TMI Blog2021 (10) TMI 523X X X X Extracts X X X X X X X X Extracts X X X X ..... R2 must contain references to the material while according sanction under Section 83. The power conferred upon an authority under Section 83 is substantial and with great power comes great responsibility. The authority concerned must justify the invocation of the coercive and intrusive recovery proceedings against the assessee, even prior to determination of liability and passing of an assessment order. The burden that lies upon the revenue is heavy and has to be seen to be discharged by them in a proper manner in each and every case where power under Section 83 is invoked. The opinion of R2 in this case is far more cryptic revealing total nonapplication of mind and merely repeating what R1 has stated in his request for sanction. The impugned order of attachment is set aside. Petition allowed. - W.P. No.32 of 2021 And WMP. Nos.46, 49 & 51 of 2021 - - - Dated:- 5-10-2021 - Honourable Dr. Justice Anita Sumanth For the Petitioner : Mr.P.Rajkumar For the Respondents : Mr.V.Sundareswaran, Senior Panel Counsel ORDER The petitioner is an assessee under the provisions of the Central Goods and Service Tax Act, 2017 (in short CGST Act/Act ) and challenges pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nflating its entitlement to ITC, projected as though it had engaged in business dealings with non-existent, bogus companies. 6. Section 83 provides for the provisional attachment of any property including bank accounts belonging to the taxable person with the avowed object of protecting the revenue, in certain cases. Section 83 reads as follows: 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. (2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1). 7. The premise upon which Section 83 operates is the opinion of the Commissioner that for the purpose of protecting the interests of Government revenue, it becomes necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning fraudulent GSTINs. It was found that they are availing fraudulent ITC from bogus/non-existing units. It is found that Smt. Shunmugadevi is operating the bank accounts of Sl. 3, 4, 5, 6 7 as given in below table. Transaction of bogus companies indulging in passing on fraudulent ITC were carried out by using these bank details. The details of those PAN based accounts are given below table. .. 10. The proceedings have been placed before R1 on the same day and received approval as proposed, on the same day. Thereafter, R2 puts up a note on 03.11.2020 giving the details of the bank accounts of Mr.Sivakumar, Proprietor of the petitioner proprietory and his wife Mrs.Shunmugadevi, who also manages some of the sister concerns of the petitioner concern. 11. R2 thus proceeds on the firm conviction that the petitioner was availing fraudulent ITC from bogus/non-existent units. To me, this conclusion appears pre-mature, as investigation had just been completed. Investigation, per se, is the process of collecting material from the premises of the assessee and consequent upon such investigation, the authorities are expected to study the documents and verify the same in conj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C originally claimed has been reversed and further that ineligible ITC claimed would be remitted within a weeks time. 16. Question No.7 and her answer thereto are extracted below: Q.No.7. It is noticed that you have purchased invoices without actual receipt of the goods from non-existent/fake units as detailed below. Please comment. Sl.No. Name of the Unit GSTIN Amount of ITC in Rs. passed to Mutharamm an Co Document stating the company is nonexistent 1. Moon Traders 33AOMPK7693H1ZG 36,24,275/- Visit report dt.25.08.2020 2. Super Metal Trading 33CZUPM5643Q1ZD 32,34,923/- Visit report dt.25.08.2020 3. Covai Steels 33ADJPW3771A1ZL 2,62,710/- Covai DGGI report dt.26.08.2020 4. India Steels 33CZJPM6461K1ZY 17,77,176/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat Goods and Services Tax Act, 2017 (in short Gujarat GST Act ) and an order of provisional attachment of that petitioner s bank account. The Court examined in detail the Scheme of the Gujarat GST Act concluding as follows: 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 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 farreaching 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The discussion at paragraphs 6, 7 and 8 of their decision in Patran Steel Rolling Mill (supra) has been extracted as follows : 6 From the facts as emerging on record, it appears that the tax liability of the petitioner in terms of the goods seized as well as the transporter s statement, the same would not exceed ₹ 13,00,000/. The petitioner has already deposited a sum of ₹ 17,00,000/ with the respondent. Insofar as the amount assessed towards the penalty is concerned, in the absence of any proceedings having been undertaken under the provisions of the GGST Act as well as any penalty having been imposed, in the opinion of this court, the respondent authorities were not justified in resorting to such a drastic coercive measure of attachment of the bank accounts and seizure of goods, which results in bringing the business of the petitioner to a grinding halt. 7 Sub-section (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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the dealer is in a position to continue with the business. This court does not intend to lay down any absolute proposition that in no case drastic action should be taken, but that the respondents should consider the background and history of the dealer as well as his financial position to ascertain as to whether or not he would otherwise be in a position to pay the dues that may be assessed upon the culmination of any assessment proceedings that may be initiated. If the dealer is a fly by night operator or a habitual offender or does not have sufficient means to pay the dues that may arise upon assessment, such action may be justified. Such drastic powers under section 83 of the Act should not be exercised as a matter of course, but only after due application of mind to the relevant factors. 21. In the present case, there are serious allegations in regard to the excess claim of ITC based on transactions with non-existent or fraudulent entities. However, such allegations are to be based upon supporting materials and evidences if they are to translate into an opinion as required in terms of Section 83. No doubt, there are instances where, even prior to the passing of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, in that case insufficient. The Hon ble Bench perused the records minutely and has extracted from the opinion of the sanctioning authority, finding it lacking. The Hon ble Court was of the view that the opinion neither disclosed any tangible material nor did it reveal any basis for the formation of the opinion that a provisional attachment was necessary to safeguard the interests of the revenue to justify invocation of powers under Section 83. The relevant portion of the summary of findings of the Hon ble Bench at paragraph 72 is extracted below: E Summary of findings 72 For the above reasons, we hold and conclude that (i) .. (ii) The writ petition before the High Court under Article 226 of the Constitution challenging the order of provisional attachment was maintainable; (iii) The High Court has erred in dismissing the writ petition on the ground that it was not maintainable; (iv) The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled; (v) The exercise o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/fraudulent claim of input tax credit. The above mentioned orders have been passed for the financial years 2017-18 and 2018-19. As per evidences available in the case of M/s.G.M.Powertech, Kala-Amb it has been established that M/s.G.M.Powertech claimed/utilized input tax credit in contravention of various provisions of the HPGST/the CGST Acts, 2017. After illegal accumulation of input tax credit, M/s.G.M.Powertech, Kala-Amb passed on the same to various R.T.P s situated in the State of Himachal Pradesh. It has been established that M/s.G.M.Powertech issued invoices on the basis of fake input tax credit during the years 2017- 18 and 2018-19. It also issued invoices to M/s.Radha Krishan Industries, Kala-Amb during 2018-19 and a case u/Sec.74 of the HPGST/ the CGST Acts, 2017 has also been initiated against the R.T.P. M/s.Radha Krishan Industries claimed input tax credit of ₹ 3,25,04,864/- on the strength of invoices issued by M/s.G.M.Powertech. FORM GST DRC-01A has also been issued to the R.T.P. on 04.07.2020. The submissions made by the R.T.P. on PART-B of FORM GST DRC-01A were received in this office on 05.08.2020 which are not sustainable before laws related to HPGST/C ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
