Amazonite Steel Pvt. Ltd. & Anr. v. Union of India & Ors
[Citation -2020-LL-0304-121]

Citation 2020-LL-0304-121
Appellant Name Amazonite Steel Pvt. Ltd. & Anr.
Respondent Name Union of India & Ors.
Court HIGH COURT OF CALCUTTA
Relevant Act CGST
Date of Order 04/03/2020
Judgment View Judgment
Keyword Tags principal place of business • attachment of bank account • goods and services tax • provisional attachment • immovable property • sufficient cause • attachment order • input tax credit • current account • supply of goods • issue of notice • satisfaction • new material • evade tax • due date • tax due • bail


IN HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction Appellate Side Present: Hon ble Justice Shekhar B. Saraf W. P. No. 18429 (W) of 2019 M/s. Amazonite Steel Pvt. Ltd. & Anr. Versus Union of India & Ors. With W.P. No. 18431 (W) of 2019 M/s. Corandum Impex Pvt. Ltd. & Anr. Versus Union of India & Ors. With W.P. No. 18433 (W) of 2019 M/s. Cuprite Marketing Pvt. Ltd. & Anr. Versus Union of India & Ors. With W. P. No. 21272 (W) of 2019 M/s. Amazonite Steel (P) Ltd. & Anr. Versus Union of India & Ors. With W. P. No. 21273 (W) of 2019 M/s. Corandum Impex Pvt. Ltd. & Anr. Versus Union of India & Ors. With W.P. No. 21274 (W) of 2019 M/s. Cuprite Marketing Pvt. Ltd. & Anr. 2 Versus Union of India & Ors. For Petitioners : Mr. Arijit Chakrabarti Mr. Nilotpal Chowdhury Mr. Prabir Bera For UOI : Mr. Bhaskar Prasad Banerjee Mr. Sujit Mitra For Respondent No. 2. : Mrs. Sanjukta Gupta Mr. Sabnam Basu For Respondent Nos. 3 & 4. : Mr. Vivek Basu Mr. Jaydeb Brahmachari Heard on : 20.11.2019, 27.11.2019, 08.01.2020, 15.01.2020, 22.01.2020, 05.02.2020 & 19.02.2020 Judgment on : 04.03.2020 Shekhar B. Saraf, J.: 1. grievances raised and issues involved in all six writ petitions are common, and accordingly they were heard together and are being decided conjointly. This is application under Article 226 of Constitution of India wherein writ petitioners are aggrieved by orders passed by Directorate General of Goods and Services Tax Intelligence, Kolkata Zonal Unit [hereinafter referred to as DGGI ], to provisionally attach current bank accounts of writ petitioner under Section 83 of Central Goods and Services Tax Act, 2017. 3 2. For purpose of convenience, facts in writ petition W.P. No. 21272(W) of 2019 are being taken into consideration and are chronologically delineated hereinbelow: a. writ petitioner no. 1 is private limited company duly incorporated under Companies Act, 2013, under name of Amazonite Steels Private Limited [hereinafter referred to as said company ] whereas petitioner no. 2 is director of said company. said company is duly registered under Central Goods and Services Tax Act, 2017 [hereinafter referred to as CGST Act, 2017 ] and West Bengal Goods and Services Tax Act, 2017, having its registration number as 19AAPCA2903C1ZW. b. said company carries on its business transactions through current account registered with M/s. Lakshmi Vilas Bank, New Alipur Branch [hereinafter referred to as said bank ] having account no. 0125360000002129 [hereinafter referred to as said account ]. c. On 5th June, 2018, Additional Director General, Directorate General of Goods & Services Tax Intelligence (hereinafter referred ADGGI ) passed Order to provisionally attach current account of writ petitioner maintained in said bank under 4 Section 83 of CGST Act, 2017, through FORM GST DRC 22 [hereinafter referred to as said first Order ]. said first Order of ADGGI was addressed to Branch Manager of said bank in order to freeze functioning of said account of petitioners. relevant extract of said Order is delineated below: It is to inform that M/s. Amazonite Steels Pvt. Ltd. having principal place of business at 23 MSBK Mitra Road, Baranagar, Kolkata- 700036 bearing GST registration number as 19AAPCA2903C1ZW, PAN- AAPCA2903C is registered taxable entity under CGST Act, 2017. Proceedings have been launched against aforesaid taxable person under Section 67 of said Act to determine tax or any other amount due from said entity. As per information available with department, it has come to my notice that said entity has following bank account at your bank. Name as per Account:- Amazonite Steels Pvt. Ltd. Account No:- 0125360000002129 In order to protect interests of revenue and in exercise of powers conferred under Section 83 of Act, I, Ataur Rahman, Additional Director General, hereby provisionally attach aforesaid account. No debit shall be allowed to be made from said account or any other account operated by aforesaid entity on same PAN without prior permission of this department. d. said bank through letter dated 11th June, 2018, informed writ petitioner about Order passed by ADGGI which directed bank to freeze current account of petitioners. 5 e. After more than year, on 19th July, 2019, said company by way of letter made representation before ADGGI, requesting to de-freeze current account of company which was earlier provisionally attached under Section 83 of CGST Act, 2017. f. petitioner company on 20th July, 2019 informed said bank regarding appointment of new directors in company, which was duly acknowledged by said bank. g. On 31st July, 2019, petitioner company wrote to said bank praying for immediate de-freezing of said account. relevant portion of letter is delineated below: In this connection it is to inform you that although during pendency of any proceedings under Section 67, concerned authority had power to provisionally attach bank account under sub-section (1) of Section 83 of CGST Act, 2017 but under Section 83(2) of CGST Act, 2017, such provisional attachment shall cease to have effect after one year from date of order made under sub-section (1) . letter for provisional attachment was issued by DGGI, GOI on 05-06-2018 and in terms of Section 83(2) period of provisional attachment expired on 05-06-2019. In such circumstances, you are requested to immediately de-freeze said account and allow operation of account forthwith. 6 h. Thereafter, several other representations were made by writ petitioner before said bank as well as ADGGI respectively praying to de-freeze said current account but there was no response to representations by either of parties. i. Being aggrieved and dissatisfied with inaction on part of respondents writ petitioner preferred writ application before this Court bearing W.P. No. 18429(W) of 2019 [hereinafter referred to as earlier writ petition ]. main prayers made by writ petitioner in earlier writ petition are delineated below: (a) Writ in nature of Mandamus directing respondents and/or their men, servants, agents, assigns, etc. to withdraw/ cancel/ rescind order of provisional attachment of Current Account No. 0125360000002129 of petitioner no. 1 company maintained with M/s. Lakshmi Vilas Bank, New Alipur Branch, Kolkata; (b) Writ in nature of Mandamus directing respondents and/or their men, servants, agents, assigns, etc. to forthwith allow petitioners to operate Current Account No. 0125360000002129 of petitioner no. 1 company maintained with M/s. Lakshmi Vilas Bank, New Alipur Branch, Kolkata in terms of Section 83(2) of CGST Act, 2017 j. earlier writ petition which was filed by writ petitioners came up for hearing and co-ordinate bench of this Court passed Order dated 1st October, 2019, directing parties to file affidavits within prescribed time. 7 k. Thereafter, on 31st October, 2019, Principal Additional Director General, Directorate General of Goods & Services Tax Intelligence (hereinafter referred to as PDDGI ) passed fresh provisional order directing said bank to provisionally attach said current account of petitioner. said order was annexed to affidavit-in-opposition filed in earlier writ petition. l. Assailing above fresh order of provisional attachment fresh writ was filed being W.P. 21272 (W) of 2019. 3. facts in W. P. No. 18431 (W) of 2019 and W. P. No. 18433 (W) of 2019 are identical to W. P. No. 18429 (W) of 2019, and accordingly, all these three writ petitions are hereinafter referred to as earlier writ petitions . Furthermore, facts in W.P. 21274 (W) of 2019 and W.P. 21273 (W) of 2019 are identical to W.P. 21272(W) of 2019, and accordingly, all these three writ petitions are hereinafter referred to as present writ petitions . legal issues which need to be addressed in above writ petitions are as follows: A. Whether Principal Additional Director General, DGGI and Additional Director General, DGGI are competent to pass orders under Section 83 of CGST Act, 2017? B. Whether order passed under Section 83 of CGST Act, 2017, remains valid after expiry of one year from date of order? 8 C. Whether authorities can issue fresh order of provisional attachment/multiple orders under Section 83 of CGST Act, 2017? Issue A: 4. In relation to first issue, Mr. Arijit Chakrabarti, counsel on behalf of petitioner submitted that Section 83 of CGST Act, 2017 read with Rule 159 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as CGST Rules, 2017 ) only empowers Commissioner to attach any property including bank account provisionally for purpose of protecting interest of Revenue. He placed Section 2(24) of CGST Act, 2017 to indicate that Commissioner means Commissioner of Central Tax and includes Principal Commissioner of Central Tax appointed under Section 3 and Commissioner of Integrated Tax appointed under Integrated Goods and Service Tax Act, 2017. Ergo, he submitted that Principal Additional Director General and Additional Director General are not Commissioner of Central Tax or Principal Commissioner of Central Tax or Commissioner of Integrated Goods & Service Tax . Hence, power vested under Section 83 of CGST Act, 2017 cannot be exercised by respondent no. 2 and 3 herein. 5. Mrs. Sanjuka Gupta, counsel on behalf of respondent authorities (hereinafter referred to as Revenue ) placed Section 2(24), Section 3(c), 9 Section 3(d) and Section 5(2) to submit that Section 3(c) and 3(d) make it clear that Principal Commissioner of Central Tax and Commissioner of Central Tax are equivalent to Principal Additional Directors General of Central Tax and Additional Directors General of Central Tax . She further submitted that Section 5(2) allows officer of central tax to exercise powers and discharge duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him. She submitted that definition of Commissioner in Section 2(24) has to be read in conjunction with Section 3. In light of same, she submitted that orders passed by respondent nos. 2 and 3 are absolutely legal and within scope of officers who have passed these orders. 6. For better understanding of issue, Section 2(24), Section 3 and Section 5 of CGST Act, 2017 are delineated below:- Section 2 (24):- Commissioner means Commissioner of central tax and includes Principal Commissioner of central tax appointed under section 3 and Commissioner of integrated tax appointed under Integrated Goods and Services Tax Act; Section 3:- Officers under this Act:- Government shall, by notification, appoint following classes of officers for purposes of this Act, namely:- (a) Principal Chief Commissioners of Central Tax or Principal Directors General of Central Tax, 10 (b) Chief Commissioners of Central Tax or Directors General of Central Tax, (c) Principal Commissioners of Central Tax or Principal Additional Directors General of Central Tax, (d) Commissioners of Central Tax or Additional Directors General of Central Tax, (e) Additional Commissioners of Central Tax or Additional Directors of Central Tax, (f) Joint Commissioners of Central Tax or Joint Directors of Central Tax, (g) Deputy Commissioners of Central Tax or Deputy Directors of Central Tax, (h) Assistant Commissioners of Central Tax or Assistant Directors of Central Tax, and (i) any other class of officers as it may deem fit: Provided that officers appointed under Central Excise Act, 1944 (1 of 1944) shall be deemed to be officers appointed under provisions of this Act. Section 5:- Powers of officers 11 (1) Subject to such conditions and limitations as Board may impose, officer of central tax may exercise powers and discharge duties conferred or imposed on him under this Act. (2) officer of central tax may exercise powers and discharge duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him. (3) commissioner may, subject to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other officer who is subordinate to him. (4) Notwithstanding anything contained in this section, Appellate Authority shall not exercise powers and discharge duties conferred or imposed on any other officer of central tax. 7. On bare perusal of CGST Act, 2017, it is absolutely clear that Section 3 equates Principal Commissioner of Central Tax as Principal Additional Director of Central Tax and Commissioner of Central Tax as Additional Director General of Central Tax . One need not quibble with wording as meaning is plain and unambiguous. Furthermore, fresh orders of provisional attachment has been passed by Principal Additional Director of Central Tax who is superior officer and therefore, as per Section 5(2) of CGST Act, 2017 she possesses power to pass provisional attachment orders under Section 83. Hence, first issue is answered in favour of Revenue. Issue B: 12 8. Mr. Arijit Chakrabarti learned counsel appearing on behalf of petitioner company submitted in relation to earlier writ petitions that writ petitioners are aggrieved by illegal and highhanded actions on part of respondent authorities. He submitted that current accounts that were used by petitioner companies for its daily business transactions was provisionally attached by order dated 5th June, 2018, and ceased to have any effect after one year according to Section 83(2) of CGST Act, 2017. 9. Mr. Chakrabarti further argued that various representations were made to respondent authorities praying before them to defreeze said accounts of petitioners but to no avail. He further submits that fresh orders dated 31st October, 2019, passed by respondent no. 3 was not even served personally upon petitioner, in fact, it was annexed along with Affidavit-in-Opposition filed by respondent No. 3 in earlier writ petitions. 10. Counsel on behalf of respondent submitted that non issue of fresh orders within time was error on part of authorities. She further submitted that since investigation with regard to entire transactions that involved several companies was in progress, authorities may have inadvertently failed to issue fresh orders of provisional attachment within time. 13 11. Upon hearing both parties on second issue, it is obvious that authorities have acted in blatantly highhanded and illegal manner by keeping provisional attachments in state of continuance for period from 5th June, 2019 (when first order of provisional attachment ceases to operate) till 31st October, 2019 (when fresh order for provisional attachment was passed). Section 83(2) is crystal clear that provisional attachment shall cease upon expiry of one year. It was therefore incumbent on authorities to either release provisional attachment by informing bank or by issuing fresh order of provisional attachment, if law so allowed. failure to do above is nothing short of being act of highhandedness. Such actions of authorities is obloquy and reprehensible. No explanation has been provided for same either in affidavits filed in earlier writ petitions or by counsel appearing on behalf of respondent authorities during hearing of arguments. In my view above action is clearly in violation of petitioners rights for carrying on business under Article 19(1) of Constitution of India and under Article 300A of Constitution of India wherein petitioners have been deprived of their property without authority of law. Ergo, issue is decided in favour of petitioners. In my view actions of Revenue in acting in contravention of Section 83(2) is condemnable, and accordingly costs are required to be imposed. In light of same, I direct concerned respondent authorities to pay costs of Rs. 5 Lakhs to each of three petitioner 14 companies. These amounts should be deposited in current account that are provisionally attached within period of four weeks from date. Issue C: 12. Mr. Chakraborty drew court s attention to Calcutta High Court judgment in Falguni Chakraborti Vs. State of West Bengal and Others1 and Supreme Court judgment in Indian National Congress (I) Vs. Institute of Social Welfare and Others2 to bring home point that authority cannot act beyond powers conferred by statute. He submitted that in fiscal statutes, Supreme Court has time and again held that strict interpretation is required to be followed and no liability of tax can be imposed dehors statute. He further relied on Supreme Court judgments in CIT Bombay Vs. Gwalior Rayon Silk Manufacturing Company Ltd.3 and State of Jharkhand and others Vs. Ambay Cements and another4 to buttress argument that when language is plain and unambiguous and provision penal in nature, same must be strictly construed and courts should not do violence to provision by reading and/or adding something that is not intended by legislature. 1 2002 LAB I.C. 65 2 (2002) 5 SCC 685 3 (1992) 3 SCC 326 4 AIR 2005 SC 4168 15 13. Mr. Chakraborty further relied on judgements of Punjab and Haryana High Court, Calcutta High Court and Andhra Pradesh High Court in PML Industries Ltd. Vs. Commissioner of Central Excise5, I.C.I. India Ltd. Vs. Collector of Customs6 and Commissioner of Customs & Central Excise, Hyderabad IV Vs. Sunder Ispat Ltd.7 respectively to submit that respondent authorities are creatures of statute and can only exercise power that has been specifically entrusted upon them and cannot under any circumstances travel beyond scope of statute. 14. Mr. Chakraborty further relied on judgements passed in relation to Section 281B of Income Tax Act, 1961 (a similar provision for provisional attachment) in Shrimati Majjo Vs. Assistant Commissioner of Income-Tax and Another8, Sukhpal Singh (HUF) Vs. Commissioner of Income-Tax and Another9, VLS Finance Limited and Others Vs. Assistant Commissioner of Income Tax & Another10 and Electro Zavod (India) Pvt. Ltd. and Others Vs. Commissioner of Income-Tax and Others11 to highlight drastic nature of provision for provisional attachment and scope and limitation of same. 5 2013 (290) ELT 3 (P & H) 6 1992 (60) ELT 529 (Cal) 7 2015 (316) ELT 238 (AP) 8 (1991) 187 ITR 642 9 (1985) 156 ITR 480 10 2012 SCC Online Del 1363 11 (2005) 278 ITR 187 16 15. Mr. Chakraborty also relied on judgments of Gujarat High Court in Valerius Industries v. Union of India of India12 wherein Court had held that initiation of proceedings under Section 67 of CGST Act, 2017 by itself is not sufficient to provisionally attach property for purpose of protecting interest of government revenue. counsel then relied on Pranit Hem Desai v. Additional Director General & others (Special Civil Application No. 9392 of 2019) wherein court observed nature of drastic power under Section 83 and highlighted rationale of exercising such power. 16. Relying heavily on above judgements, he submitted that Section 83 of CGST Act, 2017 does not provide either for any extension of order of provisional attachment or for issuance of any fresh order of provisional attachment. According to him, Revenue being branch of Executive cannot assume such jurisdiction. He submitted that if fresh order of provisional attachment on same property of petitioner in same case is allowed, same would make redundant Sub-section (2) of Section 83 of CGST Act, 2017, and accordingly, that cannot be intention of Legislature. He further submitted that since provisional attachment of bank account of petitioners creates embargo on rights of petitioners as guaranteed under Article 19(1)(g), 300A and 301 of Constitution of India, order of provisional attachment during pendency of investigation cannot continue for indefinite period, and it is for that reason Legislature had 12 2019 (3) G.S.T.L. 15 (Guj.) 17 provided period of one year for completion of such investigation and adjudication of alleged demand, if any, and in interregnum, provisional attachment would be in operation. 17. Mrs. Sanjukta Gupta, counsel appearing on behalf of respondents submitted that in instant case investigation has been initiated under Section 67 of CGST Act, 2017 and demand will be made under Section 74 of CGST Act, 2017. counsel submits that fresh order of provisional attachment was issued on grounds that investigation authorities have come across fresh evidences against writ petitioners and also that there is no bar under Section 83 of CGST Act, 2017, preventing fresh order of provisional attachment. 18. learned counsel relied on case of Shrimati Priti v. State of Gujarat13 wherein Court interpreted scope of Section 45 of Gujarat Value Added Tax Act, 2003 (provisional attachment similar to Section 83) and held that on one hand Section 45 requires competent officer to review situation compulsorily at least upon completion of period, while so doing, does not limit his discretion to exercise such powers again if situation so arises. Mrs. Gupta referred to another unreported judgment delivered by Gujarat High Court in matter of Kaithal Timber Pvt. Ltd. vs. State of Gujarat and Ors. [Special Civil Application No. 14039 of 2017] wherein Court held that Section 45 of Gujarat Value Added Tax Act has not barred fresh issue of 13 2011 SCC Online Guj 1869 18 provisional attachment order and that such order could be passed for protecting interest of government revenue. 19. Thereafter, Mrs. Gupta drew Court s attention towards Rule 159(3) of CGST Rules, 2017 which provides for release of provisional attachment on payment of amount equivalent to market price of such property or amount that is or may become payable by taxable person, whichever is lower. She further refers to Rule 159(5) of CGST Act to which she submits that any person whose property is attached may, within seven days of attachment under sub-rule (1), file objection to effect that property attached was or is not liable to attachment, and Commissioner may, after affording opportunity of being heard to person filing objection, release said property. She submitted that petitioner never made any application under Rule 159, and therefore, it was clear that petitioners business was not impacted in any manner whatsoever. 20. Counsel on behalf of respondent thereafter submitted that petitioner companies are shell companies that have no business of trading or manufacturing whatsoever. Relying on affidavit filed by authorities, she submitted that company M/s Mecon Engineering Works, Raniganj simply engaged in issuance of fake invoices without supplying any goods and/services leading to fraudulent utilization of 19 input credit that has resulted in massive evasion of GST and fraudulent availment and utilization of input tax credit. above company M/s Mecon Engineering Works, Raniganj had supplied several fake invoices to petitioner companies. Investigation had revealed that three petitioner companies had also made several fake transactions with various iron and steel manufacturing units and passed on fake input tax credit to these companies. She further submitted that petitioner companies were nonexistent at their registered address and on search carried out by officers of DGGI on Shri Sanjay Kr. Bhuwalka and Shri Neeraj Jain various incriminating documents had been recovered and seized. She further submitted that these two persons were controlling several companies including petitioner companies and had passed on approximately Rs. 40 crores of fake input tax credit. She submitted that these persons had been arrested on May 12, 2018 and have been presently enlarged on bail on furnishing personal bond of Rs. 50 lakhs each by order of High Court dated October 9, 2018. Mrs. Gupta highlighted factual aspect that erstwhile directors (directors at time of search and seizure) of three petitioner companies had made statements to investigating authorities that they were dummy directors who are unemployed and had simply submitted copies of their personal documents to Shri Bhuwalka who operated bank accounts of three petitioner companies. She further highlighted that investigations had been started by authorities with respect to companies that had received fake input tax credit and new material is being 20 unearthed in course of investigations that are presently being pursued by DGGI. 21. Mrs. Gupta finally submitted that investigation is continuing process against several companies that have issued fake invoices and recipient of same that have availed unauthorised input tax credit. She submits that out of estimated 40 crores, Rs. 12 crores have been reversed by companies that had received bogus invoices. According to her, in absence of provisional attachment, money lying in accounts of three petitioners would vanish into thin air. On legal aspect, she submitted that GST Act, 2017 provides for 5 years for completion of investigation, issuance of show cause notice and adjudication. She placed sub-Section (1), (2), (9) and (10) of Section 74 to highlight above point. She submitted that when legislature has given period of 4 and half years for issuance of show cause notice, it clearly contemplated that investigations for such complex fraudulent transactions may take aforesaid time. Accordingly, she submitted that Section 83 of GST Act 2017 cannot be read in manner detrimental to interest of Revenue. She further submitted that words every such in sub-Section (2) of Section 83 makes it clear that multiple provisional attachment orders may be issued by Revenue, if need so arises. 21 22. Before moving directly to answer legal issue in hand it is germane to produce few of relevant provisions of CGST Act, 2017 and CGST Rules, 2017. Section 67:- Power of inspection, search and seizure: 1) Where proper officer, not below rank of Joint Commissioner, has reasons to believe that (a) taxable person has suppressed any transaction relating to supply of goods or services or both or stock of goods in hand, or has claimed input tax credit in excess of his entitlement under this Act or has indulged in contravention of any of provisions of this Act or rules made thereunder to evade tax under this Act; or (b) any person engaged in business of transporting goods or owner or operator of warehouse or godown or any other place is keeping goods which have escaped payment of tax or has kept his accounts or goods in such manner as is likely to cause evasion of tax payable under this Act, he may authorise in writing any other officer of central tax to inspect any places of business of taxable person or persons engaged in business of transporting goods or owner or operator of warehouse or godown or any other place. (2) Where proper officer, not below rank of Joint Commissioner, either pursuant to inspection carried out under sub-section (1) or otherwise, has reasons to believe that any goods liable to confiscation or any documents or books or things, which in his opinion shall be useful for or relevant to any proceedings under this Act, are secreted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Provided that where it is not practicable to seize any such goods, proper officer, or any officer authorised by him, may serve on owner or custodian of goods order that he shall not remove, part with, or otherwise deal with goods except with previous permission of such officer: 22 Provided further that documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act. (3) documents, books or things referred to in sub-section (2) or any other documents, books or things produced by taxable person or any other person, which have not been relied upon for issue of notice under this Act or rules made thereunder, shall be returned to such person within period not exceeding thirty days of issue of said notice. (4) officer authorised under sub-section (2) shall have power to seal or break open door of any premises or to break open any almirah, electronic devices, box, receptacle in which any goods, accounts, registers or documents of person are suspected to be concealed, where access to such premises, almirah, electronic devices, box or receptacle is denied. (5) person from whose custody any documents are seized under sub-section (2) shall be entitled to make copies thereof or take extracts therefrom in presence of authorised officer at such place and time as such officer may indicate in this behalf except where making such copies or taking such extracts may, in opinion of proper officer, prejudicially affect investigation. (6) goods so seized under sub-section (2) shall be released, on provisional basis, upon execution of bond and furnishing of security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as case may be. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of seizure of goods, goods shall be returned to person from whose possession they were seized: Provided that period of six months may, on sufficient cause being shown, be extended by proper officer for further period not exceeding six months. (8) Government may, having regard to perishable or hazardous nature of any goods, depreciation in value of goods with passage of time, constraints of storage space for goods or 23 any other relevant considerations, by notification, specify goods or class of goods which shall, as soon as may be after its seizure under sub-section (2), be disposed of by proper officer in such manner as may be prescribed. (9) Where any goods, being goods specified under sub-section (8), have been seized by proper officer, or any officer authorised by him under sub-section (2), he shall prepare inventory of such goods in such manner as may be prescribed. (10) provisions of Code of Criminal Procedure, 1973 (2 of 1974), relating to search and seizure, shall, so far as may be, apply to search and seizure under this section subject to modification that sub-section (5) of section 165 of said Code shall have effect as if for word Magistrate , wherever it occurs, word Commissioner were substituted. (11) Where proper officer has reasons to believe that any person has evaded or is attempting to evade payment of any tax, he may, for reasons to be recorded in writing, seize accounts, registers or documents of such person produced before him and shall grant receipt for same, and shall retain same for so long as may be necessary in connection with any proceedings under this Act or rules made thereunder for prosecution. (12) Commissioner or officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from business premises of any taxable person, to check issue of tax invoices or bills of supply by such taxable person, and on return of goods so purchased by such officer, such taxable person or any person in charge of business premises shall refund amount so paid towards goods after cancelling any tax invoice or bill of supply issued earlier. Section 74:- Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any wilful-misstatement or suppression of facts: (1) Where it appears to proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or any wilful- misstatement or suppression of facts to evade tax, he shall serve 24 notice on person chargeable with tax which has not been so paid or which has been so short paid or to whom refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay amount specified in notice along with interest payable thereon under section 50 and penalty equivalent to tax specified in notice. (2) proper officer shall issue notice under sub-section (1) at least six months prior to time limit specified in sub-section (10) for issuance of order. (3) Where notice has been issued for any period under sub-section (1), proper officer may serve statement, containing details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on person chargeable with tax. (4) service of statement under sub-section (3) shall be deemed to be service of notice under sub-section (1) of section 73, subject to condition that grounds relied upon in said statement, except ground of fraud, or any wilful-misstatement or suppression of facts to evade tax, for periods other than those covered under sub- section (1) are same as are mentioned in earlier notice. (5) person chargeable with tax may, before service of notice under sub-section (1), pay amount of tax along with interest payable under section 50 and penalty equivalent to fifteen per cent. of such tax on basis of his own ascertainment of such tax or tax as ascertained by proper officer and inform proper officer in writing of such payment. (6) proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of tax so paid or any penalty payable under provisions of this Act or rules made thereunder. (7) Where proper officer is of opinion that amount paid under sub-section (5) falls short of amount actually payable, he shall proceed to issue notice as provided for in sub-section (1) in respect of such amount which falls short of amount actually payable. 25 (8) Where any person chargeable with tax under sub-section (1) prays said tax along with interest payable under section 50 and penalty equivalent to twenty-five per cent. of such tax within thirty days of issue of notice, all proceedings in respect of said notice shall be deemed to be concluded. (9) proper officer shall, after considering representation, if any, made by person chargeable with tax, determine amount of tax, interest and penalty due from such person and issue order. (10) proper officer shall issue order under sub-section (9) within period of five years from due date for furnishing of annual return for financial year to which tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within five years from date of erroneous refund. (11) Where any person served with order issued under sub-section (9) pays tax along with interest payable thereon under section 50 and penalty equivalent to fifty per cent. of such tax within thirty days of communication of order, all proceedings in respect of said notice shall be deemed to be concluded. Explanation 1. For purpose of section 73 and this section,- (i) expression all proceedings in respect of said notice shall not include proceedings under section 132; (ii) where notice under same proceedings is issued to main person liable to pay tax and some other persons, and such proceedings against main person have been concluded under section 73 or section 74, proceedings against all persons liable to pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded. Explanation 2.- For purposes of this Act, expression suppression shall mean non-declaration of facts or information which taxable person is required to declare in return, statement, report or any other document furnished under this Act or rules made thereunder, or failure to furnish any information on being asked for, in writing, by proper officer. 26 Section 83. 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 for purpose of protecting 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. (2) Every such provisional attachment shall cease to have effect after expiry of period of one year from date of order made under sub-section (1). Rule 159: Provisional Attachment of Property (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. (2) Commissioner shall send copy of order of attachment to concerned Revenue Authority or Transport Authority or any such Authority to place encumbrance on said movable or immovable property, which shall be removed only on written instructions from Commissioner to that effect. (3) Where property attached is of perishable or hazardous nature, and if taxable person pays amount equivalent to market price of such property or amount that is or may become payable by taxable person, whichever is lower, then such property shall be released forthwith, by order in FORM GST DRC-23, on proof of payment. (4) Where taxable person fails to pay amount referred to in sub-rule (3) in respect of said property of perishable or hazardous nature, Commissioner may dispose of such property and 27 amount realized thereby shall be adjusted against tax, interest, penalty, fee or any other amount payable by taxable person. (5) Any person whose property is attached may, within seven days of attachment under sub-rule (1), file objection to effect that property attached was or is not liable to attachment, and Commissioner may, after affording opportunity of being heard to person filing objection, release said property by order in FORM GST DRC-23. (6) Commissioner may, upon being satisfied that property was, or is no longer liable for attachment, release such property by issuing order in FORM GST DRC-23. 23. At this juncture, it is important to examine relevant judgments to adjudicate legal issue at hand. In judgment cited by petitioner in Valerius Industries (Supra), Gujarat High Court held that initiation of proceedings under Section 67 of CGST Act, 2017 by itself is not sufficient to provisionally attach property for purpose of protecting interest of government revenue. relevant extract of judgment is delineated below: 52. Our final conclusions may be summarized as under: (1) order of provisional attachment before assessment order is made, may be justified if assessing authority or any other authority empowered in law is of opinion that it is necessary to protect interest of revenue. However, 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 farfetching, which would warrant formation of belief. (2) power conferred upon authority under Section 83 of Act for provisional attachment could be termed as very drastic and far- reaching power. Such power should be used sparingly and only on substantive weighty grounds and reasons. 28 (3) power of provisional attachment under Section 83 of Act should be exercised by authority only if there is reasonable apprehension that assessee may default ultimate collection of demand that is likely to be raised on completion of assessment. It should, therefore, be exercised with extreme care and caution. (4) power under Section 83 of Act for provisional attachment should be exercised only if there is sufficient material on record to justify satisfaction that assessee is about to dispose of wholly or any part of his/her property with view to thwarting ultimate collection of demand and in order to achieve said objective, attachment should be of properties and to that extent, it is required to achieve this objective. (5) power under Section 83 of Act should neither be used as tool to harass assessee nor should it be used in manner which may have irreversible detrimental effect on business of assessee. (6) attachment of bank account and trading assets should be resorted to only as last resort or measure. provisional attachment under Section 83 of Act should not be equated with attachment in course of recovery proceedings. (7) authority before exercising power under Section 83 of Act for provisional attachment should take into consideration two things: (i) whether it is revenue neutral situation (ii) statement of output liability or input credit . Having regard to amount paid by reversing input tax credit if interest of revenue is sufficiently secured, then authority may not be justified in invoking its power under Section 83 of Act for purpose of provisional attachment. 24. counsel for petitioner has also cited VLS Finance Limited (supra) wherein court has made observation about not extending time of provision attachment after period of time as prescribed under Section 29 281B of Income Tax Act, 1961. Relevant paragraph of judgement is presented below: 9. Sub-section 1 to Section 281B stipulates that order provisionally attaching any property of assessee can be passed during pendency of any proceedings for assessment/reassessment, if Assessing Officer is of opinion that such order is necessary for purpose of protecting interest of Revenue. order can be only passed with previous approval of Chief Commissioner, Commissioner, Director General or Director. order has to be in writing. Sub-section 2 to Section 281B states that order for provisional attachment under sub-section (1) shall cease to have effect after six months. Thus, sub-section 2, provides period during which order of provisional attachment remains in force, i.e., six months. first proviso to Section 281B states that Chief Commissioner, Commissioner, Director General, Director may for reasons recorded in writing extend said period or periods, which shall not exceed two years. Thus, total period for which extension can be granted is two years, after first order of provisional attachment, which is valid for six months, comes to end. period of provisional attachment, therefore, cannot be for more than two years and six months. said period in present case, as first attachment order was issued on 28th July, 2005, came to end on 24th January, 2008. 25. Another case presented by petitioner is Shrimati Majjo (supra) wherein it was held that extension of provisional attachment period is not allowed after certain period of time as per provisions of Section 281B of Income Tax Act, 1961. Relevant extract of judgement is delineated below: 6. We do not, however, think it necessary to examine said contention for reason that total period for which extensions can be granted under section 281B is two years and that period has also expired on and with August 19, 1989. It is thus clear that attachment under section 281B cannot survive beyond said date, namely, beyond August 19, 1989. petitioner shall be entitled to encash or withdraw amounts concerned subject, of course, to any demand for any tax due as on today. Even if there is any such demand, amount equal to such demand shall be retained and remaining amount returned to petitioner. 30 26. Counsel for Revenue has relied on Shrimati Priti (supra) for buttressing argument that fresh issue of provisional attachment orders is permissible even after expiry of one-year period as prescribed under Act. relevant paragraph of judgement is as follows: 13. Contention that order of provisional attachment can last only for one year and that no further order thereafter, can be passed is not borne out from statutory provisions contained in Section 45 of Act. It is undoubtedly true that sub-section(2) of Section 45 statutorily provides for maximum life of provisional order to last not beyond one year from date of order. There is nothing in language used in said section to suggest that upon completion of such period, no fresh order could be passed. Reading any such requirement or limitation would amount to supplying words not used in section itself. Section 45 of Act aims to protect Revenue's interest pending assessment proceedings by empowering competent authority to pass provisional attachment order. To obviate, obvious inconvenience to assessee, such provisional attachment order cannot be effective beyond one year. However, that by itself does not mean that if assessment proceedings are not completed within said period and where satisfaction of Commissioner or his delegate that such attachment is required to safeguard interest of Revenue looking to dues of dealer, no such fresh order could be passed. section thus on one hand, require competent officer to review situation compulsorily at-least upon completion of period, while so doing, does not limit his discretion to exercise such powers again if situation so arises. Contention of petitioner that upon completion of maximum period prescribed under sub-section(2) of Section 45, no fresh order of provisional attachment could be passed, therefore cannot be accepted. 27. While deciding issue of provisional attachment under Section 45 of VAT Tax Act, court in Kaithal Timber Pvt. Ltd. (supra) has held that interest of government revenue must be given importance while interpreting section for provisional attachment. It further held that 31 after provisional order ceases to remain in force, fresh order under same provision could be passed. Relevant paragraph of judgement is attached below: 5. statute has not provided any prohibition on fresh order of attachment being passed. Sub-section (2) of section 45 would, in any case, ensure that even if Commissioner or authority in whom power of Commissioner under sub- section (1) of section 45 have been delegated is of opinion that attachment should continue, it would be necessary that fresh order be passed. This would ensure that authority would examine current position and would take fresh decision that to protect interest of Government revenue, it is necessary to pass fresh order of provisional attachment and that earlier order of attachment would not mechanically continue indefinitely. 28. Bad facts make bad cases court crafts its decision to create outcome dictated by facts, instead of outcome based on proper legal analysis - I am very well aware of above adage and do not intend to fall prey to same. Ergo, interpretation of Section 83 of CGST Act, 2017 is not based on facts that have been presented by respondents in their affidavits, but on legal principles of interpretation of fiscal statutes and examination of precedents cited by parties. Upon hearing both parties on third issue, Court is of opinion that powers conferred under Section 83 are drastic and extraordinary in nature. Court also believes that powers under this section should not be invoked routinely and must be exercised with due caution, circumspection and deliberation. judgments relied on by learned counsel for petitioners in Valerius Industries (supra) and Pranit Hem Desai (supra) can be distinguished on grounds that they only highlight rationale and nature of powers conferred under Section 32 83. These judgements do not deliberate upon point of fresh issue of order for provisional attachment which is of principal relevance to this case. judgments relied by learned counsel for respondents, that is, Shrimati Priti (supra) and Kaithal Timber Pvt. Ltd. (supra) interprets similar provision of provisional attachment in Gujarat Value Added Tax Act, 2003. Court in both cases while dealing with provision that is pari materia to present Section 83, has categorically held that fresh order for provisional attachment can be issued after expiry of time as prescribed under Act. 29. Mr. Chakraborty learned counsel on behalf of petitioners relied on Delhi High Court judgement in VLS Finance Limited (supra) to support argument that extending time of provisional attachment after certain period of time as prescribed in statute is not permissible. Court while appreciating this finding, would also like to note another observation of Delhi High Court wherein it has categorically mentioned that they have not considered and examined whether Revenue can pass fresh order under Section 281B of Income Tax Act, 1961. In my view this observation is pertinent to issue in hand. relevant extract has been cited below: 15. We wish to further clarify as matter of abundant caution and state that we have not considered and examined whether Revenue can pass fresh order under Section 281B in view of third proviso to said Section introduced/inserted by Finance (No. 2) Act of 2009 with retrospective effect from 1st April, 1988. If required, said issue and question will be examined in case Revenue passes any such order. We have not barred or prohibited 33 Revenue from passing any such order or expressed any opinion whether any such order should be or could be passed. These aspects can be examined by respondents. It will be premature to decide these contentions now. We do not want to express any opinion in vacuum on assumption that order may be passed. This caveat is necessary least there be any confusion .. 30. Mr. Chakraborty further relied on Shrimati Majjo (supra), Electro Zavod (India) Pvt. Ltd. (supra) & Sukhpal Singh (supra) to contend that extension of provisional attachment beyond time-period prescribed is not permitted by statute. It is to be noted that Section 83 of CGST Act, 2017 does not have provision for extension of order for provisional attachment. contention in hand is with respect to issue of fresh order of provisional attachment and not extension of same. On this note, case laws referred to by learned counsel shall not be applicable to issue in hand. 31. One need not join issue with regard to judgments cited by petitioner with respect to interpretation of fiscal statutes, as I am firmly of view that Section 83 has to be construed literally and strictly. On perusal of Section 83, it is evident that Section 83 does not provide for extension of order for provisional attachment and any such extension shall be dehors statute. Section 83 empowers competent authority to issue order for provisional attachment of property including bank accounts if it is of opinion that such step is necessary for protecting interest of government revenue. It is palpably clear that Section 83(2) 34 permits continuation of provisional attachment order for period of one year from date of order after which it ceases to remain in effect. However, there is nothing in section which indicates that upon completion of prescribed period, fresh order cannot be issued. To say this would amount to supplying such requirements into section which would go against well-established principles of interpretation of statutes. In view point of Court, after expiry of time period, appropriate authority may be of opinion that such attachment is further required to protect interest of government revenue, and may therefore, issue fresh order upon compliance of formalities in Section 83(1). 32. One may also examine scheme of GST Act, 2017 in relation to provisional attachment. Section 83 of CGST Act, 2017 has to be read with Sections 67 and 74 of CGST Act, 2017 and Rule 159 of CGST Rules, 2017. As is evident from Section 74, time limit for issue of show cause notice is four and half years, while adjudication is required to be completed within five years of particular evasion of tax / fraudulent transaction. At this juncture, I ask myself this question as to whether Legislature would have intended to allow investigation to be continued for period of four and half years but only allowed protection to government revenue for period of one year. Section 83(2) provides for period for cessation of provisional attachment. This provision does not in any manner prevent authorities to issue fresh order of 35 provisional attachment if requirements under Section 83(1) are met. period of one year has been provided only to bring about balance between rights of assessee and interest of Revenue. 33. I make it clear that Court has not gone into sufficiency of reasons with respect to fresh order of provisional attachment under section 83 as writ petitions filed challenging same do not raise that point at all. In fact, counsel on behalf of petitioner has categorically stated in Court that petitioners are not challenging sufficiency of reasons and are only challenging legality of issue of fresh order of provisional attachment. Based on above submissions, no affidavits were called on from Respondents to explain sufficiency of reasons for issue of fresh order of provisional attachment. However, it may be noted that Mrs. Gupta, counsel on behalf of respondents has categorically submitted in Court that apart from reasons provided in affidavits filed in earlier writ petitions, fresh material has also been unearthed by DGGI. 34. However, given far-reaching consequences of provisional attachment under Section 83, Court is of opinion that issuance of fresh order under Section 83 of CGST Act, 2017 will require fresh review and assessment of circumstances in hand. In no manner, fresh 36 order should be issued in garb of extension of earlier order without actually evaluating and analysing requirement of doing so. 35. Another point raised by petitioner is with respect to non-service of fresh order personally upon petitioner. Section 83 of CGST Act, 2017 read with Rule 159 of CGST Rules, 2017 does not provide for supply of order of provisional attachment of bank account to assessee concerned. Accordingly, there is no requirement on part of respondent to serve such order under Section 83 personally upon petitioners. 36. In light of discussions made hereinabove, third issue is decided in favour of Revenue. 37. I would like to summarize issues that have been answered by this Court for easier understanding of parties; Issue A: Whether Principal Additional Director General, DGGI and Additional Director General, DGGI are competent to pass orders under Section 83 of CGST Act, 2017? Answer: Both officers that have passed orders under Section 83 of CGST Act, 2017 are competent to pass same, and accordingly, issue is answered in favour of Revenue. 37 Issue B: Whether order passed under Section 83 of CGST Act, 2017, remains valid after expiry of one year from date of order? Answer: actions of respondent authorities in continuing with provisional attachment beyond period of one year and without informing bank that provisional attachment seizes to operate after period of one year is act that is reprehensible and absolutely contrary to law. Such arbitrary action has clearly resulted in violation of petitioners rights for carrying on business under Article 19(1) of Constitution of India and under Article 300A of Constitution of India wherein petitioners have been deprived of their property without authority of law. Accordingly, issue is answered in favour of petitioners and respondent authorities are directed to pay costs of Rs. 5 lakhs to each of three petitioners. This amount should be deposited in current accounts that have provisionally attached within period of four weeks from date. Issue C: Whether authorities can issue fresh order of provisional attachment/multiple orders under Section 83 of CGST Act, 2017? Answer: Section 83 empowers competent authority to issue order for provisional attachment of property including bank accounts if it is of opinion that such step is necessary for protecting interest of 38 Revenue. It is palpably clear that Section 83(2) permits continuation of provisional attachment order for period of one year from date of order after which it ceases to remain in effect. However, there is nothing in section which indicates that upon completion of prescribed period, fresh order cannot be issued. To say this would amount to supplying such requirements into section which would go against well-established principles of interpretation of statutes. In view point of Court, after expiry of time period, appropriate authority may be of opinion that such attachment is further required to protect interest of Revenue, and may therefore, issue fresh order upon compliance of formalities in Section 83(1). Accordingly, issue is answered in favour of Revenue. EPILOGUE: tax collector should collect taxes from tax payer just like bee collects honey from flower in expert manner without disturbing its petals Kautilya in Arthashastra. 38. new regime under GST Act, 2017 is new legislative creation by which Union Government along with all State Governments have streamlined various statutes under which tax was earlier collected to enhance ease of doing business by preventing multi-point taxation that was extremely cumbersome and time consuming for citizens of India. raison d etre of GST Act, 2017 is to reduce burden of 39 tax and also to simplify procedures. This, however, is coupled with certain far reaching and drastic measures that would be applicable on persons who evade payment of such taxes. One need not stress importance of responsibility that comes upon government officials who take such drastic measures upon citizens of this country. Nonetheless, these drastic provisions come with purpose, and that is to ensure collection of taxes so that inequities in society may be reduced by Government. Provisions such as provisional attachment are necessary to ensure that persons who intend to evade taxes and/or are part of mechanism to defraud Government are nipped in bud and appropriate taxes can be collected from such persons. 39. I would like to show my appreciation to Mr. Chakrabarti and Mrs. Gupta for their diligent work in assisting Court. 40. In view of above conclusion, all writ petitions are disposed of. Urgent photostat certified copy of this order, if applied for, should be made available to parties upon compliance with requisite formalities. (Shekhar B. Saraf, J.) Amazonite Steel Pvt. Ltd. & Anr. v. Union of India & Or
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