Cengres Tiles Limited vs. State Of Gujarat

Held

The Court held that the provisional attachment orders issued under Section 83 of the CGST Act were illegal and premature. The Court reasoned that Section 83 is intended to protect government revenue during the pendency of proceedings under specific sections, including Section 62. Section 62, in turn, is triggered only after a notice under Section 46 is served on a registered person who fails to furnish a return. In this case, the provisional attachments were made before the issuance of the Section 46 notice and before any proceedings under Section 62 could commence. Therefore, the authority acted without jurisdiction by directly proceeding with provisional attachment. The Court quashed and set aside the impugned orders of provisional attachment of goods and bank accounts. The Court noted that proceedings under Section 62 have since been initiated and are in progress, and the petitioner's liability will be assessed accordingly. The petitioner undertook to deposit ₹1.50 crore monthly towards GST liabilities.

Facts

Cengres Tiles Limited (the petitioner) filed a writ application challenging provisional attachment orders issued by the Assistant Commissioner of Sales Tax. These orders, dated October 30, 2018, November 26, 2018, and November 27, 2018, provisionally attached the petitioner's bank accounts and stock worth approximately ₹12 crore and ₹19.17 crore. The petitioner argued that these attachments were premature as they were made before the initiation of proceedings under Section 62 of the Central Goods and Services Tax Act, 2017, which requires a notice under Section 46 to be issued first. The petitioner also sought permission to pay outstanding GST arrears in monthly installments.

Key Issues

1. Whether the provisional attachment orders issued under Section 83 of the Central Goods and Services Tax Act, 2017, were illegal, highhanded, arbitrary, and premature, given that they were passed before the issuance of a notice under Section 46 and the pendency of proceedings under Section 62 of the Act? Petitioner's Arguments: The petitioner contended that Section 83 of the CGST Act can only be invoked during the pendency of proceedings under Sections 62, 63, 64, 67, 73, or 74. Specifically, for Section 62, it requires a prior notice under Section 46. As the notice under Section 46 was issued on November 27, 2018, and the provisional attachments were made on October 30, 2018, and November 26, 2018, there were no pending proceedings under Section 62 at the time of attachment, rendering the attachments without authority of law. The petitioner also expressed willingness to pay arrears in installments. Revenue's Arguments: The revenue argued that the provisional attachment order itself should be construed as the initiation of proceedings under Section 62. Therefore, the attachments were not premature and were made in accordance with the law to protect government revenue.