Bhart Parihar vs. State Of Maharashtra Thr Pp Office And Ors
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The petitioners challenged the provisional attachment of their bank accounts under Section 83 of the CGST Act, 2017, and subsequent communications retaining the attachment. The initial attachment order was dated April 21, 2022. The petitioners' objections to the provisional attachment were disposed of under Rule 159(5) of the CGST Rules. The respondents contended that the order disposing of objections was appealable under Section 107 of the Act, thus barring writ jurisdiction. They also argued that a fresh order of attachment was passed on April 19, 2023, validating the continued attachment. In one of the petitions (WP No. 3905 of 2023), the petitioner, located in Chennai, challenged the jurisdiction of the Maharashtra GST authorities to attach their bank account.
Held
The Court held that the objection regarding the alternative remedy of appeal under Section 107 was concluded by the Supreme Court's decision in Radha Krishan Industries, which held that orders disposing of objections to provisional attachment are not appealable and writ jurisdiction is the appropriate remedy. Therefore, the writ petitions were entertained. Regarding the validity of the attachment, the Court found that Section 83(2) of the CGST Act mandates that provisional attachments cease to have effect after one year from the date of the order. As the initial attachment order was dated April 21, 2022, it expired on April 21, 2023. The Court found no evidence of a fresh, formal order of attachment being passed on April 19, 2023, or communicated to the petitioner prior to the expiry of the original attachment. The communication dated April 19, 2023, was deemed a mere communication to the bank to retain the attachment, not a fresh order under Section 83(1). Thus, the attachment was held to be illegal and invalid after April 21, 2023. In WP No. 3905 of 2023, the Court held that the respondents did have jurisdiction to pass the provisional attachment order. It reasoned that Section 83(1), when read with Section 122(1-A), empowers the Commissioner to take action against "any person" who retains the benefit of a transaction, irrespective of their location, to protect government revenue. The CGST Act operates throughout the country, and a contrary interpretation would allow individuals involved in tax evasion to escape proceedings. However, despite upholding jurisdiction, the Court found that the attachment itself had lapsed due to the operation of Section 83(2). The Court quashed and set aside the communication dated April 19, 2023, extending the provisional attachment, and declared the initial attachment order illegal and invalid by virtue of Section 83(2).
Key Issues
1. Whether the order disposing of objections to a provisional attachment of a bank account under Rule 159(5) of the CGST Rules is appealable under Section 107 of the CGST Act, thereby precluding writ jurisdiction? 2. Whether a provisional attachment of a bank account under Section 83(1) of the CGST Act, made on April 21, 2022, ceases to have effect after one year from the date of the order, as stipulated by Section 83(2)? 3. Whether a communication dated April 19, 2023, constitutes a fresh order of provisional attachment under Section 83(1) of the CGST Act, or is merely a communication to retain the existing attachment? 4. Do the Maharashtra GST authorities have jurisdiction to provisionally attach the bank account of a person located outside their territorial jurisdiction, specifically in Chennai, under Section 83 read with Section 122(1-A) of the CGST Act? Petitioner's Arguments: The petitioner relied on the Supreme Court's decision in Radha Krishan Industries vs. State of Himachal Pradesh, arguing that an order disposing of objections to provisional attachment is not appealable and writ jurisdiction is available. They contended that the attachment lapsed by operation of law after one year under Section 83(2) and that the communication dated April 19, 2023, was not a fresh order. In WP No. 3905 of 2023, the petitioner argued that the respondents lacked jurisdiction due to their out-of-state location. Respondents' Arguments: The respondents argued that the order disposing of objections was appealable under Section 107 of the CGST Act. They contended that a fresh order of attachment was passed on April 19, 2023, making the continued attachment valid, and relied on the Gujarat High Court's decision in Shrimati Priti Amrutlal Gandhi vs. State of Gujarat. They also argued that the provisions of Section 83, read with Section 122(1-A), allow for action against persons outside their jurisdiction.
Sections Cited
Section 83, Rule 159(5), Section 107, Section 122(1-A), Section 70, Section 2(24), Section 1(2)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Judgment (Per Jitendra Jain, J.) : 3/11 13. wp3742-23-.doc not an appealable order and the only remedy that is available is in the form of the invocation of the writ juri iction under Article 226 of the Constitution of India. The Respondents cannot take a position contrary to the decision of the Supreme Court. Thus, the objection as to alternative remedy being no more res integra and concluded by the decision of the Supreme Court in the case of Radha Krishan Industries (supra), the present writ petition needs to be entertained. We now propose to deal with the provisions relating to attachment under Section 83 of the CGST Act.
Section 83 of the CGST Act reads as under:- “(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).”
Section 83(2) provides that provisional attachment made under sub-section (1) of Section 83 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). In the instant case, the provisional attachment order was made on 21st April 2022 and period of one year from the said date 3 of 11
sg 4/11 13. wp3742-23-.doc the Respondent’s letter dated 19th April 2023 is concerned, it is submitted by learned Counsel for the Respondents that the said letter is only a communication to the bankers with a copy marked to the Petitioner. Learned Counsel for the Respondents stated that a copy of fresh order is passed, which is noted on the order sheet a copy of which is annexed to the reply of the Respondents. It is the contention of the Respondents as a fresh order is passed provisionally attaching the Petitioner’s bank account, hence, the provisional attachment of the Petitioner’s account as informed in the communication dated 19th April 2023, is valid. Learned Counsel for the Respondents has relied on the 2021-TIOL-2017-HC-Mum-GST 3 2011 SCC OnLine Guj 1869. 4 of 11
sg 5/11 13. wp3742-23-.doc
We have perused the said order sheet referred to by the Respondents. The order sheet records the date of the noting as 21st April 2022, wherein after narrating the facts it is stated that same is submitted for necessary orders under Section 83 of the MGST Act. It further states that “we may consider taking action of provisional attachment under Section 83 in respect of this bank account and, thereafter, the Joint Commissioner (Investigation) has opined that this bank account is required to be attached. The said order sheet is dated 21st April 2022 and formed the basis for issue of first provisional attachment on 21st April 2022 and which, as observed above, has ceased to expire by operation of sub-section (2) of Section 83. 8. Thus, we do not find any fresh order having being passed by the Respondents to attach the bank account on 19th April 2023. In any view of the matter, mere notings in the file of the concerned Officer cannot constitute an order without a formal order as the law may mandate being passed and most importantly such order being communicated to the affected person, whose bank account is attached. The Respondents have not shown that such order was passed and served on the Petitioner much less prior to the provisional attachment order ceasing to operate by virtue of the provisions of Section 83(2) and/or the communication dated on 19th April 2023. In any case, the Respondents have also not disputed that letter of 19th April 2023 is only a communication to the bank, to retain provisional attachment of 5 of 11
sg 6/11 13. wp3742-23-.doc the account. Thus, it can never be a fresh order under Section 83(1) provisionally attaching the Petitioner’s bank account. In these circumstances, it is clear that after 21st April 2023 there is no provisional attachment of the Petitioner's bank account, looked from any angle.
The decision of the Gujarat High Court relied upon by the Respondents may not assist the revenue as much as in that case a fresh order was passed for provisional attachment. In the instant case, as observed, there is no fresh order in question after 21st April 2023 attaching the bank account.
In the light of the above discussion, it is held that the communication dated 21st April 2022 (Exhibit “B” to the petition) provisionally attaching the Petitioner’s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated 19th April 2023 (Exhibit “G-1” to the petition) is hereby quashed and set aside. Parties, including the bank, to act on authenticated copy of this order.
The writ petition stands allowed in the aforesaid terms. No order as to costs. 6 of 11
sg 7/11 13. wp3742-23-.doc Writ Petition No.3744 of 2023 Heard learned Counsel for the Petitioner and learned Counsel for the Respondents.
The issue raised in this petition is identical to the issue raised in Writ Petition No.3742 of 2023. 3. For the reasons stated in our judgment in Writ Petition No.3742 of 2023, it is held that the communication dated 21st April 2022 (Exhibit “B” to the petition) provisionally attaching the Petitioner’s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated 19th April 2023 (Exhibit “G-1” to the petition) is hereby quashed and set aside. Parties, including the bank, to act on authenticated copy of this order. Writ Petition No.3905 of 2023 This petition challenges the provisional attachment communication dated 21st April 2022 and 19th April 2023. Learned Counsel for the Petitioner submitted that the Respondents do not have the juri iction to pass the provisional attachment order, since the Petitioner is in Chennai and the bank account, in respect of which the 7 of 11
sg 8/11 13. wp3742-23-.doc provisional attachment order is communicated, is also in Chennai. Therefore, it is submitted that the Respondents do not have the juri iction to pass the impugned order.
Section 83 of the GST Act, 2017 is reproduced hereunder:
Provisional attachment to protect revenue in certain cases. - (1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, 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 or any person specified in sub-section (1-A) of section 122, 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).”
Sub-section (1) of Section 83 empowers the Commissioner for the purpose of protecting the interest of the revenue to provisionally attach any property, including bank account belonging to the taxable person or “any person” specified in Section 122(1-A) in such manner as may be prescribed.
The two persons referred to in Section 83(1) are (i) taxable person or (ii) any person specified in Section 122(1-A) of the Act. Therefore, in second limb the phrase “any person” would include non- taxable person. 8 of 11
sg 9/11 13. wp3742-23-.doc
Section 122(1-A) provides that any person, who retains the benefit of a transaction covered under clauses (i)(ii)(vii) or (ix) of sub- section (1) and, at whose instance such transaction is conducted shall be liable to a penalty of a sum equivalent to the tax evaded or input tax credit availed of or passed on. In our view, thus the powers conferred under Section 83(1) of the Act can be exercised in respect of a person, who may not be within the territorial juri iction of the Maharashtra GST Authorities. The allegation against the Petitioner is that he is the beneficiary of the GST refund claimed fraudulently. The Petitioner has also failed to comply with the summons under Section 70 of the GST Act. The Petitioner has not produced any document before the authorities in support of its written submission that the amount received is on account of the sale of crypto currency. In these facts and on a true and proper construction of Section 83(1) r/w Section 122(1-A), it cannot be said that the authorities do not have the juri iction over a person situated in other State. If the contention as canvassed by the Petitioner is accepted then it would lead to a situation where a person who stays outside the State and who is a beneficiary/ part of any transaction involving tax evasion or violation of the Act would have total immunity in as much as in such a situation, such person would never be examined nor any proceedings could be taken by the State in which the transaction is executed and the State in which he is located would also not take any action since the transaction has not happened in the State where he is located. In our view, such an 9 of 11
sg 10/11 13. wp3742-23-.doc interpretation cannot be accepted. Furthermore, Section 122(1-A), refers to “any person”, who has retained benefit of a transaction and in whose presence transaction is conducted. It does not contemplate of a situation where the person should be located within the State in which the transaction is carried out. Therefore, in our view, the Respondents have the juri iction to resort to the provisions of Section 83 of the Act with respect to the Petitioner located in Chennai.
In so far as the juri iction of the Commissioner to exercise powers under Section 83 is concerned, we may observe that the provisions of Section 83, which are to be read with Section 122(1-A), would be required to be read in the context of the legislation itself namely the CGST Act. As Section 1(2) would mandate, the CGST Act is operational throughout the country. This would have relevance in construing the juri iction of the Commissioner who has been defined under Section 2(24) of the CGST Act, for the purposes of Section 83(2) of the Act. A cumulative reading of the provisions of Section 83(1) read with Section 122(1-A) of the Act makes it manifest that the Commissioner for the purposes of exercising power under Section 83 read with Section 122(1-A) of the CGST Act, would have a power to take action against “any person” as Section 122(1-A) mandates, even if such a person is outside his juri iction. There cannot be any other reading of the legislative scheme flowing through a conjoint reading of Section 83(2) read with Section 122(1-A) and Section 2(24) of the 10 of 11
sg 11/11 13. wp3742-23-.doc Act, moreover, a contrary reading of the said provisions would defeat the legislative intention.
However, as it is held that the communication dated 21st April 2022 (Exhibit “C” to the petition), provisionally attaching the Petitioner’s bank account is rendered illegal and invalid by virtue of the provisions of Section 83(2) of the CGST Act. The extension of the provisional attachment by communication dated 19th April 2023 (Exhibit “H-1” to the petition) is hereby quashed and set aside. Parties, including the bank, to act on authenticated copy of this order.
(JITENDRA JAIN, J.) (G.S. KULKARNI, J.) 11 of 11
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.