Facts of the Case

• Proceedings u/s 67 of the CGST Act had been launched by Additional Director
  General, Directorate General of Goods & Services Tax Intelligence (hereinafter
  referred “ADGGI”) against the writ petitioner firm namely Amazonite Steels Private
  Limited (herein referred to as “said entity”) to determine the tax or any other amount
  due from the said entity
• The bank branch manager of the said entity received an order dated 5th June, 2018, passed by the ADGGI to provisionally attach the current account of the said entity, under Section 83 of the CGST Act, 2017,through FORM GST DRC – 22 [hereinafter referred to as the “said first Order”]
• The said bank through a letter dated 11th June, 2018, informed the writ petitioner about the said first Order passed by the ADGGI. After more than a year, on 19th July, 2019, the said entity, by way of a letter, made representation before the ADGGI, requesting to de-freeze the current account of the company which was earlier provisionally attached under Section 83 of the CGST Act, 2017.
• On 31st July, 2019, the said entity wrote to the said bank praying for immediate defreezing of the said account since the letter for provisional attachment was issued by the DGGI, GOI on 05-06-2018 and in terms of Section 83(2) the period of provisional attachment expired on 05-06-2019
•  Thereafter, on 31st October, 2019, the Principal Additional Director General, Directorate General of Goods & Services Tax Intelligence (hereinafter referred to as “PDDGI”) passed a fresh provisional order directing the said bank to provisionally attach the said current account of the said entity

 

Legal Provisions

Section 83 of CGST Act-Provisional attachment to protect revenue in certain cases.
(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1)

 

Issues
The legal issues which need to be addressed are as follows:
A. Whether the Principal Additional Director General, DGGI and Additional Director General, DGGI are competent to pass orders under Section 83 of the CGST Act, 2017?

B. Whether an order passed u/s 83 of the CGST Act, 2017, remains valid after the expiry of one year from the date of the order?

C. Whether the authorities can issue fresh order of provisional attachment/multiple orders under Section 83 of the CGST Act, 2017?

Issue A
Contention by the petitioner
 Section 83 of the CGST Act, 2017 read with Rule 159 of the CGST Rules only
empowers the ‘Commissioner’ to attach any property including bank account
provisionally for the purpose of protecting the interest of the Revenue.

 Section 2(24) of CGST Act, 2017 indicates that ‘Commissioner’ means
Commissioner of Central Tax and includes Principal Commissioner of Central Tax appointed under Section 3 and the Commissioner of Integrated Tax appointed underthe IGST Act, 2017.

Contention by the respondent
 Section 3(c) and 3(d) of the CGST Act make it clear that ‘Principal Commissioner of Central Tax’ and “Commissioner of Central Tax’ are equivalent to ‘Principal
Additional Directors General of Central Tax’ and ‘Additional Directors General of
Central Tax’ respectively.

 Section 5(2) allows an officer of central tax to exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him

Ratio Decidendi by the Hon’ble Court
 Section 3 equates the ‘Principal Commissioner of Central Tax’ as the “Principal
Additional Director of Central Tax’ and the “Commissioner of Central Tax’ as the
‘Additional Director General of Central Tax’.

 Furthermore, the fresh orders of provisional attachment have been passed by
‘Principal Additional Director of Central Tax’ who is the superior officer and
therefore, as per Section 5(2) of the CGST Act, 2017 she possesses the power to pass the provisional attachment orders under Section 83. Hence, the first issue is answered in favour of the Revenue.

Issue B
Contention by the petitioner
 The current account of the petitioner was provisionally attached by the order dated 5th June, 2018, and ceased to have any effect after one year according to Section 83(2) of the CGST Act, 2017 i.e. after 5 th June 2019 Contention by the respondent

 Non-issue of the fresh orders within time was an error on the part of the authorities Ratio Decidendi by the Hon’ble Court

 The authorities have acted in a blatantly highhanded and illegal manner by keeping the provisional attachments in a state of continuance for the period from 5th June, 2019 (when the first order of provisional attachment ceases to operate) till 31st October, 2019 (when fresh order for provisional attachment was passed).

 Section 83(2) is crystal clear that the provisional attachment shall cease upon expiry of one year.It was therefore incumbent on the authorities to either release the provisional attachment by informing the bank or by issuing a fresh order of provisional attachment, if the law so allowed

 The above action is clearly in violation of the petitioners’ rights for carrying on
business under Article 19(1) of the Constitution of India and under Article 300A of the Constitution of India wherein the petitioners have been deprived of their property without authority of law.

Issue C
Contention by the petitioner
 Section 83 of the CGST Act, 2017 does not provide either for any extension of an
order of provisional attachment or for issuance of any fresh order of provisional
attachment.

 If a fresh order of provisional attachment on the same property of the petitioner in the same case is allowed, the same would make redundant 83(2) of the CGST Act, 2017, and accordingly, that cannot be the intention of the Legislature. Contention by the Respondent

 Fresh order of provisional attachment was issued on the grounds that fresh evidences were found against the writ petitioners and also that there is no bar under Section 83 of the CGST Act, 2017, preventing a fresh order of provisional attachment.

 Reliance was placed on judgements passed under erstwhile Gujarat VAT law, wherein the court interpreted that Section 45 of Gujarat VAT Act (provisional attachment similar to Section 83) does not limit the discretion of the officer to provisionally attach the property again if the situation so arises nor there is any debar from fresh issue of provisional attachment order if such order could be passed for protecting the interest of government revenue.

 Section 74 provides for 5 years for completion of the investigation, issuance of show cause notice and adjudication.Accordingly, it is submitted that Section 83 of the GST
Act 2017 cannot be read in a manner detrimental to the interest of the Revenue.

 The respondent further submitted that the words “every such” in sub-Section (2) of Section 83 makes it clear that multiple provisional attachment orders may be issued by the Revenue, if the need so arises.

Ratio Decidendi by the Hon’ble Court
 As per judgements on provisional attachment (which is parimateria to section 83) in erstwhile Gujarat VAT law, it was held that fresh order for provisional attachment can be issued after the expiry of the time as prescribed under the Act.

 Section 83(2) provides for a period for cessation of the provisional attachment and does not in any manner prevent the authorities to issue a fresh order of provisional attachment if the requirements under Section 83(1) are met. To say this would amount to supplying such requirements into the section which would go against the wellestablished principles of interpretation of statutes

 After the expiry of the time period, the appropriate authority may be of the opinion that such an attachment is further required to protect the interest of government revenue, and may therefore, issue a fresh order upon compliance of the formalities in Section 83(1)

 Issue of a fresh order u/s 83 will require a fresh review and assessment of the
circumstances in hand. In no manner, a fresh order should be issued in the garb of an extension of the earlier order without actually evaluating and analysing the requirement of doing so.

Summary
As discussed in above judgement passed by Hon’ble Calcutta HC, the moot question whether a fresh order of provisional attachment can be issued after expiry of one year from the date of original order has been answered in affirmative subject to fresh review and assessment of the circumstances in hand and the fresh order shall not be issued in the garb of extension of order already passed.Ergo, one can infer that the time limit prescribed u/d 83(2) is a subjective one which is at discretion of the Commissioner and can be extended if the situation so arises.