RECOVERY THROUGH PROVISIONAL ATTACHMENT UNDER GST

[Dr. Sanjiv Agarwal]

Provisional attachment of any property can be made to enforce or protect recovery of tax demands under the GST law.

Where the proper officer consider it expedient in the interest of revenue, he may for reasons to be recorded in writing may require the taxable person to pay the demanded amount within a period shorter than 3 months as he may decide.

Section 78 of the GST Act provides that after passing of an order under the Act, the taxable person is required to deposit the amount of demand within 3 months of date of service of such order to him. Further, it provides that in case of failure of taxable person to deposit the amount within permitted time, the proper officer may initiate the recovery proceedings for recovery of such amount from taxable person.

Where any sum payable under the GST Act has not been paid, the proper officer has following different modes to recover the defaulted sum from such person. These modes have been provided in section 79(1) of the GST Act and are as follows:

(a)   May deduct or require any other officer to deduct the defaulted sum from any money payable to such defaulter.

(b)  May recover or require any other officer to recover the amount by detaining and selling any goods belonging to such defaulter.

(c)   May give notice in writing to any debtor or future debtor of such defaulter to pay money to the Government on account of such person.

(d)  On authorization by Competent Authority, seize any movable and/or immovable property belonging to or under the control of defaulting person and detain till the time defaulted amount is paid by such person. In case amount is not paid within 30 days of such seizure, may cause the sale of such property and from the sale proceeds, satisfy the amount payable and the costs including cost of sale and render any surplus amount to such person.

(e)   May write to Collector of the District, where such person resides or do business or holds property to recover the amount from such person as arrears of land revenue.

(f)   May file an application with the Appropriate Magistrate for proceedings against such person for recovery of such sum as it were a fine imposed by such Magistrate.

Provisional attachment

Provisional attachment can be made by tax authorities to protect revenue in certain cases. Section 83(1) of GST law prescribes that in case Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may order the provisional attachment of any property belonging to the taxable person. The provisional attachment order made by Commissioner under section 83(1) of the GST Act remains effective till one year from the date of such order. On expiry of one year from the date of such order, it will cease to have any effect.

Statutory provisions

Section 83 provides that during the pendency of any proceedings under certain sections of the CGST Act, 2017 the Commissioner by order in writing attach provisionally any property for a period of one year from the date of the order for provisional attachment.

Section 83 reads as under:

(1)       Where, during the pendency of any proceeding under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

(2)       Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).

Sub- Section (1) above has been substituted by Finance Act, 2021:

“(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.”.

The above amendment has been made to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.

The above amendment is yet to be notified for coming into force (as on 30^th June, 2021).

A perusal of the above provisions and amendment made by Finance Act, 2021 would reveal that:

1. Prior to amendment

• Provisional attachment could be made where proceedings were pending u/s 62, 63, 64, 67, 73 or 74 of the CGST Act, 2017.
• Attachment could be done to property belonging to the taxable person only.

 

2. After amendment by Finance Act, 2021

• Provisional attachment could be made where proceedings are pending under any section of Chapter XII, XIII or XV of the CGST Act, 2017
• Provisional attachment shall be valid for entire period starting from initiation of proceedings till the expiry of one year from date of Order
• Property belonging to the taxable person or any person specified in section 122(1A) of the CGST Act can be attached, i.e. person who retains benefit of a specific transaction(s) and at whose instance such transaction is conducted.

Thus, the scope of section 83 for provisional attachment of property has been enlarged by the Finance Act, 2021.