Adhunik Corporation Limited And Anr vs. Superintendent, Directorate General Of Goods And Service, Tax Intelligenceand Ors

Held

The Court held that the order of provisional attachment passed under Section 83 of the CGST Act, 2017, ceases to have effect once the proceedings under Section 67 of the CGST Act are concluded. The Court relied on the Supreme Court's decision in Radha Krishan Industries Vs. State of Himachal Pradesh, emphasizing that the power of provisional attachment is draconian and must be exercised only when necessary to protect the interest of government revenue, and it is contemplated during the pendency of specific proceedings. The Court found that the proceedings under Section 67 had admittedly concluded. Therefore, the provisional attachment order dated January 20, 2021, had worked out. The Court also referred to decisions from the Gujarat High Court in Kushal Ltd. Vs. Union of India and Valerious Industries Vs. Union of India, which supported the appellants' position. Consequently, the Court quashed the provisional attachment order dated January 20, 2021, and the communication dated June 14, 2021, directing the respondents to intimate the appellants' banker to lift the attachment within one week. The Court clarified that this decision tested the validity of the attachment order in light of the conclusion of Section 67 proceedings and preserved the department's right to exercise powers under Section 83 if circumstances warranted.

Facts

The appellants, Adhunik Corporation Limited and another, filed a writ petition challenging a provisional attachment order dated January 20, 2021, passed by the Superintendent, Directorate General of Goods and Services Tax Intelligence, Kolkata Zonal Unit, under Section 83 of the CGST Act, 2017. The attachment was of their bank account to protect revenue interest during proceedings initiated under Section 67 of the CGST Act. The appellants argued that despite depositing Rs. 10 lakhs and submitting representations explaining the genuineness of their transactions and the hardship caused by the attachment, their request to lift the attachment was rejected on June 14, 2021. The writ petition was filed after approximately seven months from the attachment order, with the appellants claiming they sought resolution from authorities before approaching the court. The appeal is against the Single Bench's order refusing interim protection, and both parties agreed to have the main writ petition decided.

Key Issues

1. Whether the order of provisional attachment of a bank account under Section 83 of the CGST Act, 2017, remains valid after the conclusion of proceedings initiated under Section 67 of the CGST Act? Petitioner's Arguments: - The appellants contended that the power of provisional attachment under Section 83 is draconian and must be exercised strictly in accordance with the law, requiring a pre-existing opinion formed by the Commissioner based on tangible material demonstrating necessity to protect revenue interest. They relied on the Supreme Court's decision in Radha Krishan Industries Vs. State of Himachal Pradesh, which held that such attachment must be preceded by a formed opinion and is contemplated during the pendency of specific proceedings. - They argued that once the proceedings under Section 67 have concluded, the provisional attachment order should cease to subsist, citing the principle that anticipatory attachment must strictly conform to statutory requirements. Revenue's Arguments: - The revenue contended that proceedings under Section 67 had unearthed sufficient material, and the matter was being processed, leading to the eventual issuance of a show cause notice. They argued that the provisional attachment order should continue until the matter is taken to its logical end, to protect the interest of revenue. They referred to the Punjab & Haryana High Court's decision in UFV India Global Education Vs. Union of India, though the court distinguished this case.