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2022 (64) G.S.T.L. 150 (All.) [11-05-2022]
2022 (64) G.S.T.L. 150 (All.)
IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Surya Prakash Kesarwani and Jayant Banerji, JJ.
VARUN GUPTA
Versus
UNION OF INDIA
Writ Tax No. 448 of 2022, decided on 11-5-2022
GST : When no notice under Section 74 of CGST Act, 2017 was issued as on date of order of
attachment of bank account, same would not be sustainable
Provisional attachment of bank accounts - No show cause notice under Section 74 of Central Goods and Services
Tax Act, 2017 having been issued as on date of attachment order - Consequently, attachment order itself was without
jurisdiction and not sustainable - Amended provision of Section 83 ibid came into force with effect from 1-1-2022 and not
available as on date when impugned provisional attachment order passed - Section 83 of Central Goods and Services Tax
Act, 2017 read with Rule 159 of Central Goods and Services Tax Rules, 2017. [paras 9, 11]
Petition allowed in favour of assessee
DEPARTMENTAL CLARIFICATION CITED
Notification No. 39/2021-C.T., dated 21-12-2021.............................................................. [Para 11]
REPRESENTED BY : S/Shri Indra Raj, Alok Saxena, Counsels, for the Petitioner.
S/Shri Dhananjay Awasthi and Sanjay Kumar Om, Counsels, for the Respondent.
[Order]. - Heard Sri Alok Saxena, Learned Counsel for the petitioner, Sri S.P. Singh, Learned Additional Solicitor General of India
assisted by Sri Dhananjay Awasthi, Learned Senior Standing Counsel for the respondents.
2. This writ petition has been filed praying for the following relief :
“Issue a writ of certiorari quashing order dated 22-10-2021 passed by the respondent No. 2, i.e.
the Commissioner of Central Goods and Services Tax, Ghaziabad directing provisional
attachment of the bank accounts of the petitioner detailed in Para 5 of this writ petition.”
3. Section 83 of the Central Goods and Services Tax Act, 2017 as stood at the relevant time and Rule 159 of the CGST Rules, 2017
are reproduced below :-
Section 83 of the CGST Act, 2017
“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).”
Rule 159 of the CGST Rules, 2017
“Provisional attachment of property. - (1) Where the Commissioner decides to attach any property, including bank account in
accordance with the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of
property which is attached.
(2) The Commissioner shall send a copy of the order of attachment to the concerned Revenue Authority or Transport Authority or
any such Authority to place encumbrance on the said movable or immovable property, which shall be removed only on the written instructions
from the Commissioner to that effect.
(3) Where the property attached is of perishable or hazardous nature, and if the taxable person pays an amount equivalent to the
market price of such property or the amount that is or may become payable by the taxable person, whichever is lower, then such property shall
be released forthwith, by an order in FORM GST DRC-23, on proof of payment.
(4) Where the taxable person fails to pay the amount referred to in sub-rule (3) in respect of the said property of perishable or
hazardous nature, the Commissioner may dispose of such property and the amount realized thereby shall be adjusted against the tax, interest,
penalty, fee or any other amount payable by the taxable person.
(5) Any person whose property is attached may, within seven days of the attachment under sub-rule (1), file an objection to the effect
that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the
person filing the objection, release the said property by an order in FORM GST DRC-23.
(6) The Commissioner may, upon being satisfied that the property was, or is no longer liable for attachment, release such property by
issuing an order in FORM GST DRC-23.”
4. By order dated 27-4-2022, 5-5-2022 and 9-5-2022, we required the respondent No. 2 to state on affidavit as to whether any
proceedings under the provisions referred in Section 83 of the CGST Act is pending? In Paragraph 3 of his personal affidavit dated 9-5-2022
the respondent No. 2 has stated as under :-
“3. That on 27-4-2022, a specific query was sought by the Hon’ble Court as to whether on the date of attachment i.e. 22-10-2021
U/s. 83 of the CGST Act, 2017 any proceedings U/s. 62, 63, 64, 67, 73 or 74 were pending?. At present at the time of attachment, proceedings
U/s. 74 of the CGST Act, 2017 are pending, hence, the contention of the petitioner is misleading as far as it asserts that no proceedings are
pending.”
5. Thus, as per statement made by the respondent No. 2 on affidavit before this Court by means of personal affidavit dated 9-5-2022,
proceedings under Section 74 of the CGST Act, 2017 was pending at the time of attachment. The attachment was made by the impugned
attachment order dated 22-10-2021. However, in Paragraph 5 of the personal affidavit dated 11-5-2022, filed today, the respondent No. 2 has
stated as under :-
“That in this personal affidavit, the answering deponent again reiterates the fact that Show Cause Notice have not been issued till date
but there was reasons to believe for provisional attachment U/S. 83 of the CGST Act, 2017 that is why Note Sheet showing reasons to believe,
has already annexed as Annexure No. 4 to the personal affidavit.”
6. Sub-sections (1) and (2) of Section 74 provide for issuance of service of notice where it appears to the proper officer that any tax
has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilised by reason of fraud, or
any wilful misstatement or suppression of facts to evade tax.
7. Sub-section (3) of Section 74 empowers the proper officer to serve a statement, containing the details of tax not paid or short paid
or erroneously refunded or input tax credit wrongly availed or utilised for such periods other than those covered under sub-section (1), on the
person chargeable with tax.
8. Sub-section (4) provides for deemed service of notice under sub-section (1) if a statement under sub-section (3) is served, subject
to certain conditions. Sub-sections (5), (6), (7), (8), (9), (10) and (11) of Section 74 provide for statement of dispute in certain circumstances.
9. Thus, bare reading of Section 74 of the CGST Act, 2017, leaves no manner of doubt that proceedings under Section 74 of the
CGST Act starts with issuance and service of notice upon the assessee. It has been admitted in the personal affidavit filed today by the
respondent No. 2 that no notice under Section 74 of the CGST Act has yet been issued. Thus, as on the date of attachment order dated 22-10-
2021, there was no notice under Section 74 of the CGST Act. Consequently, the attachment order dated 22-10-2021 itself was without
jurisdiction and consequently, it is not sustainable.
10. In the personal affidavit, dated 11-5-2022 filed today, the respondent No. 2 has referred Section 115 of the Finance Act, 2021
(No. 13 of the 2021) whereby Section 83 of the CGST Act has been amended. Section 1(2)(b) of the Finance Act, 2021 provides that Sections
108 to 123 shall come into force on such date as the Central Government may by notification in the Official Gazette appoint.
11. Learned Counsel for the respondent has stated before us that 1-1-2022 is the appointed date for coming into force of Sections
108, 109 and 113 to 122 of the Finance Act, 2021 as has been notified by Notification No. 39/2021-Central Tax, dated 21-12-2021, issued by
the Government of India, Ministry of Finance (Department of Revenue), Central Board of Indirect Taxes and Customs, New Delhi. Thus, the
amended provision of Section 83 of the CGST Act has come into force w.e.f. 1-1-2022. Thus, the amended provision of Section 83 of the Act
was not available as on the date when the impugned provisional attachment order dated 22-10-2021 was passed.
12. For all the reasons afforested, the writ petition is allowed. The impugned attachment order dated 22-10-2021 passed by the
respondent No. 2, is hereby quashed. Respondents shall have liberty to proceed in accordance with law.
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