1) Meaning of Attachment of Property
If the government attaches the property of a person, the person cannot transfer the said property to anyone else. Even if he does manage to transfer the attached property, the transfer shall be deemed void and thus not recognised by law. Even bank accounts can be attached – he will not be allowed to transfer his funds to any other account.
Any Litigation under various tax laws, including GST, might take a considerable amount of time. The pendency of any proceeding could potentially delay the earning of revenue by the Government.
Further, the taxpayer may transfer his property to another person before the end of the proceedings. In order to protect the interests of the revenue during the pendency of any proceedings the government has the power to provisionally attach the properties of the taxpayer.
2) Section 83. Provisional attachment to protect revenue in certain cases
1{(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 (1A) 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).
Chapter XII :- Assessment (Section 59-64)
Chaper XIV :-Inspection, Search, Seizure and Arrest (Section 67 to 72)
Chapter XV :- Demands and Recovery (Section 73 to 84)
Section 2(107) “taxable person” means a person who is registered or liable to be registered under section 22 or section 24;
Section 122 (1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.
Four Offences:-Section 122(1
(i) Supply of Goods/Services without Invoice;
(ii) Issuance of Invoice without supply of Goods/Services;
(iii) ITC (Input Tax Credit) wrongly availed or Utilized without actual receipt of Goods/Services;
(iv) ITC on the basis of ISD (Input Service Distributor) wrongly distributed.
3. Rule 159.Provisional attachment of property.–
(1) Where the Commissioner decides to attach any property, including bank account in accordance with the provisions of section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of property which is attached.
(2) The Commissioner shall send a copy of the order of attachment [in FORM GST DRC-22] to the concerned Revenue Authority or Transport Authority or any such Authority to place encumbrance on the said movable or immovable property, which shall be removed only on the written instructions from the Commissioner to that effect and [a copy of such order shall also be sent to the person whose property is being attached under section 83].
(3) Where the property attached is of perishable or hazardous nature, [and if the person, whose property has been attached,] pays an amount equivalent to the market price of such property or the amount that is or may become payable [by such person] whichever is lower, then such property shall be released forthwith, by an order in FORM GST DRC-23, on proof of payment.
(4) Where [such person] fails to pay the amount referred to in sub-rule (3) in respect of the said property of perishable or hazardous nature, the Commissioner may dispose of such property and the amount realized thereby shall be adjusted against the tax, interest, penalty, fee or any other amount payable by [such person].
(5) Any person whose property is attached may, [file an objection in FORM GST DRC-22A] to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC-23.
(6) The Commissioner may, upon being satisfied that the property was, or is no longer liable for attachment, release such property by issuing an order in FORM GST DRC-23.
4. Guidelines for Provisional Attachment of Property under section 83 of CGST Act 2017 [CBIC-20/16/05/2021-GST/359 dated 23/02/2021] (Please click here for download circular No. 359 dated 23/02/2021)
5. Type of case, where provisional attachment can be considered to be resorted to, subject to specific fact of the case:-[Para No. 3.3.1 of No. 359]
Where taxable person has:-
i) Supplied any Goods or Services or both without issue any Invoice in violation of the provisions of the act and rule made there under, with an intention to evade tax; or
ii) Issued any Invoice or bill without supply of Goods or Services or both in violation of the provisions of the act and rule made there under ; or
iii) Availed Input Tax Credit using the invoice or bill referred in clause (b) or fraudulently availed input tax credit without any invoice or bill; or wrongly availed or Utilized without actual receipt of Goods/Services;
iv) Collected any amount of tax but has failed to pay the to the Government beyond a periods of three months from the date on which such payment become due; or
v) Fraudulently obtained refund; and
vi) Passed on input tax credit fraudulently to the recipients but has not paid the commensurate tax
List of Types of Property should be attached [3.3 of circular No. 359 dated 23/02/2021]
i) It should be ensured that the value of property attached provisionally is not excessive. The provisional attachment of property shall be to the extent it is required to protect the interest of revenue that is to say, the value of attached property should be as near as possible to the estimated amount of pending revenue against such person.
ii) More than one property may be attached in case value of one property is not sufficient to cover the estimated amount of pending revenue against such person. Further, different properties of the taxpayer can be attached at different points of time subject to the conditions specified in section 83 of the Act.
iii) It may be noted that the provisional attachment can be made only of the property belonging to the taxable person, against whom the proceedings mentioned under section 83 of the Act are pending.
iv) Movable property should normally be attached only if the immovable property, available for attachment, is not sufficient to protect the interests of revenue.
v) As far as possible, it should also be ensured that such attachment does not hamper normal business activities of the taxable person. This would mean that raw materials and inputs required for production or finished goods should not normally be–attached by the Department.
vi) In cases where the movable property, including bank account, belonging .to taxable person has been attached, such movable property may be released if taxable person offers, in lieu of movable property, any other immovable property which is sufficient to protect the interest of revenue. Such immovable property should be of value not less than the tax amount in dispute. It should also be free from any subsisting charge, liens, mortgages or encumbrances, property tax fully paid up to date and not involved in any legal dispute. The taxable person must produce the original title deeds and other necessary information relating to the property, for the satisfaction of the concerned officer.
Related Court Case:-
a) Manish scrap Traders V/s Principal Commissioner-Gujrat High court[C/SCA/76/2022] dated 12.01.2022:- Under sec 83 of the Act. Bank account can be attached but Cash credit account as that’s not the bank account but a credit facility.
b) Kaneria Granito Ltd. V/s Assistant commissioner of Income Tax – Gujrat High [C/SCA/14497/2014] dated 27.06.2016- CC Accounts cannot be attached.
c) Formative Tex Fab V/s State of Gujrat – Gujrat High Court [C/SCA/14059/2020] dated 18.01.2021:- CC Accounts cannot be attached.
7. Share of Property can be attached?
Yes, where the property to be provisionally attached consists of the share or interest of the concerned taxable person in property belonging to him and another as co-owners, the provisional attachment shall be made by order to the concerned. Person prohibiting him from transferring the share or interest or charging it in any way.
8. Can Property attached which is exempt from attachment?
No, All such property as is by the Code of Civil Procedure, 1908 (5 of 1908). Exempted from attachment and sale for execution of a Decree of a Civil Court shall be exempt from provisional attachment.
Section 60. Property liable to attachment and sale in execution of decree.
1(1) The following property is liable to attachment and sale in execution of a decree, namely, lands, houses or other buildings, goods, money, bank-notes, cheques, bills of exchange, hundis, promissory notes, Government securities, bonds or other securities for money, debts, –Shares in a corporation and, save as hereinafter mentioned, all other saleable property, movable or immovable, belonging to the judgment-debtor, or over which, or the profits of which, he has a disposing power which he may exercise for his own benefit, whether the same be held in the name of the judgment-debtor or by another person in trust for him or on his behalf:
Provided that the following particulars shall not be liable to such attachment or sale, namely:
(a) the necessary wearing-apparel, cooking vessels, beds and bedding of the judgment-debtor, his wife and children, and such personal ornaments as, in accordance with religious usage, cannot be parted with by any woman;
(b) tools of artisans, and, where the judgment-debtor is an agriculturist, his implements of husbandry and such cattle and seed-grain as may, in the opinion of the Court, be necessary to enable him to earn his livelihood as such, and such portion of agricultural produce or of any class of agricultural produce as may have been declared to be free from liability under the provisions of the next following section;
(c) houses and other buildings (with the materials and the sites thereof and the land immediately appurtenant thereto and necessary for their enjoyment) belonging to an agriculturist or a labourer of a domestic servant] and occupied by him;
(d) books of account ;
(e) a mere right to sue for damages ;
(f) any right of personal service ;
(g) stipends and gratuities allowed to pensioners of the Government or of a local authority or of any other employer, or payable out of any service family pension fund notified in the Official Gazette by the Central Government or the State Government in this behalf, and political pensions;
[(h) the wages of labourers and domestic servants, whether payable in money or in kind;
[(i) salary to the extent of the first one thousand rupees and two third of the remainder in execution of any decree other than a decree for maintenance
Provided that where any part of such portion of the salary as is liable to attachment has been undep-pttachment, whether continuously or intermittently, for a total period of twenty-four`months, such portion shall be exempt from attachment until the expiry of a further period of twelve months, and, where such attachment has been made in execution of one and the same decree, shall, after the attachment has continued for a total period of twenty-four months, be finally exempt from attachment in execution of that decree.
(ia) one-third of the salary in execution of any decree for maintenance;
(j) the pay and allowances of persons to whom the Air Force Act, 1950 (45 of 1950) or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957), applies;
(k) all compulsory deposits and other sums in or derived from any fund to which the Provident Funds Act, 1925 (19 of 1925), for the time being applies in so far as they are declared by the said Act not to be liable to attachment;
[(ka) all deposits and other sums in or derived from any fund to which the Public Provident Fund Act, 1968 (23 of 1968), for the time being applies, in so far as they are declared by the said Act as not to be liable to attachment;
(kb) all moneys payable under a policy of insurance on the life of the judgment debtor;
(kc) the interest of a lessee of a residential of building to which the provisions of law for the time being in force relating to control of rents and accommodation apply;]
[(1) any allowance forming part of the emoluments of any servant of the Government or of any servant of a railway company or local authority which the appropriate Government may by notification in the Official Gazette declare to be exempt from attachment, and any subsistence grant or allowance made to any such servant while under suspension;
(m) an expectancy of succession by survivorship or other merely contingent or possible right or interest;
(n) a right to future maintenance;
(o) any allowance declared by any Indian law to be exempt from liability to attachment or sale in execution of a decree, and
(p) where the judgment-debtor is a person liable for the payment of land-revenue, any movable property which, under any law for the time being applicable to him, is exempt from .sale for the recovery of an arrear of such revenue.
Explanation 1. The moneys payable in relation to the matters mentioned in clauses (g), (h), (i), (ia), (j), (1) and (o) are exempt from attachment or sale, whether before or after they are actually payable, and, in the case of salary, the attachable portion thereof is liable to attachment whether before or after it is actually payable.
Explanation II– In clauses (i) and (ia), “salary” means the total monthly emoluments, excluding any allowance declared exempt from attachment under the provisions of clause (1), derived by a person from his employment whether on duty or on leave.
Explanation [III] — In clause (1) appropriate Government means–
(i) as respects any [person] in the service of the Central Government, or any servant of a Railway Administration or of a cantonment authority or of the port authority of a major port, the Central Government;
(ii) as respects any other servant of the Government or a servant of any other local authority, the State Government.
Explanation IV.– For the purposes of this proviso, “wages” includes bonus. and “labourer” includes a skilled unskilled or semi-skilled labourer.
Explanation V .– For the purposes of this proviso, the expression agriculturist means a person who cultivates land personally and who depends for his livelihood mainly on the income from agricultural land, whether as owner, tenant, partner or agricultural labourer.
Explanation VI.– For the purposes of Explanation V an agriculturist shall be deemded to cultivate land-personally, if he cultivates land
(a) by his own labour, or
(b) by the labour of any member of his family, or
(c) by servants or labourers on wages payable in cash or in kind (not being as a share of the produce), or both.
(IA) Notwithstanding anything contained in any other law for the time being in force, an agreement by which a person agrees to waive the benefit of any exemption under this section shall be void.
(2) Nothing in this section shall be deemed to exempt houses and other buildings (with the materials and the sites thereof and the lands immediately appurtenant thereto and necessary for their enjoyment) from attachment or sale in execution of decrees for rent of any such house, building, site or land.
Conclusion: –
1. PO can’t provisionally attached Cash Credit account under Section 83 of CGST Act 2017?
Answer:- No.
2. Shared Property Can be Attached under Section 83 of CGST Act 2017
Answer:- Yes, up to taxable persons share (circular No. 359 dated 23/02/2021)
3. Property Exempt under Section 60 of CPC 1908 can be attached?
No (circular No. 359 dated 23/02/2021).
4. Stock of Raw Martials which is required for final product can be attached?
Yes, Department ensure that attachment does not hamper normal business activities of the taxable person. This would mean that raw materials and inputs required for production or finished goods should not normally be–attached by the Department. (circular No. 359 dated 23/02/2021)
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