AJE India Private Limited Vs Union of India and ors. (Bombay High Court)
We have perused the original record produced by Mr. Mishra which discusses about investigation under section 67 and therefore, the need to take action under section 83. Whether recourse to section 83 is warranted at this stage has not been dealt with in the record. Merely because there is a proceeding under section 67 would not mean that recourse to such a drastic power as under section 83 would be an automatic consequence, more so when petitioner has cooperated with the investigation. That apart, section 83 speaks of provisional attachment of any property including bank account. The record is silent as to whether any attempt has been made for provisional attachment of any property of the petitioner and instead why the bank accounts should be attached. Besides, by use of the word “may” in sub-section (1) of section 83 Parliament has made it quite clear that exercise of such a power is discretionary. When discretion is vested in an authority, such discretion has to be exercised in a just and judicious manner, more so when the power conferred under section 83 admittedly is a very drastic power having serious ramifications. Such power having the potential to adversely affect property rights of persons as well as life and liberty under Article 21 of the Constitution of India has to be exercised in a fair and reasonable manner.
Being possessed of power is one thing and exercise of such power is altogether another thing. Because the Commissioner is conferred with the power of provisional attachment under section 83 it would not ipso-facto mean that he can straight away proceed to provisionally attach any property including bank accounts of a taxable person merely on the ground of pendency of proceedings under section 67.
During the course of the hearing Mr.Sridharan had referred to averments made in the writ petition more particularly to Ground No.F.11 to submit that petitioner had already offered to respondent No.2 its land, building and plant and machinery having estimated gross value of approximately Rs.44 crores to secure the interest of the revenue. In such circumstances, we are of the view that recourse to section 83 by respondent No.2 straight away is not justified. Prima facie, such an exercise appears to be harsh and excessive, thus arbitrary.
Consequently, we stay the impugned order dated 18th/19th November, 2020 and direct withdrawal of the provisional attachment of the bank accounts of the petitioner mentioned in the said order forthwith. However, petitioner shall furnish an undertaking before the Court by way of affidavit that it shall not alienate its land, building, plant and machinery during pendency of the present proceeding.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. Heard Mr.V.Sridharan, learned senior counsel for the petitioner; and Mr.J.B.Mishra, learned counsel for the respondents.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of order dated 18th/19th November, 2020 passed by respondent No.2 provisionally attaching the bank accounts of the petitioner maintained with respondent No.3.
3. The matter was heard on 17th December, 2020 on the interim prayer on which date Mr.Mishra had also produced the record in original which we have perused.
4. Before adverting to the impugned order we may briefly indicate that the petitioner, a company incorporated under the Companies Act, 1956, is engaged in the business of manufacture and supply of carbonated fruit drinks, such as, Big Cola, Big Orange Cola, Big Lemon and similar other products. Petitioner has been manufacturing such fruit juice based drinks since December, 2017 having more than 5% juice content in apple drink and 2.5% in respect of lemon drink. Petitioner has been classifying such goods under Tariff Item 2202 99 20 of the Customs Tariff Act, 1975 and specified at Serial No.48 under Schedule-II as “fruit pulp or fruit juice based drinks” of the Central Government Notification dated 28th June, 2017 taxable at the rate of 12%. According to the petitioner, the above classification is in conformity with the judgment of the Supreme Court in case of Parle Agro (P) Ltd. Vs. Commissioner of Commercial Taxes, Trivandrum, 2017(352) ELT 113 and also of the Larger Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case of Brindavan Beverages Private Limited Vs. Commissioner of Customs, which were rendered prior to introduction of Goods and Services Tax (GST). It is stated that in respect of one of the group companies of the petitioner, namely, M/s Anutham Exim Private Limited, Commissioner of Customs (Appeals), Kolkata by order dated 8th June, 2020 has upheld such classification.
5. Petitioner has stated that on the basis of such classification petitioner has been filing its GST returns and paying the taxes regularly.
6. According to the petitioner, the departmental authorities initiated investigation sometime in March, 2019 with regard to classification of the goods which was however dropped. Such inquiry was revived in January, 2020 but no progress was made because of Covid-19 pandemic and the resultant lockdown. Then on 21st September, 2020, officials of respondent No.2 visited the petitioner’s factory for further investigation. Summons were issued to the petitioner on 21st September, 2020 itself for appearance of director and other authorized representatives which was complied with. It appears that statement of one of the foreign directors was recorded on 22nd September, 2020.
7. However, the impugned order dated 18th/19th November, 2020 was issued by respondent No.2 and addressed to the Branch Manager, ICICI Bank, Nagari Reespost, Mohopada, Khalapur, Raigad provisionally attaching bank accounts of the petitioner under section 83 of the Central Goods and Services Tax Act, 2017 (briefly “the CGST Act” hereinafter). Order dated 18th/19th November, 2020 is extracted hereunder :-
“Date:18.11.2020
Reference No. V/PI/RGD/GR-II/30-93/AJE India/18-19
To,
The Branch Manager,
ICICI Bank, (IFSC-ICIC0001627)
Address-Survey No.177/3A/B, 40 KVL,
Nagari Reespost, Mohopada,
Khalapur, Raigad- 410222.
Provisional attachment of Property under section 83
It is to inform that M/s AJE India Pvt. Ltd. having principal place of business at A-21, A 1,2,3, MIDC Patalganga, Khalapur, Raigad-410220 bearing registration number as 27AAHCA9177AIZN, PAN-AAHCA9177A is a registered taxable person under the CGST Act, 2017. Proceedings have been launched against the aforesaid taxable person under Section 67 of the said Act to determine the tax or any other amount due from the said person. As per information available with the department, it has come to my notice that the said person has following accounts in your bank having account no as mentioned against them:
