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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
N.V. ANJARIA, BHARGAV D. KARIA, JJ.
CONCEPTIAL TRADE – Petitioner
Versus
STATE OF GUJARAT – Respondent
Special Civil Application No. 7687 of 2022
Decided On : 19-10-2022
Attachment - Jurisdictional Issue - Central Goods and Services Tax Act, 2017 (CGST Act) - Section 83 - Section 83 of the CGST Act allows provisional attachment of property, including bank accounts, during the pendency of specified proceedings to protect the government revenue. The court held that the power of provisional attachment under section 83 could only be exercised when proceedings were pending, and the impugned order was illegal as no proceedings were initiated at the time of the attachment order. The court set aside the attachment order but allowed the authorities to proceed further pursuant to the summons dated 21.01.2022.
Fact of the Case:
The petitioner, a business entity in Mumbai, sought to set aside an attachment notice and a summons issued under the CGST Act. The petitioner claimed to have paid an advance amount for goods that were never supplied, leading to the attachment of their bank account by the tax authorities.
Finding of the Court:
The court found that the attachment order was illegal as no proceedings were pending at the time of its issuance. The court set aside the attachment order but allowed the authorities to proceed further pursuant to the summons dated 21.01.2022.
Issues: Jurisdictional issue regarding the legality of the attachment order under section 83 of the CGST Act.
Ratio Decidendi: The power of provisional attachment under section 83 of the CGST Act can only be exercised when proceedings are pending. The impugned order was illegal as no proceedings were initiated at the time of the attachment order.
Final Decision: The attachment order dated 6.1.2022 issued by the respondent no. 3 is set aside. The respondent authorities may continue to proceed further pursuant to the summons dated 21.01.2022 and are at liberty to consider imposing the provisional attachment under section 83 of the CGST Act in accordance with law.
JUDGMENT :
N.V. ANJARIA, J.
1. In the facts and circumstances of the case and having regard to the request and consent of the learned advocates for the respective parties, the petition is taken up for final consideration.
1.1. Rule returnable forthwith. Learned advocate Mr. Krutik Parikh waives service of Rule on behalf of respondent - State and its authorities.
1.2 Heard learned advocate Mr. Naman Kinkhabwala for the petitioner and learned AGP for the respondents.
2. What the petitioner has prayed in this Special Civil Application filed under Article 226 of the Constitution is to set aside attachment notice dated 06.01.2022 issued by the Assistant Commissioner of State Tax, Unit 16, Ahmedabad. The said notice came to be issued under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act).
2.1 Further prayed is to direct the respondents and their officers to de-freeze bank account no. 10077040495 in IDFC First Bank, Kandivli (West), Mumbai, standing in the name of the petitioner.
2.2 Also prayed is to set aside the summons dated 21.02.2022 issued under section 70(1) of the CGST Act.
3. The petitioner, engaged in the business of trading of products such as garments, footwear, leather accessories, amongst is located at Mumbai and carries out the business from the address shown. It was stated that the petitioner does not have any commercial presence in the State of Gujarat and is not registered under the Gujarat State Tax laws.
3.1 It is the case of the petitioner that the petitioner wanted to purchase certain goods from one M/s. Raja Traders situated at Ahmedabad and for that purpose the petitioner paid advance amount of approximately Rs. 20 lakhs. The petitioner has further contended that the goods were never supplied nor advance amount paid to M/s. Raja Traders was returned.
3.2 Respondent no. 3, Assistant Commissioner of Sales Tax, Unit-16, Ahmedabad issued the provisional attachment order dated 06.01.2022 in Form GST DRC-22 under section 83 of the CGST Act and Gujarat Goods and Service Tax Act, 2017(For short “GGST Act”) read with Rule 159(1) of the Goods and Service Tax Rules, 2017 addressed to the Branch Manager, IDFC First Bank, Kandivali (West) branch wherein Account No. 10077040495 of the petitioner was ordered to be attached. It is contended in the said notice that M/s. Raja Traders and its syndicate availed GST refund fraudulently and that there was no transaction of sale or purchase with the petitioner though an amount was transferred by M/s. Raja Traders in the bank account of the petitioner with an intention to defraud the Government revenue.
3.3 It appears that the contention of the petitioner that amount was paid by the petitioner to M/s. Raja Traders for purchase of goods are contrary to the facts recorded in the impugned order dated 6.01.2022 issued under section 83 of the CGST Act.
3.4 Be that as it may, the petitioner came to know about the impugned order dated 06.01.2022 when the petitioner was informed about the same by the bank. M/s. Raja Traders situated at Ahmedabad is registered under the CGST Act and proceedings have been initiated under section 67(2) of the CGST Act to determine the tax or any other amount due from it.
3.5 It appears that information has been received by the respondent authority that the GST number was used for bogus billing activity without actual movement of goods as well as to generate and transfer the amount in violation of the provisions of CGST Act and the petitioner was found to be a part of the syndicate who claimed and availed GST refund fraudulently without any business transaction like sale/purchase by transferring the amount in the bank account.
3.6 The respondent no. 3 thereafter issued summons dated 21.01.2022 under section 70(1) of the CGST and GGST Act on the same grounds mentioned in the provisional attachment order dated 06.01.2022 upon the petitioner to appear in person on 28.1.2022 before respondent no. 3.
4. Learned advocate for the petitioner submitted that as the
The power of provisional attachment under section 83 of the CGST Act can only be exercised when proceedings are pending, and the impugned order was illegal as no proceedings were initiated at the tim....
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 held that Section 83 of the CGST Act does not require a pre-decisional hearing before provisional attachment and strict legal standards must be met for such actions.
, time can be extended for a further period of six month. Appropriate order for extension of period of provisional attachment would only be passed upon satisfaction of the criteria listed out. An inj....
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 of a bank account under the MGST Act must be justified by pending proceedings under the relevant sections, and must....
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