In this Article, Author focus on Section 83 read with Rule 159 regarding Provisional Attachment, analyzing its provisions, amendments, and judicial interpretations.
Section 83- Provisional Attachment.
➣ Section 83:- Provisional attachment to protect revenue in certain cases.(Enforced w.e.f. 01.07.17.)
➣ Rule 159:- Provisional attachment of property
➣ FORMS :-
(i) FORM GST DRC -22 PROVISIONAL ATTACHMENT OF PROPERTY U/S 83
(ii) FORM GST DRC-23 Restoration of provisionally attached property / bank account
(iii) FORM GST DRC 22A- Application for filing objection against provisional attachment of property
➣ Amendment in original section 83:- NOTIFICATION NO 39/2021 C.T. DATED 21.12.21. W.E.F. 01.01.22
➣ CIRCULARS/ORDERS ISSUED- NONE
➣ INSTRCUTIONS/ GUIDELINES- CBEC-20/16/05/2021-CGST (deals also with property which can be attached along with section 60 of Civil Code procedures 1908 (5 of 1908)
➣ ANY CASE LAW FOR REFERENCE- Radha Krishna industries vs. state of Himachal Pradesh and others. dated 20.04.2021 civil appeal no. 1155 of 2021
Section 83 before amendment w.e.f.01.01.2022
Conditions to be complied with by commissioner before invoking powers of provisional attachment :-
- Pendency of any proceedings U/s 62, U/s 63, U/s 64, U/s 67, U/s 73 or U/s 74.
- Forming of an opinion of the commissioner for protecting government revenue, as it is necessary so to do.
- Order must be in writing to attach property provisionally including bank account.
- Belonging to the Taxable person.
The section has been smartly amended after the Supreme Court Decision in the case of Radha Krishna Industries Vs. State of Himachal Pradesh and Ors. Dated 20.04.2021
➣ Amended section 83 via Notification No. 39/2021 dated 21.12.2021 w.e.f. 01.01.2022 Conditions to be complied with by commissioner before invoking powers of provisional attachment :-
- After the initiation of any proceedings under Chapter XII, Chapter XIV or Chapter XV.
- Forming of an opinion of the commissioner for protecting government revenue, as it is necessary so to do.
- Order must be in writing to attach property provisionally including bank account.
- Belonging to the taxable person or any person specified in sub-section (1A) of section 122.
Section 122(1A) of CGST Act,2017
➣ Any person who retains the benefit of a transaction and at whose instance such transaction is conducted covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1)
(i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
(ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
(vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
(ix) takes or distributes input tax credit in contravention of section 20, or the rules made there under;
Supreme court analysis in above judgment for each of the conditions before amendment.
A. Pendency of proceedings :-
“ A final order having been passed under Section 74(9), the proceedings under Section 74 are no longer pending as a result of which the provisional attachment must come to an end; and
The appellant having filed an appeal against the order under Section 74(9), the provisions of sub-Sections 6 and 7 of Section 107 will come into operation in regard to the payment of the tax and stay on the recovery of the balance as stipulated in those provisions, pending the disposal of the appeal.”
Writer opinion
➣ the wordings used in amended provision now is, after the initiation of Proceedings, that means even after the passing of an order U/s 73(9) or U/s 74(9) as the case may be, the provisional attachment made U/s 83 is still valid, It will be released only when Assessee file an Appeal U/s 107.
➣ Supreme court has already said Section 83 is a DRACONIAN PROVISION, must be invoke very cautiously and when tangible material is on hand that it is evident on record to protect the interest on government revenue it is necessary so to do. By amending this section I would say, Government has made it more Draconian.
➣ What SC has said, “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;
Supreme court analysis
B. Forming of an opinion of the commissioner for protecting government revenue, as it is necessary so to do.
“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.”
➣ Gujarat Value Added Tax Act 2003 , one of us (Hon’ble Mr Justice MR Shah) speaking fora Division Bench of the Gujarat High Court in Vishwanath Realtor v State of Gujarat Special Civil No. 7210 of 2015, decided on 29 April 2015.
➣ Supreme court has referred this case law while passing its given judgment.
Writer Opinion
Assessee must check whether the commissioner that while ordering a provisional attachment U/s 83 the commissioner must be in the formation of the opinion , on the basis of tangible material.
Supreme court analysis
C. Order must be in writing to attach property provisionally including bank account.
“Under the provisions of Rule 159(5), the person whose property is attached is entitled to dual procedural safeguards:
(a) An entitlement to submit objections on the ground that the property was or is not liable to attachment; and
(b) An opportunity of being heard;
➣ There has been a breach of the mandatory requirement of Rule 159(5) and the Commissioner was clearly misconceived in law in coming into conclusion that he had a discretion on whether or not to grant an opportunity of being heard;
➣ The Commissioner is duty bound to deal with the objections to the attachment by passing a reasoned order which must be communicated to the taxable person whose property is attached;”
Rule 159(5) Provision and writer opinion
➣ Sub Rule 5- Any person whose property is attached may5[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.
➣ (* 7 days criteria to file objection withdrawn w.e.f. 1.1.22 Notification No.40/2021 29.12.2021)
➣ Provisions of Rule 159(5) should be strictly adhered to by the commissioner. i.e., without giving proper opportunity of being heard after filing an objection by a person , Provisional attachment is not at all valid.
Supreme court was silent in respect of below condition , writer opinion
D. Belonging to the taxable person:-
Scope of Section 83 has been widened with the amendment, as earlier it was only Provisional Attachment of any property , including bank account, belonging to the taxable person but now any person who is directly or indirectly involved in such above mentioned transactions, the section 83 can also be enforced against such person aswell. As well as scope in respect of proceedings has also been changed.
Chapter XII :- Assessment
Chapter XIV:- Inspection, Search, Seizure and Arrest.
Chapter XV:- Demands and Recovery.
Can a Commissioner delegates his powers of Provisional attachment U/s 83 ?
Yes. Sec 5(3) of CGST Act, 2017 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.
Can an appeal be filed U/s 107(1) against the order of a joint commissioner to whom powers are delegated U/s 5(3) of the CGST Act, 2017?
➣ NO
➣ Supreme Court Wordings :-
“From the above definition, it is evident that the expression ‘adjudicating authority’ does not include among other authorities, the Commissioner. In the present case, the narration of facts indicates that on 21 October 2020, the Commissioner had in exercise of his powers under Section 5(3) made a delegation inter alia to the Joint Commissioner of State Taxes and Excise in respect of the powers vested under Section 83(1). The Joint Commissioner, in other words, was exercising the powers which are vested in the Commissioner under Section 83(1) to order a provisional attachment in pursuance of the delegation exercised on 21 October 2020. This being the position, clearly the order passed by the Joint Commissioner as a delegate of the Commissioner was not subject to an appeal under Section 107(1) and the only remedy that was available was in the form of the invocation of the writ jurisdiction under Article 226 of the Constitution. The High Court was, therefore, clearly in error in declining to entertain the writ proceedings.”
Conclusion : The amended Section 83 of the CGST Act, 2017 signifies a balance between revenue protection and taxpayer rights. While empowering authorities, it necessitates adherence to stringent conditions and procedural fairness. Understanding its nuances is crucial for both tax authorities and taxpayers to navigate GST regulations effectively.
This detailed article provides an in-depth exploration of Section 83 of the CGST Act, 2017, shedding light on its evolution, implications, and judicial precedents.
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