M/S. Unique Enterprises vs. State Of Andhra Pradesh
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Cause title — parties, addresses and appearances
The Court made the following: ORDER Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ petition, order or direction particularly in the nature of Writ of MANDAMUS declaring the action of the 2""^ Respondent i.e. The Deputy Commissioner (State Tax-1). Regional GST Audit and Enforcement Office, Tirupati, CHITTOOR DISTRICT in provisionally attaching the Bank accounts of the Petitioner and issuing a provisional attachment to the third parties pending the payments of tax, penalty and interest which is advised to be paid before issuance of show cause notice as illegal, arbitrary, unjust, improper, without authority of law and with a malice intention and contrary, to the principles of natural justice and violation of Rule 142(1A) read with section 74(5) of the APGST Act 2017 and CGST Act 2017 and article 14, 19(1 )(g), 21 and 265 of the Constitution of India and consequently to set aside the provisional attachments dated 03-11-2022 issued to Respondents Nos. 4 to 10 else the Petitioner would be put to serious loss and hardship. Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the writ petition, the High Court may be pleased be to suspend the provisional attachment notices impugned in the writ petition given to the Respondents 4 to 10 else the Petitioner would be put to serious loss and hardship.
f Writ Petition Nos.38754 of 2022 ORDER: (Per Hon 'ble Sri Justice U. Durga Prasad Rao) The petitioner prays for writ of mandamus declaring the respondent in issuing the provisional attachment orders dated 03.11.2022 and 04.11.2022 against respondents 4 to 10, who are the bank and third-party customers of the petitioner, pending the payment of tax, penalty and interest, which are claimed against the illegal, arbitrary. unjust and violative of Rule 142(1 A) r/w Section 74(5) of the COST / APGST Act, 2017 and also Articles 14, 19(l)(g), 21 and 226 of the Constitution of India and consequently set aside the provisional attachment orders. PETITIONER’S CASE :
The petitioner’s case succinctly is thus: HON’BLE SRI JUSTICE U. DURGA PRASAD RAO AND HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO petitioner before issuing show cause notice as action of the Deputy Commissioner (State Tax-1), Tirupati / 2"^
2 registered under the GST Act, 2017. (b) While not occupied the respondent inspected proprietory concern for inspection under Section 67(1) of the COST / APGST Act, 2017. (a) The petitioner is and they stated as It was The petitioner was During such inspection, he recorded in the proceedings in the Form - DRC 01A certain facts as if there was no physical stock and the petitioner was not conducting the business in the premises which i so, on 03.1T2022, the Audit Wing lead by 2'"’ respondent under authorization issued by 3"* the petitioner’s correct. The premises. It was an advance for small shop and collected electricity receipts, property tax receipts but he did not enter into any rental agreement and the petitioner herein has premises and not conducted the business by paying rent, further alleged that the business .veto pnjwucu SLOLK ano We petitioner was not conducting the business in the premises which is factually not stock was very much available in the business alleged in the audit statement that the house owners were examined if the petitioner approached them one month back and paid Rs.5,000/- as was closed but still invoices and bills were generated and it was created as if several vehicles were a proprietory concern engaged in purchase and sale of iron, metal and scrap.
3 moved from Chittoor and Guntur to the principal place of business i.e., Ongole. However, no enquiry was conducted with the check post, the parties concerned and vendor dealers in that regard to find out whether the petitioner claimed ITC on fake invoices. Although Therefore, Form GST DRC-OIA was issued under Rule 142(1A) of the CGST! APGST Act, 2017. It is submitted that the petitioner has 30 days time u/s 74(8) of the CGST ! APGST Act, 2017 r/w Rule 142(1 A) of CGST Rules 2017 to pay the tax amount and even without waiting for the said period of 30 days, the 2^^ respondent issued provisional attachment order against respondents 4 to 10 which is illegal and unwarranted. (c) It is further contended that as per Section 83 of the CGST Act, 2017, the “Commissioner” and as per Section 83 of the APGST Act, the “Chief Commissioner” shall issue provisional attachment order, but in this case without following Section 83, the said respondent, who is the Hence, the attachment is not sustainable. Deputy Commissioner. his allegations were not correct, still the petitioner per force was attachment order was issued by the 2"^ constrained to sign the audit statement and panchanama.
4 Hence, the writ petition.
COUNTER OF RESPONDENTS: remedy of appeal is available to the petitioner. (a) The petitioner got GST registration certificate w.e.f. 19.07.2022 but not from July 2017 as pleaded. person paid Rs.5,000/- as advance for small shop about three months back and collected the electricity receipts, property tax receipts etc. (b) Pursuant to the authorization issued by respondent to conduct inspection u/s 67 of the APGST Act, 2017, the 2"^* respondent inspected the business premises of the petitioner along with the staff and Panchas and found neither the petitioner nor petitioner’s business in the stated place. There was no physical stock available at the business premises at Ongole. Further, the registered business place is not suitable for loading and unloading of iron and steel scrap. Smt. Chennuboyina Pallavi, house owner stated that one Further, except mentioning Section 83 of the CGST / SGST Act, 2017, no reasons are mentioned for issuing attachment order. The 2"'’ respondent opposed the writ petition contending that the writ petition is not maintainable as an efficacious and alternative
f 5 but he did not enter into any rental agreement. When showed the rental agreement which was uploaded in the GST portal, she stated that it was a forged document. She further stated that the petitioner Panchanama was recorded but the petitioner was not present and his respondent obtaining the signatures of petitioner on the audit statement and panchanama by force does not arise. (c) The petitioner originally registered under GST for dealing with the goods, manufacture of straw of esparto or other plaiting However, subsequently he amended the goods and dealt with ferrous scrap which is sensitive and generated e-way bills for iron and steel scrap only. On verification of e-way bills generated for inward and outward supply, it is found that majority of his purchases are from M/s. Narayana Enterprises, Ramakuppam, Chittoor, who has chosen Adoni circle at the time of registration which is not traced in Adoni cancelation of GST registration of M/s. Narayana Enterprises. On mobile number was did not occupy the premises and conduct business. Accordingly, not working. Therefore, the question of 2^^^ materials, basket wears, wicker work having HSN forte 46. circle juri iction. The CGST authorities issued notice for 6 Thus, the petitioner received invoices.
In view of the above facts, 03.11.2022, respondent is legal and intended not issued in routine course of action but instead the last resort. were genuine, the the provisional attachment proceedings were initiated u/s 83 of the APGST Act, 2017. Therefore, the action of 2"'* 2nd attachment was on the strength of fake respondent exercised due diligence and issued proceedings as a Had the activities of the petitioner on obtaining the authorization from the Chief Commissioner (ST), A.P. vide proceedings in CCST Ref.No.CEW/E2/221/2022 dated portal, it revealed that not even a single vehicle mentioned by the petitioner passed through any of the tollgates for inward and outward supplies. As the check posts of Commercial Department were disbanded under the GST Act, the inspection authorities cross verified the e-way bill data in e-way bill system and no movement of goods to the petitioner was found. invoices and e-way bills without actual receipt of goods, meaning thereby, the petitioner claimed bogus ITC to protect the interest of the Government revenue. The provisional further verification of movement of goods from e-way bills system
7 provisional attachment proceedings would not have been resorted by the 2"^ respondent. The 2"^ respondent thus prayed to dismiss the writ petition. Heard arguments of learned counsel for petitioner Sri
M.V.J.K.Kumar, and Sri Y.N. Vivekananda, learned Government Pleader for Commercial Taxes-II. ARGUMENTS OF PETITIONER : 4. the impugned would counsel Firstly, learned argue, provisional attachment orders dated 03^^ and 04**^ November, 2022 proceedings against the petitioner under section 74 as contemplated Therefore, the in Section 83 of COST / SGST Act, 2017. attachment proceedings per se are illegal and unjust. He placed reliance on Sterne India Pvt Ltd v. Union of India’. (a) Secondly, learned counsel argued that in the instant case Form-GST DRC-OIA intimation under Rule 142(1A) of CGST 08.11.2022. The said Form The said GST DRC-OIA is only an intimation but not a notice. ' MANIJ/KA/3951/202J Rules was issued to the petitioner on were issued by 2"^’ respondent even before launching any 8 intimation would be issued before service of notice u/s 74(1) of the Act to the person chargeable with tax to enable him to pay the tax, pay the aforesaid amount U/s 74(5) of the Act even before service of notice U/s 74(1). On his failure, the authority will issue notice U/s after issuing notice U/s 74(1) also, the petitioner would have 30 days time to pay the tax amount in terms of Section 74(8) of the COST / APGST Act, 2017. (b) Thirdly, referring to Section 83 of COST / SGST Act, under CGST Act or “The Chief Commissioner” Under SGST Act, 2017 alone is competent to pass an order directing the provisional attachment of the property and bank account of a taxable person. He would submit that since the personal opinion of the designated However, without waiting for the mandatory statutory - period, the 2"*’ respondent resorted to the provisional attachment proceedings against respondent Nos.4 to 10 on 3"* and 4“" November, 2022 itself. Therefore, the provisional attachment proceedings are illegal on that ground also. 74(1). Learned counsel would submit that even 2017, Sri M.V.J.K. Kumar would submit that “The Commissioner” interest and penalty. Receiving the intimation, such a person can
9 officer is the sine qua non for ordering attachment, such power cannot be delegated by such designated authority to any other the instant case instead of Chief Commissioner/Commissioner, the Deputy Commissioner (ST), Tirupati/2''^ respondent has passed the provisional attachment order which is per se illegal. (c) The fourth argument of the learned counsel for the petitioner is that the 2"^ respondent simply quoted Section 83 and passed the attachment order without mentioning the reasons for his order. Therefore, the attachment being bereft of reasons is liable to be set aside. In this regard he relied upon State of Himachal V. ■ Manu/^/l743/2019 ’MANU/PH/2993/2019 ^MANU/SC/0293/2021 officer. To buttress his argument he relied upon the decision in Valerius Industries v. Union of India^. He would submit that in (1) Valerius Industries V. Union of India (2 supra), (2) Bindal Smelting Pvt Ltd v. Additional Director General and (3) Radhakrishan Industries Pradesh"^
10 5, ARGUMENTS OF GOVERNMENT PLEADER : (a) Per contra, learned Government Pleader argued that the first argument of the petitioner that the provisional attachment proceedings cannot be initiated under Section 83 without initiating proceedings u/s 74 is untenable for the reason that Section 83 itself is clear to the effect that during the pendency of any proceedings u/s 62 or 63 or 64 or 67 or 73 or 74, the provisional attachment proceedings can be initiated for the purpose of protecting the interest of the Government revenue. Learned Government Pleader would respondent having obtained respondent, initiated proceedings U/s 67 of CGST/SGST Act and conducted the inspection of the premises of the petitioner on 03.11.2022 and having found many iiTegularities in the business activities of the respondent obtained authorization from the Chief Commissioner vide order dated 03.11.2022 and issued provisional attachment conducted by the petitioner, proposed to initiate provisional attachment proceedings U/s 83 of the Act. For this purpose, the 2'“’ authorisation dated 01.11.2022 from the 3"* argue that in the instant case the 2""^ petitioner, most importantly, having found no business was 11 orders dated 03^^ and 04'*’ November, 2022 against respondents 4 to 10. respondent proceedings, his action is within the purview of Section 83, though he has not resorted to the proceedings U/s 74 by the date of attachment. (b) As against the second contention of the petitioner, learned GP argued that assuming the proceedings were launched u/s 74 r/w Rule 142(1A), still the 2"^’ respondent need not wait for 30 days in terms of Section 74(8) of the Act without initiating attachment proceedings u/s 83, for the reason, Section 83 is not controlled by section 74, particularly section 74(8). He would logically argue that after issuing intimation under Rule 142(1 A) and thereafter issuing notice U/s 74(1), if the 2"*^ respondent waits for 30 days without initiating the provisional attachment proceedings in spite of existence of sufficient grounds, there will be every possibility of petitioner depleting his bank balance and credit resources to scuttle the ultimate process of recollection of tax and thereby the interest of Learned GP would submit that since the 2*^ proceeded U/s 67 and pending the same issued attachment
12 Section 167 of CGST/APGST Act, 2017 dated 03.11.2022 has Learned decision in Valerius Industries (supra 1) material exhumed during the this regard. Government Pleader would ftirther submit that the the Government revenue will receive a setback. Learned GP thus sought to back up the attachment proceedings. (c) As against the third argument of petitioner, learned Government Pleader would submit that the Commissioner/Chief Commissioner by virtue of the power conferred on him U/s 5(3) r/w on the basis of tangible respondent and therefore the petitioner cannot take any objection in case relied upon by the petitioner has been held per incurium by another Division Bench of High Court of Gujarat in Nathalal Maganlal Chauhan v. State of Gujarati (d) As against the fourth argument of the petitioner, learned Government Pleader would submit that can delegate the power exercisable by him U/s 83 to any other officer and accordingly, in the instant case the Chief Commissioner by virtue of the proceedings in CCST’s Ref. No. CEW/E2/221/2022, delegated his power to the 2"*^ course of inspection and having formed a reasonable opinion that the petitioner is likely to defeat the 5 MANU/GJ/0858/2020-2020GLH (1)589
13 ultimate tax recovery, the 2"^ respondent issued attachment orders to protect the interest of the Government revenue. In expatiation he would submit that many incriminating facts relating to the business affairs of the petitioner viz., (i) absence of business activity in the premises mentioned in the registration details (ii) the petitioner’s passing Input Tax Credit of Rs. 1.90 Crores to different industries movement of goods (iii) his availment of ITC using the invoices fraudulently without purchasing and receiving the goods physically, forced the 2'^^ respondent to take the drastic step. Learned GP thus sought to defend the attachment proceedings other way to safeguard the interest of the Government revenue. FINDINGS OF THE COURT:
Having heard the above and punctiliously scrutinised the relevant law, we are unable to accept the first argument of the respondent should not have issued attachment orders U/s 83 of CGST/SGST Act, 2017. submitting that there was no without supply or petitioner that without launching proceedings U/s 74, the 2"^
14 It is expedient to extract Section 83 here: Section 83 ofCGST Act; Section 83 of APGST Act;
As can be seen, both the above provisions are in pari materia proceedings U/s 62 or 63 or 64 or 67 or 73 or 74, if the Chief “83. 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 Chief 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(l)” “83. Provisional attachment to protect revenue in certain cases. (1) Where, after the initiation of any proceeding under Chapter XU, 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 (lA) 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)” with the minor variation regarding the designation of attaching officer. They say, after initiation and during pendency of any 15 Commissioner is of the opinion that for the purpose of protecting the interest of Government revenue it is necessary so to do, he may order in writing attach provisionally any property including bank account of the taxable person. Thus, the sine qua non for ordering provisional attachment is the protection of interest of Government revenue. The plain language of Section 83 manifests that provisional attachment proceedings can be initiated by the Commissioner not invariably during the pendency of the proceedings U/s 74 alone but also during the pendency of proceedings under other Sections vzz., Section 62, 63, 64, 67 & 73. The language in Section 83 is plain and clear and therefore literal rule of interpretation will apply in the instant case. This interpretation would say that if the provision of a statute is plain, clear and unambiguous, its literal meaning has to be imported without the necessity of any other external aids. In Gurudevdatta VKSSS Maryadit v. State of Maharashtra^, the Apex Court observed: "AIR 2001 SC 1980 =MANU/SC/0191/)980 “It is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the 16 In B. Premanand v. Mohan Koikaf the Apex Court held thus:
When the above literal rule of construction is applied to Section 83, the plain and unambiguous meaning portrayed is that the provisional attachment can be issued during the pendency of not only the proceedings covered by Section 74 but also some other “16. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule, vide Swedish Match AB v. Securities and Exchange Board, India MANU/SC/0693/ 2004MANU/SC/ 0693/2004 : AIR 2004 SC 4219.” object of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the Courts are bound to give effect to that meaning, irrespective of the consequences. It is said that the words themselves best declare the intention of the law-giver. The Courts are adhered to the principle that efforts should be made to give meaning to each and every word used by the legislature and it is not a sound principle of construction to brush aside words in a statute as being inapposite surpluses, if they can have a proper application in circumstances conceivable within the contemplation of the statute.” ’ AIR 20H SC 1925 = MANU/SC/0249/2011
17 respondent issued provisional attachment. The contra argument of the petitioner has no force in our view. The decision in Sterne India Pvt Ltd. (supra 1) relied by the 9. petitioner can be distinguished. In that case investigation was initiated under GST Act against one M/s Paul Overseas regarding the alleged issuance of bogus/fake invoices without supply of goods The writ petitioner therein was purchasing but claiming ITC. mobile handsets from Ms/ Paul Overseas and selling to its customers. While so, the 2"** respondent therein conducted search in the head office of the petitioner under Section 67 of CGST Act and before initiating the proceedings U/s 74 of CGST Act, attached the bank accounts of the petitioner U/s 83 of CGST Act which was attachment order enclosed to Annexure-A, it was mentioned that proceedings have been initiated U/s 74 of CGST Act which was factually not correct. In that context, a learned single Judge while initiated against a different taxable entity and even without initiation provisions including Section 67, after initiating which, the 2"** allowing the writ petition observed that the proceedings were challenged before the High Court of Karnataka. It appears in the 18 of proceedings U/s 74 was made Unlike in the above case, in the instant case, the attachment 4 to against the petitioner, attachment U/s 83 which is not tenable. Learned Judge observed thus: to ‘he taxable entity to which the proceedings were taken out is an entity other than the petitioner and in the context of which search has been conducted with respect to the petitioner. Admittedly, no proceedings have been initiated under Section 74 of CGSit A«^f nptitinn^r till . Tin UgaiUSt thC statem / date. What must also be noticed is that tLugh the “ase tha°t the‘'°“ to make out a case that the proceedings under Section 74 of COST Act are sought to be instituted and in the context of which the provisional attachment under Section 83 of CGST Act is resorted to the b7r grounder'''"®' be ground to exercise power under Section 83 for the provKsional attachment. If the only ground made out in the ^tatement ob.iections a^^T the very order of attachmgni proceedings under Section 74 of theT^ Act, even if there are other proceedings that ni^^~iZ considered to be pending against the petitioner as long"^^ feedings under Section 74 areyjot initiated hySf? uttachment purport-;^ ^ting to the proceedings under Section 74 cannot be p,e respondent Authority cannot be permitted to conten~d I.*' contemplated under SecH^^ruJ ^ST Ac have been initiated, as it is made out i^Hi;: ^ovisional order of attachment enclosed at Annexure-A thji Ergceedings have been initiated under Section 74 of the CGCT ich has an adverse consequence on the petitionee m have to be strictly constnjed. (emphasis supplied)” orders dated 3^^ and 4*' November, 2022 issued against respondents 10 would clearly depict that proceedings have been launched against the petitioner U/s 67(1) and 67(2) of the CGST/SGST Act,
19 2017 but not U/s 74. As already stated supra, pending the proceedings U/s 67, the provisional attachment U/s 83 can be made. the petitioner.
The second argument of the petitioner is concerned, in order to appreciate the same we have to refer to Section 74(1) (5) and (8) of CGST/SGST Act, 2017 and Rule 142(1 A) of CGST Rules, 2017. Section 74(1) (5) and (8) of CGST Act: (1) 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, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice.” (2) xxx (3) xxx (4) xxx (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and For this reason we reject the first argument of learned counsel for “74. Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willfulmisstatement or suppression of facts.—
20 the tax a penalty equivalent to fifteen per cent of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) XXX (7) XXX (8) Where any person chargeable with tax under sub section (1) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five percent of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded.” Section 74(1) 15land (8) of APGST Act:
Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willfulmisstatement or suppression of facts.— (1) 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, he shall serve notice on the person chargeable with tax which has not been so paid or which has been so short paid or to whom the refund has erroneously been made, or who has wrongly availed or utilised input tax credit, requiring him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon under section 50 and a penalty equivalent to the tax specified in the notice.” (2) xxxx (3) xxxx (4) xxxx (5) The person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under section 50 and a penalty equivalent to fifteen per cent of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and 21 writing of such Rule 142 (lA) of CGST Rules. 2017 of amounts payable 11. 142. Notice and order for demand under the Act. (1) XXX (lA) The proper officer may, before service of notice to the person chargeable with tax, interest and penalty, under sub-section (1) of Section 73 or sub- section(l) of Section 74, as the case may be, communicate the details of any tax, interest and penalty as ascertained by the said officer, in Part A of Form GST DRC-OIA” inform the proper officer in payment. (6) xxxx (7) xxxx (8) Where any person chargeable with tax under sub section (I) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five percent of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded.” The above provisions would show that the proper officer even before serving notice U/s 74(1), may issue an “intimation of tax” payable under Rule 142(1 A) of the CGST Rules, 2017 and if the taxable person accordingly pays the amount of tax U/s 74(5), the notice U/s 74(1) cannot be issued. If he fails to pay the amount, the proper office may issue notice U/s 74(1). Then, if the taxable person in terms of .Section 74(8) of the Act, pays the tax amount with interest and penalty equivalent to twenty five per cent as mentioned
22 petitioner is that even if a notice i was 12. respondent cannot be found fault. will discuss presently. in notice U/s 74(1) within 30 days of the shall be deemed to be concluded. notice, all the proceedings Now the argument of the The said action of the 2"'’ were issued the basis of his proceedings U/s 67 but not U/s 74. What is to be noted is wholly irrelevant and unacceptable for the reason that, the attachment orders by the 2"^’ respondent on The above argument in our view is that after conducting inspection U/s 67 and having found incriminating material against the petitioner, the 2 respondent immediately issued provisional attachment orders dated 03 and 04.11.2022 and thereafter issued intimation of tax in Form GST DRC-OIA dated 08.11.2022. an intimation under Rule 142(1 A) 08.11.2022 and without waiting for the further time and following the due procedure U/s 74, the attachment was made even prior to 08.11.2022 which is illegal. peutioner is that even if a notice is issued U/s 74(1) still he would have time of 30 days to comply with but however no notice was issued U/s 74(1) but only issued on IS a question of fact which we uf course whether there are sufficient grounds to order attachment i
23 The third argument of the petitioner is that in view of the 13. clause 'Commissioner/Chief Commissioner is of the opinion”, opinion must be the subjective specified and designated officer but not that of a delegate. To appreciate this argument we have to examine certain provisions. In this context, Section 5(3) of COST Act says thus: Section 5(3) of APGST Act, 2017 is also in pari materia but for the difference that in the place of “Commissioner”, “Chief Commissioner” has to be read. Then Section 167 of COST Act reads thus: 14. “167. Delegation of powers: opinion of a employed in Section 83, such an The Commissioner may, by notification, direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by any authority or officer under this Act may be exercisable also by another authority or officer as may be specified in such notification.’* “5. Powers of officers: 1. xxx
XXX
The Commissioner may, subject to such conditions and limitations as may be specified in this behalf by him, delegate his powers to any other officer who is subordinate to him.
XXXX”
24 15. the place of 16. rightly argued by learned Go the respective statutes, to the subordinate officer. was dealing with the Thus as Section 167 of APGST Act, 2017 is also identical except that the word “Chief Commissioner” has to be read in “Commissioner”. petitioner that the subjective satisfaction of the designated officer alone i power Therefore, the contention of the a Division Bench 'vemment Pleader, as per Commissioner/Chief Commissioner is authorised to delegate his -I can .X uic ucsignaieo otticer alone is essential to exercise the power U/s 83 holds no water. In Valerius Industries (supra 1) cited by the petitioner, of Gujarat High Court question whether the State Tax Officer exercise power U/s 83 of Gujarat Goods and Services Tax Act, 2017 (GGST Act, 2017). It may be noted, Section 83 of GGST Act, 2017 IS in pan materia with Section 83 of APGST Act, 2017. In that context, the Division Bench of High Court of Gujarat held thus: 2 iU^theT “ “ abundantly clear hat I IS the Commissioner’s opinion which is relevant The legislature has thought fit to confer this power upon the Commissioner. Whether such power conferred upon the th by the legislature could have been delegated to Xr Tate^ by virtue of the der dated 15 Januaiy 2018 passed in exercise of power Sectl™ 2 of th “ A clause 19 of Section 2 of the Act and the rules framed thereunder. In our
25 However, subsequently in Nathalal’s case (supra 2) another
Division Bench of High Court of Gujarat, considering the ratio in the judgments (1) Sidhartha Sarawgi v. Board of Trustee for the 9 Port of Kolkata,^ (2) State of Bihar v. Anil Kumar and (3) Sahni Silk Mills (P) Ltd., v. Employees’ State Insurance Corporation'^ held as follows:
“43. In Valerius Industries (supra), this Court was dealing with a matter in which the subject matter of challenge was an order of provisional attachment under Section 83 of the Act. For the purpose of Section 83 of the Act, the Legislature thought fit to confer the power upon the Commissioner. However, in this regard also, the Commissioner has issued a notification dated 15*'’ January 2018 delegating his power to three subordinate officers. While considering the challenge, this Court observed in para-35 as quoted above.
We are of the view that the observations made by this Court in the above refened para-35 could be termed as per incurium as such observations run contrary to the Supreme Court decisions referred to above in this judgment.
It is an accepted principle of administrative law that the repository of power must exercise that power personally. However, there are two exceptions to this principle:
Legislation provides for the power to delegate or authorise: opinion, the answer has to be in the negative. Although there is no specific challenge to the order dated 15*'^ January 2015 passed by the Commissioner of State Tax delegating his power under Section 83 to the subordinate officers, yet, we are of the view that by virtue of such order, such impugned order of provisional attachment cannot be defended.” ® <2014) 16 see 248 ’(2017) 14 see 304 "’(1994) 5 see 346
26
In the instant case, the Chief Commissioner vide his proceedings in CCST’s dated Act, 2017 to Thus in essence, in the subsequent judgment, the Division Bench of High Court of Gujarat approved the delegating powers of the Commissioner. Ref.No.CE W/E2/221 /2022, 03.11.2022 has delegated his powers U/s 83 of APGST the 2"'^ respondent. The order reads thus: An express power to delegate, usually in legislation, allows the person who has the legislative authority to delegate that authority to others. The individual/s or position/s having the delegation can exercise the authority in their ovm right. An example of an express to delegate can be seen in section 5(3) of the Act,
Implied power to authorise; An implied power to authorise, arises where even though there may or may not be an express power to delegate in legislation, there can be an implied power for an official to exercise the power on the person's behalf - it is often termed the ‘alter ego’ principle the ‘Carltona principle’ or an implied power to delegate. This principle arose from the decision Carltona Limited v. Commissioner of Works, (1943) 2 All ER
The principle is : devolving power is permitted in the cases where the nature, scope, and purpose of the power in legislation means that it is unlikely that the Parliament intended that the power is to be exercised personally, and the only practical way the power can be exercised is by the officers who responsible to the person (who has the power by legislation).”
27 :ORDER: The above order would manifest that the Chief Commissioner 19. pursuant to his power U/s 5(3) r/w Section 167 delegated his power U/s 83 of the CGST/SGST Act, 2017 to the 2"^ respondent and in Chief Commissioner of State Tax A.P., Vijayawada dt. 03.11.2022 The Additional Commissioner of State Tax, Regional GST Audit and Enforcement Office, Tirupathi unit vide reference cited has requested to accord permission for provisional attachment of Bank Account or any other properties of M/s Unique Enterprises, GSTN:37MFBPK6797J1ZI, Nellore Division under Section 83 ofAPGST Act, 2017. After careful examination of the report submitted by the Additional Commissioner of State Tax, Regional GST Audit and Enforcement Office, Tirupathi unit and in view of circumstances explained therein, I am of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to initiate provisional attachment provisions under Section 83 read with Rule 159 of APGST Act, 2017 and accordingly here with delegate all powers vested with the Undersigned, under Section 83 of APGST Act, 2017 regarding the provisional attachment proceedings relating to M/s Unique Enterprises, GSTN:37MFBPK6797J1ZI, Nellore Division to the proper Officer viz, Deputy Commissioner of State Tax Regional GST Audit and Enforcement Office, Tirupathi unit office as per the powers vested under the provisions of Section 167 of APGST Act, 2017. In view of the above, proper Officer viz, Deputy Commissioner of State Tax Regional GST Audit and Enforcement Office, Tirupathi unit is directed to initiate the provisional attachment as per the provisions under section 83 read with Rule 159 of APGST Act, 2017 and the Additional Commissioner of State Tax, Regional GST Audit and Enforcement Office, Tirupathi unit is directed to monitor the proper Officer and report compliance regarding the provisional attachment made by the Proper Officer.”
28 consonance thereof, the said officer has Therefore,
The law on The fourth argument of the petitioner’s counsel is that the attachment order is bereft of any reasons much less valid reasons and hence, the same fell fowl of Section 83. Learned GP refuted the same. issued provisional attachment proceedings against the respondents 4 to 10. the delegating power of the Chief Commissioner and consequential action of the 2"‘' respondent cannot be said to be without power or juri iction. Thus the third argument of the petitioner is rejected. the aspects of the draconian nature of Section 83 and the principles to be followed to initiate provisional attachment proceedings under the said section is no more res integra. In Radhakrishan Industries’s case (4 supra), the Hon’ble Apex Court after considering the decisions of different High Courts including the decision of the High Court of Gujarat in Valerius Industries’s case (2 supra), has laid down the following guidelines to be followed by the concerned authority for taking up of provisional attachment proceedings u/s 83. 29 It has now to be seen whether in the instant case the above guidelines have been scrupulously followed or not.
The respondent obtaining authorisation dated on 01.11.2022 issued U/s 67(1) by the 3^^^ respondent, inspected the business premises of the petitioner on 03.11.2022 in the presence of two independent mediators and noticed the following grave and incriminating facts relating to the business affairs of the petitioner and mentioned the same in his letter dated 03.11.2022 addressed to the 3'"'' respondent, a copy of which is filed along with the counter by (v) The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissioner must form an opinion on the basis of tangible material that the assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the government revenue. 72, (iv) The power to order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled; 2nd (vii) The formation of an opinion by the Commissioner under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government revenue.” (vi) The expression “necessary so to do for protecting the government revenue” implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment;
30 the respondents and also in the ‘intimation of tax’ vide Form GST DRC-OIA, dated 08.11.2022 served on the petitioner. i. of other plaiting ii. manufacture of straw, of esparto or materials, basket wear and wicker work The petitioner applied for registration under GST Act, 2017 in the name and style of M/s Unique Enterprises, No.46 -139-1028, Manikanta Nagar, Ward No.46, Siva Prasad Colony, Ongole’ Prakasam District for doing business in: and obtained registration w.e.f 19.07.2022. However, during the inspection of the business premises there was no such business existing at that place and tax payer was not present. When enquired, one Chenniboina Akkeswara Rao (drive in ASPSRTC, Ongole Depot) the owner of the said building informed that one person by name Babu approached them three months back and paid Rs.5,000/- as advance for small shop (3m X 5m) and collected electricity receipts, property tax receipts from them. He further informed that they have not entered into any rental agreement and monthly rents were not received since last three months. He contacted the said Babu over phone number 9441610889 for payment of rent but he did not respond. He further stated that Adil Khan i.e., the proprietor of the petitioner concern did not occupy the premises and do any business there. The said fact indicates that the petitioner obtained GST registration by furnishing false information with fabricated rental agreement with malafide intention. On verification of inward and outward e-Way bill data the following irregularities were found: a. The tax payer initially obtained registration for non sensitive goods as mentioned supra but later amended as ferrous waste and scrap, re-melting scrap inguards of iron or steel and aluminium waste and scrap which are sensitive commodities through non-core field amendment and generated e-Way bills for iron and steel scrap only. b. I he place of business was closed but still invoices were issued and way bills were generated. The tax payer has passed input tax credit of Rs. 1.90 Crores to M/s Shyam Terrace Ltd., (GSTIN:37AAECS4592A1ZE) and M/s Metro Trading Corpn. (GSTIN:37N1W PS2402BIZW)
31 c. d. e. f. nd On the strength of above grave facts, the 2 respondent
Chief obtained authorization dated from the 03.11.2022 Commissioner and issued the provisional attachment proceedings. Subsequently issued intimation of tax in Form GST DRC-OIA, dated 08.11.2022 incorporating the above facts. However, it appears against the said intimation. In the writ petition, the petitioner simply denied the allegations without submitting any clarification regarding the allegation of petitioner issuing ITC of Rs. 1.90 Crores to the two Though all the concerns and claiming ITC of Rs. 1.10 Crores. Though so many vehicles moved from Chittoor, Guntur to the business place of tax payer i.e., Ongole no business activity was noticed by the owners of the business premises. The business premises is not suited for loading and unloading of iron and steel scrap. Verification of movement of goods from e-Way bills portal revealed that not even a single vehicle passed through any of the toll gates while moving from Chittoor, Madanapalli and Guntur to Ongole, though there are toll gates between these stations. Some of the vehicles noted in the way bills are not the transport vehicles. As per GSTR 2A, the petitioner claimed ITC for an amount of Rs. 1.10 Crores from M/s Narayana Enterprises. However the said supplier filed only GSTR 1 and not filed GSTR 3B and not paid tax to the Government. It indicates the petitioner claimed bogus ITC on the strength of fake invoices, e-Way bills without receiving goods physically and utilized the ITC to adjust his output tax to evade 18% tax for the iron scrap. so far the petitioner has not submitted any explanation or objections
32 are respondent. the writ petition.
Accordingly, the writ petition is dismissed with and 04 respondent came to the opinion that unless his financial resources and bank account November, 2022 issued against respondents 4 to 10 in terms of Rule 159(5) of COST Rules, 2017 within two weeks from the date of receipt of a copy of this order if was not conducting a liberty to the petitioner to file his objections against the provisional attachment orders dated 03'"^ the premises was not suitable for business activities, which speaks volumes of the dubious nature of petitioner’s business affairs. Considering these facts, it appears the 2"'* Thus, on a conspectus of facts and law, we find no merits in Therefore, we do not find any illegality or irregularity in the attachment orders dated 03^^ and 04"’ of November, 2022 of the 2"" aforesaid aspects have to be decided after enquiry, still, prima facie they project grave and suspicious facts regarding the business affairs of the petitioner. Most importantly he business at his official address and he was not available there and attached, it would be difficult to protect the Government revenue.
33 respondent shall consider such objections and pass order within one week in accordance with governing law and rules and communicate to the petitioner. No costs. As a sequel, interlocutory applications, pending if any shall stand closed. //// L One CC to SRI. M V J K KUMAR, Advocate [OPUC] [OUT] VCf^ To, 1. r
Two CCs to an appropriate K.SRINIVASA RAJU ASSISTANT REGISTRAR SECTIC^OFFICER already such objections were not filed and thereupon the GP FOR COMMERCIAL TAX .High Court of Andhra Pradesh.
Three C.D.Copies nm . 1
% HIGH COURT DATED:28/08/2023 ORDER WP.No.38754 of 2022 DISMISSING OF THE WP WITHOUT COSTS € Copi'gj 0 2 DEC 2023 | V\^ . Cur»©nt Section
Reproduced from the public record of the Andhra Pradesh High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.