Case Law Details
Vikas Enterprises Vs Commissioner of Central Tax (GST) (Delhi High Court)
Authority to issue Provisional Attachment Order under CGST Act is solely vested with the Commissioner
The Hon’ble Delhi High Court in M/s Vikas Enterprises v. Commissioner of Central Tax (GST), Delhi North & Anr. [W.P.(C) 9495 of 2023 dated July 31, 2023] set aside the letter issued by the Superintendent instructing to freeze the bank account of the assessee and held that the power to issue order of attachment of bank accounts under the Central Goods and Services Tax Act, 2017 (“the CGST Act”) is only with the Commissioner and not below the rank of Commissioner can pass such order. Further, imposed the cost INR 5,000 on the Superintendent who issued such order.
Facts:
M/s. Vikas Enterprises (“the Petitioner”) maintained bank account with State Bank of India. The Branch Manager of the State Bank of India was served a communication dated March 03, 2022 (“the Impugned communication”) by the Superintendent Anti-Evasion directing to furnish certain bank documents pertaining to the Petitioner and further directed the bank not to permit any debit from the Petitioner’s bank account maintained with the said bank without prior permission of the Respondent.
The Petitioner filed writ before the Hon’ble Delhi High Court.
The Petitioner relied upon the Judgement of Radha Krishan Industries v. State of Himachal Pradesh & Ors. [(2021) 6 SCC 771] wherein the Hon’ble Supreme Court held that the order under Section 83 of the CGST Act cannot be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue.
Issue:
Whether is Superintendent has power to issue notice under Section 83 of the CGST Act to attach the bank Account?
Held:
The Hon’ble Delhi High Court in W.P.(C) 9495 of 2023 held as under:
- Directed that, the Revenue Department is required to act by the statutory provisions.
- Relied upon the Judgement of Radha Krishan Industries v. State of Himachal Pradesh & Ors. [(2021) 6 SCC 771] wherein the Hon’ble Supreme Court held that the power under Section 83 of the CGST Act can be exercised only subject to the conditions, as specified therein, being fully satisfied. No order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue.
- Ordered to restore the bank account of a taxpayer wherein the directive was given by the superintendent.
- Held that, the power to order the attachment of bank accounts under the CGST Act is only on the commissioner.
- Set aside the Impugned Communication the extent that it seeks to place a debit freeze on the Petitioner’s account and imposed the cost of INR 5,000 on the Superintendent.
Relevant Provision:
Section 83 of the CGST Act
“Provisional attachment to protect revenue in certain cases
83. (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).”
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The petitioner has filed the present petition impugning a communication dated 25 .03 .2022 (hereafter ‘the impugned communication’), issued by respondent no.2 [Superintendent (Anti-Evasion) Group 1] to the Branch Manager, State Bank of India, Indraparstha Building, Vikas Marg, Lakshmi Nagar, Delhi, calling upon the bank to furnish certain documents pertaining to the petitioner. The said impugned communication further directed the bank not to permit any debit from the petitioner’s bank account (Account No.39617476186) maintained with the said bank without prior permission of the Department.
2. The present petition was listed on 19.07.2023. The learned counsel for the respondents had accepted notice and sought time to take instructions in regard to the statutory provision under which respondent no.2 had issued the impugned communication.
3. Ojha, learned counsel appearing for the respondents is unable to point out any provision under the Central Goods and Services Tax Act, 2017 (hereafter ‘the CGST Act’) permitting respondent no.2 to issue such a communication directing the Bank to freeze the bank account. He has referred to the provision of Section 83 of the CGST Act, which empowers the Commissioner to issue an order for provisional attachment of assets including bank accounts. However, an order of provisional attachment of assets under Section 83 of the CGST Act can be issued only if the Commissioner is of the view that it is necessary to protect the interest of the Revenue. However, admittedly, in the present case, the Commissioner has not issued any such order.
4. It is well settled that the orders of provisional attachment of bank accounts or other assets of a tax payer has a serious adverse effect on the business of the tax payer. In Radha Krishan Industries v. State of Himachal Pradesh & Ors. (2021) 6 SCC 771, the Supreme Court made observations to the effect that such drastic powers must be exercised only where it is necessary. Considering that the wide adverse ramifications such orders have, this Court, has in a number of decisions, held that the power under Section 83 of the CGST Act can be exercised only subject to the conditions, as specified therein, being fully satisfied. No order under Section 83 of the CGST Act can be passed by any officer other than the Commissioner and this can be done only if he is satisfied that it is necessary to pass such an order for protecting the interest of Revenue.
5. In the present case, respondent no.2 has, by a letter addressed to the bank seeking information, also directed freezing the petitioner’s bank account. The impugned communication is without authority of It has been issued in complete disregard of the provisions of the CGST Act and the adverse effect of such orders.
6. The learned counsel for the petitioner also states that the bank account freezed by respondent no.2 is a cash credit account, therefore, the petitioner was unable to effectively operate the same.
7. The petitioner had filed his objection in terms of the Rule 159(5) of the Central Goods and Services Tax Rules, 2017 (hereafter ‘the CGST Rules’) assuming that the impugned communication was passed under Section 83 of the CGST Act. However, the said objections were not considered and admittedly, the respondents did not furnish any response to the said application.
8. Ojha submits that the order freezing the petitioner’s bank account would cease to be operative since a period of one year has since elapsed. The said contention is premised on the basis that the impugned communication is an order, under Section 83 of the CGST Act, however, no such order was passed by the Commissioner. It is conceded that the order in Form DRC-22 has not been issued. The impugned communication has emanated from respondent no.2 and not by the Commissioner exercising jurisdiction in respect of the tax payer. The impugned communication also does not indicate that it was issued with the authority of the Commissioner.
9. In view of the above, we set aside the impugned communication to the extent that it seeks to place a debit freeze on the petitioner’s The respondents are required to act in accordance with the statutory provisions. We find that the same has been disregarded with impunity. Accordingly, we also consider it apposite to impose cost of ₹5,000/- on the respondents. The said cost will be recovered from the concerned officer (respondent no.2).
10. The petition is disposed of in the aforesaid terms.
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