TMI Blog2019 (9) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... to be exercised during the pendency of any proceeding for assessment or reassessment, so that the assessee may not fritter away or secrete his resources out of the reach of the Commercial Tax department when the assessment or reassessment is completed. The expression for the purpose of protecting the interest of the revenue occurring in Section 83 of the Act is very wide in its meaning. The orders of provisional attachment must be in writing. There must be some material on record to indicate that the Assessing Authority had formed an opinion on the basis thereof that it was necessary to attach the property in order to protect the interest of the revenue. The provisional attachment provided under section 83 is more like an attachment before judgment under the Code of Civil Procedure. It is a liability on the property. However, the power conferred upon the Assessing Authority under Section 83 is very drastic, farreaching power and that power has to be used sparingly and only on substantive weighty grounds and for valid reasons. To ensure that this power is not misused, no safeguards have been provided in the Section 83. The Bombay High Court in GANDHI TRADING VERSUS ASSISTANT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordships may be pleased to admit this petition. B. Your Lordships may be pleased to allow this petition. C. Your Lordships may be pleased to issue writ of mandamus or any other appropriate writ directing the respondent No.01 to immediately remove attachment of following bank accounts belonging to petitioner No.02 company: Name of Bank Branch of Bank Current Account Number Kalupur Commercial Co. Op. Bank Ltd. Xaviers Road Branch, Navrangpura, Ahmedabad 820102455 HDFC Bank Ltd. Paldi Vasna Road Branch, Ahmedabad 12292000000743 and that is how, debit may be allowed to be made from said account or any other account operated by petitioner No.02 company on PAN AABCD4327M; D. Pending admission, hearing and final disposal of the matter, Your Lordships may be pleased to grant an exparte, ad interim order in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. f. PHD Ferro Alloys Ltd And that these companies had procured invoices of various goods and have passed on ITC (Input Tax Credit) fraudulently to the buyers, they have passed on ITC fraudulently without actual supply of goods to their buyers. 5.6 On perusing the said arrest memo, it may be found that it is mentioned therein that all the aforesaid six companies had passed on ITC to various buyers. Various sales and purchase invoices and inward / outward registers were seized under various panchnamas. 5.7 It is pertinent to note that although it is mentioned in the arrest memo that in the investigation conducted so far clearly reveals the offence of unutilization of ITC credit fraudulently to the extent of more than ₹ 43.00 Crore including ITC involved in Circular trading within Desai Group entities by Desai Group of Companies, namely : a. Desai Impex Pvt. Ltd. b. Desai Metalinks Ltd. c. PHD Trading Corporation Ltd. d. PHD Ferro Alloys Ltd e. Desai Overseas Pvt. Ltd. f. Desai Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAPPD7736B 24AAPPD7736B1Z W '00820102454 Likewise, vide From GST DRC22 dtd. 03/04/2019 being issued to the Branch Manager, HDFC Bank Ltd., Shop NO.34, Haash Business Centre, Nr. Ankur School, Paldi Vasna Road, Ahmedabad 380007, the respondent No.01 has provisionally attached following bank accounts: Sr. No. Company Name PAN GSTIN Current Account Number '01 PHD Trading Corporation Ltd. AAJCP1692F 24AACP1692F1ZE '502000357741 63 '02 Desai Metalinks AIPPD5602E 24AIPPD5602E1Z0 '122920000007 60 '03 Desai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued to the Branch Manager, Oriental Bank of Commerce, G2, Samedh, Nr. Associated Petrol Pump, C.G. Road, Ahmedabad 380 006, Respondent No. 02 has provisionally attached Current Account No. 10511131001097 of Desai Metalinks Ltd. 5.9 Copies of all the aforesaid form GST DRC22 all dtd. 03/04/2019 were handed over to the respective companies of Desai Group of Companies vide respective letters dtd. 04/04/2019 being addressed to the respective Desai Group of Companies. 5.10 Upon receiving the respective form GST DRC22, the accountant of the respective companies including the petitioner No. 02 company had personally visited the office of Respondent No. 01 on 05/04/2019 and had requested the officers of DGGI to kindly remove attachment from the respective bank accounts. On the other hand, the petitioner No. 01 who is director of petitioner No. 02 company was arrested since 18/03/2019 and his application praying for regular bail being CRMA No. 6623 of 2019 is allowed by this Hon ble High Court. 5.11 As the petitioner was aggrieved and dissatisfied by attachment of bank accounts, he had preferred SCA (Special Civil Application) No. 732 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly submitted that it was undisputed fact that no proceeding u/s. 74 (supra) were pending. It is undisputed fact that in the order of attachment u/s. 83 (supra) it was wrongly mentioned that proceeding u/s. 74 (supra) were pending. Only after considering submissions of the petitioners, a corrigendum was issued. It was not permissible to issue corrigendum after receipt of objection/reply/submission of the petitioner. In support of said submission, petitioner had also relied upon judgement of Hon ble Tribunal in the case of Mahindra Mahindra Ltd V/s. Commissioner of Central Excise, Mumbai reported at 2006 (196) E.L.T. 62 (Tri.Mumbai). 5.14 Having regard to all the submissions made before the aforesaid authority, it was expected that the order u/s. 83 (supra) wold be vacated and the bank accounts which were provisionally attached would be released. 5.15 However, petitioner herein is shocked and surprised to find Order dtd. 30/04/2019 issued from F.No.DGGI/AZU/12(4)73/201819. 6 Thus, it appears from the materials on record that the writ applicant is aggrieved by the orders of provisional attachment of his two bank accounts referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 43 '05 Desai Enterprises AAPPD7736B 24AAPPD7736B1Z W '122920000007 53 Proceedings have been launched against the aforesaid taxable person under section 74 of the said Act to determine the tax or any other amount due from the said person. In order to protect the interest of revenue and in exercise of powers conferred under section 83 of the Act, I, Vivek Prasad, Additional Director General, Directoprate General of Goods and Services Tax Intelligence, Ahmedabad Zonal Unit, Ahmedabad, hereby provisionally attach the aforesaid account. No debit shall be allowed to be made from the said account or any other account operated by the aforesaid person on the same PAN without the prior permission of this department. Sd/( Vivek Prasad) Additional Director General DGGI, AZU, Ahmedabad. 7 So far as the order of provisional attachment of the bank account maintained with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '06 Desai Impex Pvt Ltd AABCD4327M 24AABCD4327M1Z W '00820102455 '07 Desai Enterprises AAPPD7736B 24AAPPD7736B1Z W '00820102454 Proceedings have been launched against the aforesaid taxable person under section 74 of the said Act to determine the tax or any other amount due from the said person. In order to protect the interest of revenue and in exercise of powers conferred under section 83 of the Act, I, Vivek Prasad, Additional Director General, Directoprate General of Goods and Services Tax Intelligence, Ahmedabad Zonal Unit, Ahmedabad, hereby provisionally attach the aforesaid account. No debit shall be allowed to be made from the said account or any other account operated by the aforesaid person on the same PAN without the prior permission of this department. Sd/( Vivek Prasa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioners have an efficacious alternative remedy before the competent authority before whom all the contentions raised in the present petitions can be raised. This court is, therefore, not inclined to entertain these petitions. 4. In the above view of the matter, the petitions are dismissed as not entertained in the light of the availability of the efficacious alternative remedy under subrule (5) of rule 159 of the Central Goods and Services Tax Rules, 2017. 5. In terms of the communication dated 4.4.2019 of the Deputy Director, DGGI, AZU, the petitioners are required to file objections within seven days of attachment. Therefore, the petitioners were required to file the objections by 11th April, 2019. However, considering the fact that the petitioners were diligently prosecuting the proceedings before this court under Article 226 of the Constitution of India against the orders of attachment, if the petitioners file objections under subrule (5) of rule 159 of the Central Goods and Services Tax Rules, 2017 on or before 18th April, 2019, the competent authority shall consider the same as having been filed within time. The competent auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving admitted the liability refrains from making good the loss suffered by the Government exchequer on account of his/their fraudulent acts. 20. The provisions under Section 83 of CGST Act, 2017 read as under 83. (1) Where during the pendency of any proceedings 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 . 21. I would like to add that the investigation in the subject case are still going on under Section 67 of the Act and on conclusion of investigations in terms of provisions under Section 74 of the Act, detailed Demand cum Show Cause. Notice incorporating the specific allegations and evidences in support thereof shall be given to the assessee and applicant will get sufficient opportunity to contest the allegations. Such detailed account of evidences collected during the investigation so f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legitimate source, quoting of wrong provision shall n˙:0t vitiate the proceedings. In the instant case, it is a fact on record that proceedings under Section 67 of CGST Act, 2017 are going on against the applicant and evidences collected so far fairly indicate substantial liability on the part of applicant which stands admitted but remains unpaid. Therefore, action under Section 83 of the Act, when proceedings are going on under Section 67 of the Act to protect the interest of Revenue is clearly with the powers given under the said provisions of the Act. I, thus, find that powers under Section 83 of CGST Act, 2017 has been duly exercise as prescribed by law and since the power has been exercised legitimately, without exceeding the jurisdiction prescribed under Section 83 of the Act, merely quoting of wrong provision I.e. Section 74 instead of Section 67, when proceedings under Section 67 are also covered by the provisions under Section 83, shall not make the proceedings invalid. In this regard I place reliance on ratio of judgment of Hon ble Apex Court in the case of; ( 1) Afzal Ullah v. State of U.P. 1964 AIR 264, 1964 SCR (4) 991. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, the instant case is not a case where by way of corrigendum either the scope of the order dated 03.04.2019 has been altered or an attempt has been made to lend legality to an otherwise illegal order. The corrigendum has been issued merely to rectify an inadvertent error in the order dated 26.04.2019 by quoting the correct legal provisions. 26. In view of the above discussion in para 23 hereinabove, the Order dated 03.04.2019 issued under Section 83 of the CGST Act, 2017 remains valid irrespective of corrigendum issued thereto, as powers have been exercised legitimately in terms of provisions under Section 83 of the CGST Act, 2017. 27. Finally in view of the above facts that the applicant have substantial liability to pay to the Government exchequer which stands admitted by them and. In view of overwhelming evidences collected during the investigations, I find that the request of the applicants to withdraw orders issued under Section 83 is devoid of any merit and deserves to be rejected. Any such order to withdraw the action initiated under Section 83 of the Act shall be against the very object of the legislation, which is to protect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttachment under Section 83 has been passed by the Additional Director General DGGI AZU, Ahmedabad. 14 Mr. Trivedi further submitted that even if the corrigendum is held to be legal and valid, no proceedings under Section 67 of the Act were pending as on the date the order of provisional attachment under Section 83 of the Act came to be passed. Mr. Trivedi tried to develop this argument further by submitting that no goods were seized from the premises of the writ applicants. The proceedings under Section 67 of the Act could be said to be pending only if the goods are seized from the premises of the writ applicants. 15 Mr. Trivedi, in the last, submitted that Section 83 of the Act can be invoked for the purpose of passing a provisional attachment provided the Commissioner is subjectively satisfied on the basis of the materials on record that it is necessary to do so to protect the interest of the government revenue. Therefore, the subjective satisfaction that the interest of the government revenue needs to be protected is of prime importance. Mr. Trivedi submitted that having regard to the materials on record, the interest of the government revenue cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits are reversed after they are wrongly availed. 17 Mr. Trivedi, in support of his aforesaid submissions, has placed reliance on the following case laws: [ i] Commissioner of Customs, Bangalore vs. Kesar Marble and Granites reported in 2012 (278) ELT 42 (Kar) [ ii] Century Laminating Co Ltd vs. Commissioner of Central Excise, Meerut II, reported in 2009 (236) ELT 182 (Tri. Del). [ iii] Chawla Trading Co. vs. Commissioner of Customs (export), Nhava Sheva reported in 2015 (330) ELT 470 (Tri. Mumbai) [ iv] Mahindra Mahindra Ltd vs. Commissioner of Central Excise Mumbai V reported in 2006 (196) ELT 62 (Tri. Mumbai). ● SUBMISSIONS ON BEHALF OF THE RESPONDENTS: 18 Ms. Mehta, the learned standing counsel appearing for the Union of India has vehemently opposed all the six writ applicants. She submitted that no error, not to speak of any error of law could be said to have been committed by the respondent No.1 in passing the order of provisional attachment in exercise of its powers under Section 83 of the Act as well as the order overruling the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Act is only a provisional measure to protect the interest of Government Revenue when during the investigations the collected evidences overwhelmingly indicate substantial evasion of tax and the Petitioner despite having admitted the liability refrains from making good the loss suffered by the Government exchequer on account of his/their fraudulent acts. Therefore, contention raised by the Petitioner is devoid of any truth and does not hold any merit. Action taken under Section 83 of the Act is legal and valid to safeguard interest of the Government revenue . The orders issued under Section 83 are only a provisional measure to protect Government Revenue. Investigations under Section 67 of CGST Act, 2017 are in progress against the Petitioner. On conclusion of investigations, Demand-Cum-Show Cause Notice shall be issued under Section 74 of the CGST Act within the prescribed time limit. 25 It is to submit before Hon ble Court, that any action under Section 83 of the Act is only a provisional measure to protect the interest of Government Revenue when during the investigations the collected evidences overwhelmingly indicate substantial evas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal and proper which has been issued by lawful exercise of power under Section 83 of the CGST Act in view of the submissions made hereinabove. Reply to Para 6P: 27. It is to submit before the Hon ble Court that the statements of Various suppliers and buyers have been recorded under Section 70 Of the CGST Act, 2017. The Petitioner shall get full opportunity to defend themselves at the time of adjudication. The action under Section 83 is only a provisional measure to protect Government Revenue. Reply to Para 6Q: The submissions made in response to Para 61 and 6J hereinabove are reiterated. Reply to Para 6R: 28. Regarding the plea of the petitioner that no weighment of goods has been done during the stock verification, it is to submit before the Hon ble Court that Panchnama was drawn at the premises of M / s PHD Trading Corporation Ltd, M /s Desai Impex Pvt Limited and M /s Desai Metalinks Limited wherein physical stock verification was done in presence and to the satisfaction of Shri Pranit Hem Desai, Director of Desai Group of Companies/Petitioner and responsible person of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Activity) as per applicable CGST Act, 2017 and rules made under it, the levy of GST is imposed on all suppliers and does not interfere with the right of the Supplier/Petitioner to practice any profession, or to carry on any occupation, trade or business. Accordingly as per Section 16 of CSGT Act, 2017 ITC is available but with certain conditions, which are applicable to all registered persons engaged in supply of goods, but as discussed in above para s, the Petitioners in this case has availed ITC without any actual supply and receipt of goods in violation of conditions of the law as stipulated under Section 16(2)(b) of CGST Act, 2017. Therefore, the doubt raised by the Petitioner about legality and Validity of orders for attachment of the bank accounts dated 30.04.2019 is without any legal basis and the same has been issued With full authority and jurisdiction in law. Reply to Para 7, 8 and 9: No Comments. However, it is to submit before Hon ble Court that this Hon ble Court had an occasion to consider the provision under Section 83 of CGST Act, 2017 in the case of Special Civil Application No. 1041 of 2019 filed by M/s Nandeshwari Steel Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk Ltd Paldi Vasna Road Branch, Ahmedabad 12292000000743 1,43,847 ● ANALYSIS: 22 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the respondent No.1 was justified in invoking Section 83 of the Act for the purpose of passing an order of attachment of the bank accounts. 23 Without entering into any other controversy, we are inclined to allow all the six writ applications on the short ground that during the period between July 2017 and May 2019, the total input tax credit availed by the writ applicants aggregates to ₹ 59,49,18,103/( Rupees Fifty Nine Crore Forty Nine Lakh Eighteen Thousand One Hundred Three only), whereas the total tax paid during this period aggregates to ₹ 63,62,41,525/( Rupees Sixty Three Crore Sixty Two Lakh Forty One Thousand Five Hundred Twenty Five Only). The same is indicative of the fact that against the availment of credit of ₹ 59,49,18,103/( Rupees Fifty Nine Cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisional attachment have been made in exercise of powers under section 83 of the Central Goods and Service Tax Act, 2018 (hereinafter referred to as the CGST Act ). Section 83 of the CGST Act inter alia provides that where during the pendency of any proceedings under sections 67, 73 or 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 an order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed. 10.At the time when the impugned orders under section 83 of the CGST Act came to be passed, according to the respondent, an amount of ₹ 14.62 crores would have been due and payable by the petitioner upon conclusion of the proceedings that may be initiated pursuant to the proceedings under section 67, 73 or 74 of the Act. 11.Under section 83 of the CGST Act, the Commissioner is empowered to order provisional attachment for the purpose of protecting the interest of the Government revenue. In the facts of the present case, while a liability of ₹ 14.62 crores ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods, which results in bringing the business of the petitioner to a grinding halt. 7 Subsection (1) of section 83 of the GGST Act provides that where 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. On a plain reading of the said provision, it is evident that before resorting to such drastic action, the Commissioner is required to form an opinion that it is necessary to do so to protect the interest of the revenue. For the purpose of arriving at such an opinion, the Commissioner should first form an opinion that the petitioner would not be in a position to pay the tax dues after the assessment proceedings are over. In the facts of the present case, the petitioner firm is a going business and the petitioner has readily deposited a sum of ₹ 17,00,00/which covers more than the tax liability that may be assessed. It is not the case of the respondents that the petitioner is a fly by night operator or that it does not have the means to pay the dues that mig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the relevant factors. 27 This Court had the occasion to consider Section 83 of the State GST Act, 2017 at length in the case of Valerius Industries vs Union of India [Special Civil Application No.13132 of 2019 decided on 28th August 2019] . This Court, after an exhaustive discussions on the subject, summarized its final conclusions as under: 52 Our final conclusions may be summarized as under: [ 1] The order of provisional attachment before the assessment order is made, may be justified if the assessing authority or any other authority empowered in law is of the opinion that it is necessary to protect the interest of revenue. However, the 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 the formation of the belief. [ 2] The power conferred upon the authority under Section 83 of the Act for provisional attachment could be termed as a very drastic and farreaching power. Such power should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, in order to protect the interest of the revenue in cases where the raising of demand is likely to take time because of the investigations and there is apprehension that the assessee may default the ultimate collection of the demand. In other words, Section 83 gives a power to be exercised during the pendency of any proceeding for assessment or reassessment, so that the assessee may not fritter away or secrete his resources out of the reach of the Commercial Tax department when the assessment or reassessment is completed. The expression for the purpose of protecting the interest of the revenue occurring in Section 83 of the Act is very wide in its meaning. Further, the orders of provisional attachment must be in writing. There must be some material on record to indicate that the Assessing Authority had formed an opinion on the basis thereof that it was necessary to attach the property in order to protect the interest of the revenue. The provisional attachment provided under section 83 is more like an attachment before judgment under the Code of Civil Procedure. It is a liability on the property. However, the power conferred upon the Assessing Authority under Section 83 i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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