Analysis of procedure of provisional attachment of property under section 83
GST Act under section 83 read with Rule 159 of Central Goods and Services Tax Rules, 2017 (CGST Rules) talks about the provisional attachment of property of taxable person to protect the interest of revenue in case of pendency of any proceeding under following sections.
||Assessment of Non-filers
||Assessment of unregistered persons
||Summary assessment in certain special cases
||Search and seizure in case of contravention of provision under the act
||Short payment of tax or erroneous refund or wrong availment of the ITC (other than fraud or wilful misstatement or suppression of facts)
||Short payment of tax or erroneous refund or wrong availment of the ITC due to fraud or wilful misstatement or suppression of facts)
Section 83 States as follows: –
- Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, 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 in such manner as may be prescribed.
- Every such provisional attachment shall cease to have effect after the expiry of a period o one year from the date of the order made under sub-section (1).
Grounds for provisional attachment of the property
- There must be pendency of a proceeding against a taxable person under the sections mentioned in section 83 of the Act;
- The Commissioner must have formed the opinion that provisional attachment of the property belonging to the taxable person is necessary for the purpose of protecting the interest of the Government revenue.
Care to be taken by Commissioner
Attachment of property is being its very nature is extraordinary, therefore it need to be resorted to with utmost circumspection and with maximum care and caution.
- Commissioner must exercise due diligence and duly consider as well as carefully examine all the facts of the case, including
- the nature of offence,
- amount of revenue involved,
- established nature of business and
- extent of investment in capital assets and
reasons to believe that the taxable person, against who, the proceedings referred in section 83 are pending, may dispose of or remove the property, if not attached provisionally.
- The basis, on which, Commissioner has formed such an opinion, should be duly record file.
- A careful examination of all the facts of the case is important to determine whether the case(s) is fit for exercising power under section 83, and must not be exercised in a routine/ mechanical manner.
Procedure of Provisional attachment of property
Cases or circumstances where property can be attached
Attachment of the property normally should not be invoked in cases of technical nature and should be resorted to mainly in cases where there is an evasion of tax or where wrongful input tax credit is availed or utilized or wrongfully passed on. Following are some of type of cases, where provisional attachment can be considered to be resorted to, subject to specific facts of the case. List mentioned below is illustrative not exhaustive.
Where taxable person has:
- supplied any goods or service s o r both without issue of any invoice, in violation of the provisions of the Act or the rule s made there under, with an intention to evade tax; or
- issued any invoice or bill without supply of goods or services or both in violation of the provisions of the Act, or the rules made there under; or
- availed input tax credit using the invoice or bill referred to in clause (b) or fraudulently availed input tax credit without any invoice or bill; or
- collected any amount as tax but has failed to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; or
- fraudulently obtained refund; or
- passed on input tax cred it fraudulently to the recipients but has not pai the commensurate tax.
Specific points during attachment of property
This is the summary prepared from CBEC Circular CBEC-20/16/05 /2021 -GST/359/23.02.2021.