submission of Respondents that even though specified proceedings have been launched against one taxable person, bank account of another taxable person can be provisionally attached merely based on summons issued under section 70 to him. 17. In view of our discussion as above, we hold that order dated 22 October 2019 provisionally attaching bank account of Petitioner was without jurisdiction and is liable to be quashed and set aside. 18. Petitioner also advanced various contentions to demonstrate how Petitioner is not involved in money trail or is not guilty of offences under Act. We do not have to go into that question because of our conclusion of absence of power with Authorities to provisional attach bank account of Petitioner in facts. 19. Petition succeeds. Rule is made absolute in terms of prayer clause Para 21(i), (ii) and (iii) of provisional attachment on bank account specified in prayers clause stands lifted. concerned bank authorities will act upon same. All parties to act 14 6 WP 3145-2019 Or-Ord.e.doc on authenticated copy of order. 20. At this stage, Mr. Jetly, learned Counsel for Respondents prays that this direction is stayed for some period. mandate we have issued will come into effect two weeks after order is uploaded on server of this Court. M.S.KARNIK, J. NITIN JAMDAR, J. Maria Digitally signed by Maria Luiza Luiza Sequeira Date: 2020.01.22 Sequeira 11:07:20 +0530 Kaish Impex Private Limited v. Union of India / Principal Chief Commissioner CGST & Central Excise /Assistant Commissioner of CGST Range (IV) / Additional Director General, Directorate General of GST Intelligence