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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
Sidhivinayak Chemtech Private Limited Through Its Authorized Representative – Appellant
Versus
Principal Commissioner, CGST, Meerut & Ors. – Respondents
W.P.(C) 17547 of 2022
Decided On : 16-05-2023
CGST Act - Territorial Jurisdiction - Section 83 - Summary Attachment Order set aside due to lack of territorial jurisdiction of respondent no.1 to pass the order. The court held that the Commissioner must form an opinion based on relevant facts and not merely on grounds of suspicion. The attachment order was set aside as it did not meet the standards required for taking an action under Section 83 of the CGST Act.
Fact of the Case:
The petitioner, M/s Sidhivinayak Chemtech Private Limited, filed a writ petition impugning a provisional attachment order and a subsequent confirmation order passed by the Principal Commissioner, CGST Commissionerate, Meerut. The petitioner claimed that the attachment order lacked jurisdiction and valid reasons for attachment of its bank account.
Finding of the Court:
The court found that respondent no.1 did not have territorial jurisdiction to pass the attachment order and that the order did not reflect any valid reasons for attachment of the petitioner's bank account. The court also held that the power of provisional attachment can only be exercised if it is necessary for protecting the interests of the Revenue, based on tangible material with a live link to the formation of the opinion.
Issues: Territorial jurisdiction of respondent no.1, validity of the attachment order, and the necessity for provisional attachment to protect the interest of the Revenue.
Ratio Decidendi: The Commissioner must form an opinion based on relevant facts and not merely on grounds of suspicion. The attachment order must be based on tangible material with a live link to the formation of the opinion. The attachment of a bank account must be decided on objective standards and cannot be based on unsubstantiated suspicion.
Final Decision: The attachment order was set aside as respondent no.1 did not have territorial jurisdiction to pass the order and the reasons for attachment did not meet the standards required for taking an action under Section 83 of the CGST Act.
JUDGMENT
Vibhu Bakhru, J. M/s Sidhivinayak Chemtech Private Limited - a company incorporated under the Companies Act 1956, having its registered office at New Delhi - has filed the present writ petition under Article 226 of the Constitution of India impugning a provisional attachment order dated 01.09.2022 [C.No. IV-CGST (9) CP/MRT/EXEM.SUPP./72/2022/2255-56 - hereafter `the attachment order'] passed by respondent no.1 [the Principal Commissioner, Central Goods & Service Tax (CGST) Commissionerate, Meerut] provisionally attaching the petitioner's bank account (Bank A/C No. 4563002100002434) maintained with respondent no. 3 (Punjab National Bank Limited). The petitioner also impugns a subsequent confirmation order dated 08.12.2022 (hereafter `the impugned order') passed by respondent no.1, confirming the attachment order.
Factual context
2. The petitioner company was incorporated on 05.09.2012, under the provisions of the Companies Act, 1956 and claims that it is engaged in the trade of industrial chemicals relating to the pesticide industry. Its Permanent Account Number under the Income Tax Act, 1961 is PAN AASCS0082M. The petitioner has two principal places of business. One in the State of Uttar Pradesh and the other in Haryana. It is registered with the GST Department under GSTIN 09AASCS0082M1ZP for its principal place of business in Uttar Pradesh and under GSTIN 06AASCS0082M1ZV for its place of business in the State of Haryana. For carrying out import of industrial chemicals, the petitioner has been granted Importer-Exporter Code (IEC) No.0512052859 by the Directorate General of Foreign Trade, Ministry of Commerce and Industry, Government of India.
3. On 20.05.2022, respondent no. 2 [Superintendent (Anti-Evasion), Central Goods & Service Tax Commissionerate] issued summons under Section 70 of the Central Goods and Service Tax Act, 2017 (hereafter `the CGST Act') to the petitioner company's director, Shri Raman Kumar and Shri Indresh Kumar Yadav, who is employed as a supervisor with the petitioner, to appear at the office of respondent no.1 and tender statements in connection with investigations pertaining to fraudulent use of Input Tax Credit (ITC) of Rs.36.6 crores by M/s Best Crop Science LLP and M/s Best Crop Science Pvt. Ltd.
4. The petitioner company replied to the above-mentioned summons by its letter dated 08.06.2022 setting out the details of transactions with M/s Best Crop Science Pvt. Ltd. during the Financial Year 2021-2022. Subsequently, summons dated 22.06.2022, 01.07.2022, 04.07.2022, 26.08.2022, 29.08.2022, 31.08.2022 were issued by respondent no.2 directing the officers and directors of the petitioner company to tender statements along with the details of transactions with M/s Best Crop Science Pvt. Ltd. and M/s Best Crop Science LLP.
5. The petitioner submits that in view of the repeated summons, it addressed a letter dated 06.08.2022 to the Chief Commissioner, CGST, Meerut Zone, requesting to intervene in the investigation conducted by respondent no.2.
6. On 05.09.2022, on becoming aware that its bank account was provisionally attached, the petitioner filed its objection (in Form GST DRC-22A) under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 (hereafter `the Rules') with respondent no.1. Subsequently, by e-mails dated 02.11.2022 and 15.11.2022, the petitioner submitted a representation to respondent no.1 regarding the same.
7. Aggrieved by the attachment order, the petitioner filed a petition, W.P. (C) No. 16084/2022 titled Siddhivinayak Chemtech Private Limited v. Principal Commissioner, CGST, Meerut & Ors., before this Court. This Court disposed of the above-mentioned writ petition by an order dated 22.11.2022, inter alia, directing respondent no.1 to decide the petitioner's objections under Rule 159(5) of the Rules after affording the petitioner an opportunity of being heard.
8. Further, on 05.12.2022, the petitioner filed an application (Application No. 52500/2022) in the disposed
The Commissioner must form an opinion based on relevant facts and tangible material with a live link to the formation of the opinion when exercising the power of provisional attachment under Section ....
The necessity of the formation of opinion by the Commissioner, the live nexus to the purpose of protecting the interest of the government revenue, and the existence of tangible material before the Co....
The main legal point established in the judgment is that the provisional attachment under Section 83 of the CGST Act ceases to have effect after the expiry of one year from the date of the order, and....
The court established that provisional attachment under Section 83 of the CGST Act requires tangible evidence of necessity to protect government revenue, and such powers must be exercised with cautio....
The main legal point established in the judgment is that the provisional attachment of a bank account under the MGST Act must be justified by pending proceedings under the relevant sections, and must....
Provisional attachments under Section 83 of the CGST/SGST Acts cannot extend beyond one year, and fresh orders cannot be issued after this period.
Provisional attachments under Section 83 of the CGST/SGST Acts cannot extend beyond one year, as specified in Section 83(2), and any fresh orders issued after this period are invalid.
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