IMPORTANT POINT
Provisional orders of attachment under Section 83 of the CGST Act can be issued to protect revenue interests, but must be based on credible evidence and cannot continue beyond one year without justification.

JUDGMENT :

Raja Basu Chowdhury, J.

1. Affidavit of service filed in Court today is taken on record.

2. The present writ petition has been filed, inter alia, challenging seven provisional orders of attachment issued under Section 83 of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as the “said Act”). These orders include, three several orders dated 3rd February, 2023, two orders dated 10th February, 2023 and two several orders dated 9th February, 2024.

3. Mr. Bag, learned advocate, representing the petitioner by drawing attention of this Court to the said provisional orders of attachment, dated 3rd February, 2023 and 10th February, 2023 submits that the aforesaid orders of attachment though, could have been issued by invoking the provisions of the said Act, however, in terms of the provisions contained in Section 83 of the said Act, the same could not have continued beyond a period of one year from the date of issue of such order as the same ceases to have effect after expiry of the period of one year from the date when such order was issued. According to him, admittedly, in this case, the above five orders of attachment which were issued on 3rd February, 2023 and 10th February, 2023 have ceased to have effect, on the expiry of the period of one year from the date of issuance of such orders. It is submitted, that from the aforesaid orders of attachment it would transpire that in connection with a purported investigation initiated by the respondents that the aforesaid provisional orders of attachment had been issued, on the premise that the petitioner is in control of certain separate entities, despite the fact that the petitioner has no connection with such entities.

4. In support of his aforesaid contention that the provisional orders of attachment cannot be continued beyond the period of one year, he has placed reliance on an unreported judgment delivered by the Hon’ble High Court at New Delhi in the case of M/s. VKS Industries v. Commissioner, Central Excise and CGST in WP(C) 257 of 2023 on 13th February, 2023. It is submitted that the provisional orders of attachment issued under Section 83 of the said Act is akin to an attachment order passed under Order XXXVIII Rule 5 of the Code of Civil Procedure and the principles of Order XXXVIII Rule 5 of the Code of Civil Procedure 1908 squarely applies in respect of the orders of attachment passed under Section 83 of the said Act. Admittedly, there being no determination of liability by initiating any proceeding against the petitioner, such orders of attachment are otherwise bad in law. Simply because the respondents have reasons to believe that the petitioner is the operator/controller of the legal entities identified in the order of attachment the same cannot clothe the respondents with the power to issue provisional orders of attachment by invoking the provisions of Section 83 of the said Act.

5. By placing reliance on two separate judgments delivered by the Hon’ble High Court of Gujarat in the case of Valerius Industries v. Union of India, reported in (2019) SCC OnLine Guj 6866 and the case of Meenakshi Trendz v. State of Gujarat reported in (2020)122 taxmann.com236 (Gujarat), it is submitted that the Hon’ble Division Bench of the High Court of Gujarat while considering the scope and ambit of exercise of power under Section 83 of the said Act has specifically identified the circumstances when such power can be exercised. Since, in the instant case, no proceeding has been initiated by the respondents under the provisions of the said Act, during the currency of the provisional orders of attachment dated 3rd February, 2023 and 10th February, 2023, the provisional orders of attachment are otherwise bad in law and should be set aside. It has also been submitted that the facts of the case do not justify issuance of provisional orders of attachment. In any event under no circumstance can a provisional order of attachment be extended beyond one year. In support of his