TMI Blog2018 (4) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... powers under section 74(3) of the CGST Act? - Held that: - powers under sub-section (3) of section 74 cannot be exercised for expanding or enlarging the liability arising out of show-cause notice under sub-section (1) from the same period - Essentially, sub-sections (1) and (3) of section 74 are envisaged to cover separate periods - the respondents are wholly incorrect in issuing a fresh show-cause notice for the same period of July 2017 to 20.02.2018, which notice was already issued under sub-section (1) of section 74 of the Act. Attachment of Bank Accounts of petitioners - no reason given for such attachment - Held that: - Under sub-section (1) of section 83, the competent authority has power of provisional attachment, where during pendency of any proceedings under the Act he is of the opinion that for the purpose of protecting the interest of government revenue, it is necessary so to do. Such provisional attachment could be of any property including the bank account of the taxable person - In the present case, nothing is demonstrated by the department either in the orders of attachment or in the affidavit filed before us. The reason why exercise of such drastic power of attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts without the prior permission of the department. The petitioners have challenged this provisional attachment orders of the departmental authorities. 6. On 19.03.2018, the adjudicating authority issued fresh notice under the purported exercise of powers under section 74(3) of the Central Goods and Services Tax Act calling upon the petitioners to show cause why a sum of ₹ 1,29,13,928/-towards CGST and SGST not be recovered from the period between July 2017 and 20.02.2018. This second show-cause notice, the petitioners have challenged on the ground of lack of jurisdiction. 7. We have heard learned counsel for the parties at considerable length. We will address to these three grievances of the petitioners one after another. With respect to the collection of three cheques for a sum of ₹ 19,74,886/-, the action of the department cannot be countenanced. It has been held by this Court and other High Courts of the country that the practice of collecting post-dated cheques under coercion during raid is not permissible means of collection of revenue particularly, when no tax demand has been confirmed or crystallized. Reference in this respect is made to an order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : (1) Where it appears to the 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 notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the 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 the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice. (2) The proper officer shall issue the notice under sub section (1) at least six months prior to the time limit specified in sub-section (10) for issuance of order. (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the 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 the person chargeable wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd notice under sub-section (3) of section 74 of the Act. The impugned notice dated 19.03.2018 therefore, shall have to be quashed. 13. Coming to last surviving question of attachment of bank accounts, broad facts may be recapitulated thus. As per the notice dated 27.02.2018, as per the departmental authorities, the petitioners had not paid GSTs on branded goods. The tax liability would be ₹ 36,88,706/-. There could be possible interest and penalty liability on such tax amount. It prima facie appears that the department had issued second show-cause notice dated 19.03.2017 (which we propose to quash) including even the unbranded goods for recovery of GSTs. Having perused the relevant literature, we even otherwise find that GSTs on unbranded goods has been specifically exempted. As of now, thus, only notice for recovery of tax that survives is one seeking to recover GSTs of ₹ 30 lacs approximately with interest and penalty. At the same time, we must also realize that if the petitioners are not correct in contending that no service tax can be levied on branded goods because the brand belongs to the directors of the company, such liability may eventually arise with inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of protecting interest of Government revenue. Even before any assessment is made, such powers can be exercised if the Commissioner is of the opinion that for the purpose of protecting the interest of Government revenue, it is necessary to do so. The power thus, is of drastic nature. Any such power, therefore, is coupled with the duty to exercise such power with due care and in appropriate cases. Subsection (2) of Section 45 when specifies the life of such order of provisional assessment for a maximum period of one year, it further amplifies that the same is in the nature of a drastic measure for a temporary period. The authority exercising such powers, therefore, must have a strong prima facie case to show that upon ultimate conclusion of the assessment, there is every likelihood of tax, interest and/or liability being attached on a dealer, and further that pending such consideration, it is necessary in the interest of Government revenue to pass order of provisional attachment. Such powers cannot be exercised in a routine manner in every case of reopening of assessment de hors the consideration noted above and in any case not merely because some assessment proceedings are pendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be permissible. It is not the case of the Department placed before us through any material on record that if ultimately any additional tax liability is finalized, the petitioner would not pay or be in a position to pay such taxes. 16. In the present case, nothing is demonstrated by the department either in the orders of attachment or in the affidavit filed before us. The reason why exercise of such drastic power of attachment of bank accounts was necessary. We would therefore set aside such attachments. At the same time, we would like to provide some security so that eventually, if the tax liability is confirmed, the department is not left with no means to recover the same. 17. In the result, petition is disposed of with following directions: 1. The respondents shall return the petitioners three cheques collected on 20.02.2018. 2. Second show-cause notice dated 19.03.2018 is set aside leaving it open for the department to consider only on the ground of lack of jurisdiction and not on merits of the demand sought to be raised in this show-cause notice. Resultantly, this would not prevent the department from considering legal ways of raising further demand for the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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