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2020 Supreme(Bom) 947
IN THE HIGH COURT OF BOMBAY
Ujjal Bhuyan, Abhay Ahuja, JJ.
Siddharth Mandavia - Appellant
Versus
Union Of India And Others - Respondent
Writ Petition (L) No. 2901 of 2020
Decided On : 03-11-2020
Sujay Kantawala, Advocate, P. Choudhari, Advocate, Manthan Unadkat, Advocate, Unadkat & Co, Advocate, Pradeep S Jetly, Advocate, J.B. Mishra, Advocate
The main legal point established in the judgment is the temporary and provisional nature of attachment under Section 83 of the CGST Act, the need for periodic review, and the requirement to balance the interests of the government revenue and the affected party when exercising such powers.
Headnote:
Attachment - Goods and Services Tax - Section 83 of the Central Goods and Services Tax Act, 2017 - Summary of the judgment's legal framework: The court discussed the provisions of Section 83 of the CGST Act, which allows provisional attachment of property, including bank accounts, belonging to the taxable person. The court emphasized the conditions that must be satisfied before such attachment can be made and highlighted the temporary nature of the attachment. The court also examined Rule 159 of the CGST Rules, which provides for the procedure for provisional attachment and the rights of the person whose property is attached.
Fact of the Case:
The petitioner, a sole proprietor of a firm engaged in export business, sought relief from the court against the provisional attachment of bank accounts and the blockage of the importer exporter code by the respondents. The respondents alleged fraudulent activities by the petitioner's firm in availing and utilizing fake input tax credit and claimed that the provisional attachment was necessary to protect government revenue.
Finding of the Court:
The court found that the provisional attachment of bank accounts belonging to individuals not involved in the alleged fraudulent activities was not justified. It also held that the blockage of the importer exporter code by an authority not empowered to do so was unauthorized and without jurisdiction.
Issues: The key issues revolved around the legality of the provisional attachment of bank accounts and the blockage of the importer exporter code, and whether the conditions of Section 83 of the CGST Act were met.
Ratio Decidendi: The court emphasized the temporary nature of provisional attachment and the need for the competent authority to review the necessity of such attachment periodically. It also highlighted the importance of balancing the interests of the government revenue and the affected party when exercising powers under Section 83 of the CGST Act.
Final Decision: The court ordered the unfreezing of certain bank accounts and the withdrawal of the blockage of the importer exporter code. It also allowed the petitioner to file objections to the provisional attachment and directed the competent authority to provide a hearing and pass an appropriate order within a specified timeframe.
JUDGMENT
Ujjal Bhuyan, J. - Heard Dr. Sujay Kantawala along with Mr. P. Choudhari, learned counsel for the petitioner and Mr. Pradeep Jetly, learned senior counsel along with Mr. J. B. Mishra, learned counsel for the respondents.
2. By filing this petition under Article 226 of the Constitution of India, petitioner has sought for the following reliefs:-
1. for a direction to the respondents restraining them from adopting any coercive measures without issuing show cause notice to compel the petitioner to pay further customs duty and / or goods and services tax (GST) dues which are disputed by the petitioner;
2. for a direction to the respondents to unfreeze the 12 bank accounts of the petitioner and family members as per details furnished in the writ petition including in the prayer portion;
3. for a direction to the respondents to unfreeze the Importer Exporter Code No.0314035460 of the proprietorship firm of the petitioner by the name of 'M/s. XS Components'; and
4. for a direction to the respondents allowing presence of a lawyer of petitioner's choice during investigation (questioning) of the petitioner.
3. On 08.09.2020, this Court had issued notice on admission as well on stay while directing the respondents to file affidavit. Subsequently an affidavit was filed by the respondents.
4. On 08.10.2020, the interim prayer of the petitioner was heard whereafter the following order was passed:-
"2. Our attention has been drawn to Section 83 of the Central Goods and Services Tax Act, 2017 as well as to the garnishee notices issued including the one at page 195 of the Writ Petition.
3. From a reading of Section 83, we find that there are two preconditions which must be satisfied before the Commissioner can exercise jurisdiction under Section 83. First precondition is pendency of any proceedings under Section 62 or Section 63 or Section 64 or Section 67 or Section 73 or Section 74 of the Central Goods and Services Tax Act, 2017. Second precondition is that Commissioner must form an opinion that provisional attachment of any property including bank account is necessary for protecting the interest of Government revenue. Once these two preconditions are satisfied, Commissioner is required to pass an order in writing provisionally attaching any property including bank account belonging to the taxable person.
4. From a perusal of the notice at page 195, we find that it is basically a garnishee notice issued to the Bank Manager of Indusind Bank. In the said notice the deponent has mentioned that proceedings have been launched against the taxable person i.e. the Petitioner under Sections 67 and 74 of the Central Goods and Services Tax Act, 2017. But in what manner the proceedings have been launched is not discernible.
5. For proper appreciation, we feel that it would be appropriate if the Respondents produce before us the order passed by the Commissioner under Section 83 of the Central Goods and Services Tax Act, 2017 in respect of all the garnishee notices.
6. Ordered accordingly."
5. Following the aforesaid order, additional affidavit on behalf of respondent Nos.5 to 7 was filed on 13.10.2020.
6. The interim prayer was finally heard on 15.10.2020 whereafter order was reserved.
7. For a proper appreciation of the rival contentions vis-a-vis the interim relief sought for by the petitioner, it would be apposite to briefly narrate the relevant facts as projected by the petitioner.
8. According to the petitioner, he is the sole proprietor of the proprietorship firm M/s. XS Components which is engaged in the business of export of various products, such as, garments, footwear, leather accessories etc. Petitioner holds Importer Exporter Code bearing No.0314035460.
8.1. Petitioner has stated how the goods are purchased locally from wholesale traders and thereafter exported out of India through the container freight supply terminal at Inland Container Depot, Tuglakabad. Goods are loaded in the containers in the presence of customs officials who ver
