R.J. Exim And Another v. The Principal Commissioner Central Goods And Service Tax And 3 Others
[Citation -2020-LL-1124-74]

Citation 2020-LL-1124-74
Appellant Name R.J. Exim And Another
Respondent Name The Principal Commissioner Central Goods And Service Tax And 3 Others
Court HIGH COURT OF ALLAHABAD
Relevant Act CGST
Date of Order 24/11/2020
Judgment View Judgment
Keyword Tags attachment of bank account • attachment of property • goods and services tax • provisional attachment • suppression of facts • application of mind • immovable property • service of notice • value of property • attachment order • input tax credit • payment of tax • seized record • fixed deposit • cash credit • penalty


Court No. - 5 AFR Case :- WRIT TAX No. - 608 of 2020 Petitioner :- M/S R.J. Exim And Another Respondent :- Principal Commissioner Central Goods And Service Tax And 3 Others Counsel for Petitioner :- Vikrant Rana Counsel for Respondent :- B.K.Singh Raghuvanshi Hon'ble Surya Prakash Kesarwani,J. Hon'ble Dr. Yogendra Kumar Srivastava,J. 1. Heard learned counsel for petitioners and Sri B.K.Singh. Raghuvanshi, learned counsel for respondents. 2. This writ petition has been filed praying to quash impugned orders dated 22.07.2020 and 05.02.2020 passed by respondent no.2 in exercise of powers conferred under Section 83 of Central Goods and Services Tax Act, 2017. Petitioners have further prayed to issue direction to respondents concerned to release forthwith provisional attachment of current and saving bank account (Nos.) 306001010028200 and 3060020140796 respectively relating to PAN No.AAMPJ7368L in Union Bank of India, and also to release FDR dated 24.10.2019 of Rs. 25 Lacs issued in name of Principal Commissioner, CGST, Meerut in favour of petitioners. 3. Learned counsel for petitioners submits that as only show cause notice under Section 70 of Central Goods and Services Tax Act, 2017 has been issued, attachment under Section 83 of CGST Act can not be made. Consequently, impugned orders of provisional attachment are bad and it is liable to be quashed. 4. We have carefully considered submissions of learned counsel for parties. 5. From record, we find that order dated 22.07.2020 was issued by proper officer to petitioners, informing GST DRC-01A under Section 74(5) of Act, requiring petitioners to deposit ascertained amount of Rs. 69,67,729/- + interest @ 24%+ penalty @ 15% or to submit objection under Section 74(1) of Act. opportunity was also given by fresh notice so that petitioners may file objection against above ascertainment by 14.08.2020 in Part B of this Form. 6. Learned counsel for petitioners has stated that petitioners have not submitted any objection against ascertainment dated 22.07.2020 issued by proper officer, which was followed by impugned provisional attachment order dated 22.07.2020 issued by Assistant Commissioner, Central Goods and Service Tax Division-I , Meerut. 7. Aggrieved against aforesaid provisional attachment, petitioners have filed present writ petition. 8. From record, it appears that petitioner No.1, M/s R.J. Exim purchased Readymade Garments worth Rs. 06,50,32,128/-involving IGST Rs.69,67,729/- from supplier M/s Unimax Overseas, WZ-98, Lamba Complex Jwala Heri, Paschim Vihar, Delhi West. aforesaid purchase was shown through six invoices, which were mentioned in intimation of proper officer dated 22.07.2020. Petitioners took credit of aforesaid IGST amount of Rs. 69,67,729/-. On verification aforesaid, M/s Unimax Overseas, WZ-98, Lamba Complex Jwala Heri, Paschim Vihar, Delhi West was found non existent. 9. For purposes of controversy involved in present writ petition, provisions of Sections 74(5), Section 83, Rules 142 (1A) and Rule 159(5) of CGST Act, 2017 relevant which are reproduced below:- 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 74 (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. 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). 2 Rule 142 (1A) proper officer shall, before service of notice to person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub-section (1) of Section 74, as case may be, shall communicate details of any tax, interest and penalty as ascertained by said officer, in Part of FORM GST DRC-01A. (2) Where, before service of notice or statement, person chargeable with tax makes payment of tax and interest in accordance with provisions of sub-section (5) of section 73 or, as case may be, tax, interest and penalty in accordance with provisions of sub-section (5) of section 74, or where any person makes payment of tax, interest, penalty or any other amount due in accordance with provisions of Act, whether on his own ascertainment or, as communicated by proper officer under sub- rule (1A), he shall inform proper officer of such payment in FORM GST DRC-03 and proper officer shall issue acknowledgement, accepting payment made by said person in FORM GST DRC-04. (2A) Where person referred to in sub-rule(1A) has made partial payment of amount communicated to him or desires to file any submissions against proposed liability, he may make such submission in Part B of FORM GST DRC-01A. Rule 159 (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. 10. From perusal of Section 74(5) of Act, it is evident that person chargeable with tax may, before service of notice under sub-section (1), pay amount of tax and interest under Section 50 and penalty @ 15% of such tax on basis of own ascertainment of such tax or tax as ascertained by proper officer and inform proper officer in writing of such payment. intimation dated 22.07.2020 issued by proper officer to petitioners is referable to Section 74(5) of Act and Rule 142(1A) of Rules. proper officer afforded opportunity to petitioners to file objection, but petitioners have not filed any objection. 11. impugned Provisional attachment order has been issued by competent authority under Section 83 of Act for purpose of protecting interest of Government revenue. Against order of Provisional attachment under Section 83(1) of Act, petitioners have 3 opportunity to file objection under sub-Rule 5 of Rule 159 of Rules. It has been admitted before us by learned counsel for petitioners that petitioners have not filed any objection against impugned provisional attachment dated 22.07.2020. Therefore, impugned orders cannot be said to suffer from any manifest error of law. 12. Learned counsel for petitioners has relied upon judgment of Punjab & Haryana High Court dated 20.12.2019 in CWP No. 31382 of 2019 (O&M) (Bindal Smelting Pvt. Ltd. Through its Director Versus Additional Director General, Directorate General of GST Intelligence) . Relevant para 10 of judgment is reproduced below:- 10. Applying above quoted provisions of CGST Act, 2017 and taking cue from afore-cited judgments of Gujarat High Court, which has noticed consistent judicial pronouncement and Bombay High Court, we find that in present case attached account is Over Cash Credit account and Petitioner had debit balance of Rs.6.42 Crore, thus question arises that whether continuation of attachment would protect interest of revenue or not. Petitioner is running unit and more than 100 families are dependent upon Petitioner. Till date no proceedings under Section 74 of CGST Act are pending which would start as soon as show cause notice is issued. Respondent has seized record of Petitioner who has further supplied various documents as well put personal appearance through Directors and employees. object and intention of legislature to endow Commissioner with power of attachment under Section 83 is very clear. It is drastic and far-reaching power which must be used sparingly and only on substantive weighty grounds and reasons. power should be exercised only to protect interest of revenue and not to ruin business of any taxable person. Primarily Section 83 permits to attach property. Property means asset which may be movable, immovable, tangible, intangible or in form of some instrument. Cash in hand as well bank account is property, in form of liquidity which is better than immovable property and directly affects working in form of working capital of dealer. dealer may be having 15 of 17 CWP No.31382 of 2019(O&M) #16# cash in hand or in account in form of fixed deposit or saving account. mandate of Section 83 in our considered opinion is to attach amount lying in account in form of FDR or saving and it cannot be intention or purport of Section 83 to attach account having debit balance. No purpose leaving aside securing interest of revenue is going to be achieved except closure of business which cannot be permitted unless and until running of business itself is prohibited by law. contention of Respondent that they have power to attach bank account irrespective of nature of account cannot be countenanced. We are of opinion that Respondent can attach account only if there is some balance in form of FDR or savings. power of attachment of bank account cannot be exercised as per whims and 4 caprices of Authority. Commissioner is bound to ensure that by attachment of property or bank account, interest of revenue is going to be protected. In case property is mortgaged with bank and value of property is less than outstanding dues of bank, provisional attachment is meaningless and action remains only on paper. In absence of record showing that interest of revenue is protected by attaching property or bank account, action deserves to be declared as taken without application of mind and formation of opinion on basis of cogent material. Thus, attachment of current account having debit balance does not protect interest of revenue, instead merely ruins business of dealer. Such action of attachment of "over cash credit" account for sake of recovery of confirmed demand, may in some peculiar case, may be still permitted but not at stage of pending investigation . 13. In aforesaid judgment, it is mentioned that OCC account utilizing credit limit to tune of Rs. 6.42 Crore was attached and there was debit balance of Rs. 6.42 Crore. On these facts it was held in para 10 of judgment that mandate of section 83 is to attach amount lying in account in form of FDR or saving and it cannot be intention or purport of Section 83 to attach account having debit balance. In present set of facts, saving bank account of petitioners being account Nos. 30600101002800 and 3060020140796 relating to PAN No.AAMPJ7368L in Union Bank of India have been attached. Thus, aforesaid judgment relied by learned counsel for petitioners has no bearing on facts of present case. 14. judgment dated 17.01.2020 of Bombay High Court in Writ Petition No. 3145 of 2019 (Kaish Impex Private Limited through its Director Vs. Union of India, through Secretary, Department of Legal Affairs, Ministry of Law & Judge and others) relied by learned counsel for petitioners, also does not support case of petitioners. Relevant para 12 of aforesaid judgment is reproduced below:- Para 12. judgment order dated 22 October, 2019 proceeds on assertion that proceedings have been launched against petitioner under Section 67 and 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 summon 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. 5 Thus petitioner contends that power under section 83 could not have been invoked against petitioner . 15. Perusal of aforesaid judgment in case of Kaish Impex Pvt. Ltd. (Supra) shows that provisional attachment order was issued on ground that proceedings under Sections 67 and Section 70 of Act have been launched but in fact, it was found that no proceeding was initiated under Section 83 of Act and only summon was issued for provisional attachment of bank account. On these facts, provisional attachment was held to be bad. facts of present case are entirely different. 16. judgment dated 17.12.2019 of Gujarat High Court at Ahmedabad in R/Special Civil Application No. 19533 of 2019 ( Kushal Ltd. Versus Union of India) relied by learned counsel for petitioners, also does not support case of petitioners. Relevant para 14 of aforesaid judgment is reproduced below:- Para 14. On plain reading of section 83 of GST Acts, it is clear that sine qua non for exercise of powers thereunder is that proceedings should be pending under section 62 or section 63 or section 64 or section 67 or section 73 or section 74 of GST Acts. In present case, proceedings under section 67 of GST Acts are no longer pending and pursuant to search, proceedings under any of other sections mentioned in Section 83 have not been initiated. Under circumstances, on date when orders of provisional attachment came to be made, basic requirement for exercise of powers under section 83 of GST Acts was not satisfied. provisional attachment of bank accounts of petitioners under section 83 of GST acts is, therefore, not in consonance with provisions thereof and cannot be sustained. 17. In aforesaid judgment in case of Kaushal Ltd. (Supra), it was held that no proceeding under Section 67 of Act was pending and, therefore, provisional attachment was held to be bad. In present case, facts are entirely different. 18. In Judgment dated 09.09.2020 of Punjab and Haryana High Court at Chandigarh in CWP No. 11961 of 2020 (O&M) , Court as matter of fact had found that on date of Provisional attachment order under Section 83 of Act, proceedings under Section 67 of Act were over. On these 6 facts, Court found attachment order to be bad. Thus, this judgment is also distinguishable on facts of present case. 19. For all reasons stated above, we do not find any merits in this writ petition. Consequently, writ petition fails and is hereby dismissed. Order Date :- 24.11.2020 T.S. 7 R.J. Exim And Another v. Principal Commissioner Central Goods And Service Tax And 3 Other
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