Back
2020 Supreme(Guj) 795
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VIKRAM NATH, J.B.PARDIWALA, JJ.
KHUSHI SAREES – APPELLANT
Versus
STATE OF GUJARAT – RESPONDENT
R/SPECIAL CIVIL APPLICATION NO. 9807 of 2020
Decided On : 01-10-2020
For The Appellant : MR.AVINASH PODDAR
For The Respondent: MR. CHINTAN DAVE, LD. AGP
Point of Law: The words, "reason to believe" or "in the opinion of do not always lead to the construction that the process of entertaining "reason to believe" or "the opinion" is an altogether subjective to process not lending itself even to a limited scrutiny by the court that such "a reason to believe" or "opinion" was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rules of natural justice where the function is administrative.
Headnote:
Constitution of India - Article 226 – Registered Partnership firm - attachment order, i.e, Form GST DRC-22 for residential premises issued - Provisional attachment to protect revenue in certain cases - Power of provisional attachment under Section 83 of 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 and caution.
Facts of the case: Writ applicant is a partnership firm registered with GST - Firm is engaged in business of manufacturing of different types of textile fabrics - It appears that an inquiry has been initiated against firm by CGST Department, Surat by issuing summons under Section 70(1) of Act, 2017 - It appears that pending inquiry, Department has taken two fold action - First an order in Form GST DRC-01A has been issued, Annexure-L, Page-43 of this paper-book and secondly, an order of provisional attachment of property under Section 83 of Act in Form GST DRC-22 has been passed - Being dissatisfied with the aforesaid action on part of GST Authorities, writ applicant has come up before this Court with present writ application - We have heard Mr. Avinash Podar, learned counsel appearing for writ applicant and Mr. Chintan Dave, learned AGP appearing for State-respondents.
Finding of the court: 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 upon a decision of the Supreme Court in the case of Smt. S.R. Venkatraman vs. Union of India, reported in (1979) ILLJ 25(SC)
Result: Writ application allowed.
ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA)
1. By this writ application under Article 226 of the Constitution of India, the writ applicant, a partnership firm through one of its partners, has prayed for the following reliefs;
“(A) to quash and set aside Form DRC IA dated 23.07.2020 issued by respondent no.4.
(B) to quash and set aside the impugned provisional attachment order, i.e, Form GST DRC-22 for residential premises issued in Form GST DRC 22 dated 24.07.2020 by respondent no.4
(C ) to direct the respondents to transfer the proceedings to the CGST department as they had already initiated the same.
(D) pending admission, hearing and till final disposal of this petition, Your Lordship may be pleased to direct the Respondents
(I) To lift the attachment of factory premises;
(II) To stay the operation of Form GST DRC 01A;
(III) Not to take any coercive action against the petitioner.
(E) To issue order(s), direction(s), writ(s) or any other relief(s) as this Hon'ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice;
(F) To award Costs of and incidental to this application be paid by the Respondents;
(G) And for this act of kindness, the Petitioner shall, as in duty bound, ever pray.”
2. The facts, in brief, leading to filing of this writ application, may be summarized as under:
2.1 The writ applicant is a partnership firm registered with the GST having GSTIN 24AAKHP5754L1ZN. The firm is engaged in the business of manufacturing of different types of textile fabrics. It appears that an inquiry has been initiated against the firm by the CGST Department, Surat by issuing summons under Section 70(1) of the Act, 2017 dated 25th June, 2020. It appears that pending the inquiry, the Department has taken two fold action. First an order in Form GST DRC-01A dated 23rd July, 2020 has been issued, Annexure-L, Page-43 of this paper-book and secondly, an order of provisional attachment of property under Section 83 of the Act in Form GST DRC-22 has been passed.
2.2 Being dissatisfied with the aforesaid action on the part of the GST Authorities, the writ applicant has come up before this Court with the present writ application.
3. We have heard Mr. Avinash Podar, the learned counsel appearing for the writ applicant and Mr. Chintan Dave, the learned AGP appearing for the State-respondents.
4. We are not inclined to interfere with the order passed in Form GST DRC-01A dated 23rd July, 2020, referred to above. However, we are of the view that the order of provisional attachment of the immovable property in the form of the residential premises under Section 83 of the Act is not sustainable in law. We quote the order passed in Form GST DRC-22 as under;
“FORM GST DRC -22
Reference No. Date 24.07.2020
To
Name:-M/s. Khushi Sarees
Addresss:- 1017 World Trade Center, Ring Road, Surat.
(Bank/Post Office/Financial Institution/Immovable Property registering authority)
Provisional attachment of property under section 83
It is to inform that M/s. (name) having principal place of business at (address) bearing registration number as (GSTIN/ID), PAN is 24AAKHP5754L1ZN a registered taxable person under the <
Or
Property located at property ID & location- 401, Dev Prayag Apartment, Near Terapanth Bhawan, City Light Road, Surat.
In order to protect the interests of revenue and in exercise of the powers conferred under section 83 of the Act, I D.J. Bamaniya, (name), Assi Commi. (Enf) Div 8 Surat (designation). Hereby provisionally attach the aforesaid account/property.”
5. A bare perusal of the order of provisional attachment, referred to above, would indi
