TMI Blog2020 (10) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the opinion to be formed by the Commissioner or take a case by the delegated authority cannot be on imaginary ground, wishful thinking, howsoever laudable that may be. Such a course is impermissible in law. In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith. The order of provisional attachment of the five bank accounts of the writ applicant under Section 83 of the Act is quashed and set aside - Application allowed. - R/SPECIAL CIVIL APPLICATION NO. 11503 of 2020 - - - Dated:- 12-10-2020 - HONOURABLE THE CHIEF JUSTICE MR. VIKRAM NATH AND HONOURABLE MR. JUSTICE J.B. PARDIWALA Appearance: MR MUKUND K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 2. It appears from the materials on record that the writ applicant seeks to challenge the order of provisional attachment of five bank accounts of the writ applicant maintained with the Kotak Mahindra Bank Ltd., Ring Road, Surat in exercise of powers under Section 83 of the GST Act, 2017. The details of the five bank accounts ordered to be attached are as under:- Sr.No. Name of Bank Branch Type of Account Account Number 1. KOTAK MAHINDRA BANK LTD., 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. Current Account 1511785097 2. KOTAK MAHINDRA BANK LTD. 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. Current Account 1513858713 3. KOTAK MAHINDRA BANK LTD., 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. Current Account 1513969471 4. KOTAK MAHINDRA BANK LTD., 1 to 5, Surya Plaza, Near Udhna Darwaja, Ring Road, Surat. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 83 of the Act, 2017. Section 83 of the Act, 2017 reads as under: SECTION 83. Provisional attachment to protect revenue in certain cases. - (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. 5. Section 83 talks about the opinion which is necessary to be formed for the purpose of protecting the interest of the government revenue. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But, at the same time, there must be material based on which alone the authority could form its opinion that it has become necessary to order provisional attachment of the goods or the bank account to protect the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal attachment of the goods or the bank account or other articles which may be useful or relevant to any proceedings under the Act. [see: Bhikhubhai Vithlabhai Patel and others vs. State of Gujarat AIR 2008 SCC 1771]. 6. In J. Jayalalitha vs. U.O.I. [AIR 1999 SC 1912], the Supreme Court while construing the expression as may be necessary employed in Section 3 (1) of the Prevention of Corruption Act, 1988 which conferred the discretion upon the State Government to appoint as many Special Judges as may be necessary for such area or areas or for such case or group of cases to try the offences punishable under the Act, observed : The legislature had to leave it to the discretion of the Government as it would be in a better position to know the requirement. Further, the discretion conferred upon the Government is not absolute. It is in The nature of a statutory obligation or duty. It is the requirement which would necessitate exercise of power by the Government. When a necessity would arise and of what type being uncertain the legislature could not have laid down any other guideline except the guidance of necessity . It is really for that reason that the legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same thing where the circumstances relevant to the clause do not exist? The legislature no doubt has used the expression circumstances suggesting . But that expression means that the circumstances need not be such as would conclusively establish an intent to defraud or a fraudulent or illegal purpose. The proof of such an intent or purpose is still to be adduced through an investigation. But the expression circumstances suggesting cannot support the construction that even the existence of circumstances is a matter of subjective opinion. That expression points out that there must exist circumstances from which the Authority forms an opinion that they are suggestive of the crucial matters set out in the three sub-clauses. It is hard to contemplate that the legislature could have left to the subjective process both the formation of opinion and also the existence of circumstances on which it is to be founded. It is also not reasonable to say that the clause permitted the Authority to say that it has formed the opinion on circumstances which in its opinion exist and which in its opinion suggest an intent to defraud or a fraudulent or unlawful purpose. It is equally unreasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully or truly all material facts. It is not any or every material, howsoever vague and indefinite or distant which would warrant the formation of the belief relating to the escapement of the income of the assessee from assessment. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. 10. In Bhikhubhai Vithalabhai Patel (supra), the Supreme Court observed in paras 32 and 33 as under: 32. We are of the view that the construction placed on the expression reason to believe will equally be applicable to the expression is of opinion employed in the proviso to Section 17 (1) (a) (ii) of the Act. The expression is of opinion , that substantial modifications in the draft development plan and regulations, are necessary , in our considered opinion, does not confer any unlimited discretion on the Government. The discretion, if any, conferred upon the State Government to make substantial modifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion and whether they have any rational connection with or relevant bearing on the formation of the opinion. The Court is entitled particularly, in the event, when the formation of the opinion is challenged to determine whether the formation of opinion is arbitrary, capricious or whimsical. It is always open to the court to examine the question whether reasons for formation of opinion have rational connection or relevant bearing to the formation of such opinion and are not extraneous to the purposes of the statute. 11. In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorized purpose amounts to malice in law. It is immaterial whether the authority acted in good faith or bad faith. In the aforesaid context, we may refer to and rely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 28th August, 2019, wherein this Court drew the following conclusion: [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 far-fetching, 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 far reaching power. Such power should be used sparingly and only on substantive weighty grounds and reasons. [3] The power of provisional attachment under Section 83 of the Act 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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