TMI Blog2020 (9) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act for provisional attachment by the respondent authorities - HELD THAT:- This Court in case of VALERIUS INDUSTRIES VERSUS UNION OF INDIA [ 2019 (9) TMI 618 - GUJARAT HIGH COURT] has given guidelines for invoking the powers under section 83 of the GGST Act which states that authority before exercising power under Section 83 of the Act for provisional attachment should take into consideration two things: (i) whether it is a revenue neutral situation (ii) the statement of output liability or input credit . Having regard to the amount paid by reversing the input tax credit if the interest of the revenue is sufficiently secured, then the authority may not be justified in invoking its power under Section 83 of the Act for the purpose of provisional attachment. Prima facie, there is reasonable apprehension that the petitioners may default in the ultimate collection of the demand that is likely to be raised on completion of the assessment. It appears that prima facie there is sufficient material on record to justify the satisfaction in view of denial of the petitioner no. 2 with regard to the transactions carried out by the petitioner no.1 which is a proprietary concern of peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioners maintained with the Respondent No.4 to 6 Banks, in the interest of justice; (C) Pending admission hearing and till final disposal of the present petition, Your Lordship may be pleased to suspend operation, execution and implementation of the order of provisional attachment said to have been issued by Respondent No.2 for attachment of above mentioned Bank Accounts of the Petitioners maintained with Respondent No.4 to 6 to permit the Petitioners to operate the said Accounts, in the interest of justice: (D) Your Lordship may be pleased to pass such other and/or further orders as may be deemed fit, just and proper in the interest of justice. 2. It is the case of the petitioners that the bank accounts of the petitioners have been provisionally attached under section 83 of the Gujarat Goods and Service Tax Act, 2017 (for short GGST Act ) without considering the provisions of section 83 of the GGST Act, as in the case of the petitioners no proceedings are pending under any of the sections mentioned therein. 3. Brief facts of the case are as under : 3.1) Petitioner no.2 is a proprietor of petitioner no.1 firm. It is the case of the petitioners that respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank Ltd. 501002702075 54 1,521.40 HDFC Bank Total 1,521.40 88,87,088.14 3.2) It is the case of the petitioners that respondent no.6 informed the petitioner no.2 that on the basis of various notices received from GST department, the abovestated accounts of the petitioners were attached. 3.3) It is the case of the petitioners that pursuant to incorporation of petitioner no.1 firm, the bank accounts were opened with respondent no.4 to 6. It is the case of the petitioners that petitioner no.1 was incorporated since February 2018 and is registered under the provisions of GGST Act having registration number being GSTIN No. 24BTYPC8659P1ZJ and always adhered to all the provisions including filing of periodical returns such as GSTR1 and GSTR3B since the month of February, 2018 till the month of July 2018 when the State GST authority unilaterally ordered retrospective cancellation of registration of petitioner no.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners would be able to pay the dues which may ultimately be held liable to be paid. It was therefore, submitted that the respondent authorities by passing the impugned order has put the business of petitioner no.1 and personal life of petitioner no.2 to a halt and due to such action, business of the petitioner no.1 is paralyzed resulting into huge financial difficulties. It was submitted that the impugned orders passed under section 83 of the GGST Act is without jurisdiction and not tenable in law as the impugned order which is required to be passed by the Commissioner has been passed by the State Tax Officer Unit1, Jamnagar. 4.3) Reliance was placed on the decision of this Court in case of Valerius Industries v. Union of India rendered on 28th August, 2019 in Special Civil Application No.13132/2019 wherein certain principles have been laid down for exercising powers by the respondent authorities under section 83 of the GGST Act. Referring to the various guidelines stipulated in the said decision, it was submitted that the respondent authorities have misused the powers under section 83 of the GGST Act by passing the impugned order of provisional attachment of bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable person indicating a nexus between the proceedings to be initiated against a taxable person and provisional attachment of bank account of such taxable person. 19. Power to provisionally attach bank accounts is a drastic power. Considering the consequences that ensue from provisional attachment of bank accounts, the Courts have repeatedly emphasized that this power is not to be routinely exercised. Under Section 83, the legislature has no doubt conferred power on the authorities to provisionally attach bank accounts to safeguard government revenue, but the same is within welldefined ambit. Only upon contingencies provided therein that the power under section 83 can be exercised. This power is to be used in only limited circumstances and it is not an omnibus power. 20. It is therefore not possible to accept the submission of the Respondents that even though specified proceedings have been launched against one taxable person, bank account of another taxable person can be provisionally attached merely based on the summons issued under section 70 to him. 21. In view of our discussion as above, we hold that the order dated 22 October 2019 provisionally attaching th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. One thing is clear that this power should be exercised by the Authority only if there is a reasonable apprehension that the assessee may default the ultimate collection of the demand that is likely to be raised on completion of the assessment. It should, therefore, be exercised with extreme care and circumspection. It should not be exercised unless there is sufficient material on record to justify the satisfaction that the assessee is about to dispose of the whole or any part of his property with a view to thwarting the ultimate collection of the demand. Moreover, attachment should be made of the properties and to Page 32 of 33 Downloaded on : Sun Jun 14 20:45:20 IST 2020 C/SCA/9392/2019 JUDGMENT the extent it is required to achieve the above object. It should neither be used as a tool to harass the assessee nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of various entities were similar. Learned Assistant Government Pleader also invited the attention of the Court to the authorisation for inspection or search dated 26th August, 2019 issued by the Joint Commissioner of State Tax, Division11, Rajkot at the business premises of the petitioners. Learned Assistant Government Pleader also referred to the statement dated 27th August, 2019 of petitioner no.2 and referred to question no. 16, whereby he was asked with regard to details of E-Way bills generated from May 2018 to May 2019 for ₹ 8,44,26,683/and outward supply of ₹ 10,68,24,458/as per the return filed with the respondent authorities and for such question, the petitioner no.1 replied that he was not aware about such details. It was pointed out that petitioner no.2 has denied the knowledge of any of the information with regard to petitioner no.1 M/ s JSK Sons. 5.2) Learned Assistant Government Pleader also tendered a copy of opinion on the basis of which search and seizure was carried out at the business premises of the petitioners and other associate concern on 27th August, 2019 and it was pointed out that huge transactions were recorded in the bank account of petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons without physical movement of goods whatsoever and therefore, in the interest of Revenue, the bank accounts of the petitioners were required to be attached and accordingly, the respondent authorities have passed the impugned orders of provisional attachment of the six bank accounts of the petitioners. 6. Having heard the learned advocates for the respective parties and having considered the materials on record, prima facie, it appears that the petitioners have issued very large number of E-Way bills within a short period of time between their associate concern without movement of goods like cement, iron, tiles, brass etc. From the report, submitted to the Enforcement department of the respondent authorities, it is also revealed that the petitioners were involved in carrying out the transactions on paper without actual physical movement of goods. It is also pertinent to note that petitioner no.2 has shown total ignorance with regard to the transactions which were reported to be fictitious, more particularly, when the petitioner no.2 is the owner of the petitioner no.1 firm having GST No. 24BTYPC8659P1ZJ. 7. With regard to the contention raised on behalf of the petitioners f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings. [7] The authority before exercising power under Section 83 of the Act for provisional attachment should take into consideration two things: (i) whether it is a revenue neutral situation (ii) the statement of output liability or input credit . Having regard to the amount paid by reversing the input tax credit if the interest of the revenue is sufficiently secured, then the authority may not be justified in invoking its power under Section 83 of the Act for the purpose of provisional attachment. 8. In view of the aforesaid guidelines and in view of the facts emerging from the record, prima facie, there is reasonable apprehension that the petitioners may default in the ultimate collection of the demand that is likely to be raised on completion of the assessment. It appears that prima facie there is sufficient material on record to justify the satisfaction in view of denial of the petitioner no. 2 with regard to the transactions carried out by the petitioner no.1 which is a proprietary concern of petitioner no.2. It also emerges from the materials on record that this is a fit case to invoke the provisions of section 83 of the GGST Act as apparently the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessment, then it was incumbent upon the respondent authorities to exercise powers under section 83 of the GGST Act. 11.With regard to reliance placed by the petitioners on the decision in case of Kaish Impex Private Limited (supra), it is true that the Courts have repeatedly emphasized that such power of provisional attachment is not to be routinely exercised under the pretext to safeguard the Government revenue and it is not an omnibus power. However, in the facts of the case it has prima facie emerged from the material on the record that the petitioners were involved in bogus billing to defraud the Revenue by generating E-Way bills without physical movement of the goods. Therefore, the power exercised by the respondent authorities cannot be said to be without jurisdiction. 12.With regard to the reliance placed on the decision of this Court in case of Pranit Hem Desai (supra), the same would not come to help the petitioners in view of gross facts of the case of the petitioners as the respondent authorities have opined that there is a reasonable apprehension that the petitioners may default in the ultimate collection of demand that is likely to be raised on compl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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