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2020 (12) TMI 1047 - HC - GSTLegality and validity of the Provisional attachment of all Bank Accounts - misclassification of products thereby evading payment of due GST - carbonated fruit drinks, such as, Big Cola, Big Orange Cola, Big Lemon and similar other products - HELD THAT:- According to respondent No.2 proceedings have been launched against the taxable person i.e. the petitioner under section 67 of the CGST Act to determine the tax or any other amount due from the petitioner. From the information available it had come to the notice of respondent No.2 that petitioner has three bank accounts as mentioned therein. In order to protect the interest of revenue and exercising power conferred under section 83 of the CGST Act, respondent No.2 provisionally attached the aforesaid bank accounts. Respondent No.3 i.e. the Branch Manager of the ICICI Bank was requested that no debit should be allowed to be made from the said accounts or any other accounts operated by the petitioner without the prior permission of the department. Where the proper officer not below the 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 the stock of goods in hand or has claimed input tax credit in excess of his entitlement under the CGST Act or has indulged in contravention of any of the provisions of the CGST Act or the rules made thereunder to evade tax under the CGST Act, he may authorize in writing inspection of any place of business of the taxable person - A conjoint reading of the relevant provisions of section 67 and section 83 of the CGST Act would indicate that the proper officer must have reasons to believe that the taxable person has suppressed any taxable transaction to evade payment of tax. It is not necessary for us at this stage to delve into the meaning of the expression reasons to believe employed in section 67 which has its own connotation in fiscal statutes. Suffice it to say, requirement of section 67(1)(a) is that the proper officer should have reasons to believe that the taxable person has suppressed any taxable transaction to evade payment of tax. It is quite clear that petitioner had disclosed the details of its goods and had applied the classification which it thought was appropriate. On that basis it had filed its CGST returns and had been assessed. It is not the case that petitioner has defaulted in payment of tax as per its returns or assessment. On the other hand, respondent Nos.1 and 2 contends that it is a case of misclassification which has led to short payment of GST. Whether recourse to section 83 is warranted at this stage has not been dealt with in the record. Merely because there is a proceeding under section 67 would not mean that recourse to such a drastic power as under section 83 would be an automatic consequence, more so when petitioner has cooperated with the investigation. That apart, section 83 speaks of provisional attachment of any property including bank account. The record is silent as to whether any attempt has been made for provisional attachment of any property of the petitioner and instead why the bank accounts should be attached. Besides, by use of the word “may” in sub-section (1) of section 83 Parliament has made it quite clear that exercise of such a power is discretionary. When discretion is vested in an authority, such discretion has to be exercised in a just and judicious manner, more so when the power conferred under section 83 admittedly is a very drastic power having serious ramifications. Such power having the potential to adversely affect property rights of persons as well as life and liberty under Article 21 of the Constitution of India has to be exercised in a fair and reasonable manner. The impugned order dated 18th/ 19th November, 2020 is stayed - withdrawal of the provisional attachment of the bank accounts of the petitioner is directed. Stand over to 9th March, 2021 for final hearing.
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