It is submitted that Section 83 of The Central Goods and Services Tax, Act, 2017 (“CGST Act, 2017”) is proposed to be amended via clause 106 of Finance Bill, 2021. Please note that these proposals will come into effect from a date to be notified later. It is stated that Sections 2 to 79 of Finance Act, 2021 shall come into force on the 1st day of April, 2021 and Sections 99 to 114 of Finance Act, 2021 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
Pursuant to clause 106 of the Finance Bill 2021, powers under Section 83 of the CGST Act, 2017 to make the provisional attachment of the property has been extended. Section 83 of the CGST Act, 2017 is sought to be amended so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.
Please note that before the aforesaid amendment, the provisions of Section 83 of the CGST Act, 2017 may be read as under:
“(1) 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.
(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).”
It is stated that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under section 62 or section 63 or section 64 or section 67 or section 73 or section 74 till the expiry of a period of one year from the date of order made thereunder. However, after the proposed amendment provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.
Now, via clause 106 of Finance Bill 2021, the provision of Section 83 is sought to be amended as under:
“106. In section 83 of the Central Goods and Services Tax Act, for sub-section (1), the following sub-section shall be substituted, namely:––
“(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.”.
It has been proposed to increase the ambit of provisional attachment by permitting attachments in proceedings in the nature of
- Assessment (Chapter XII) [Section 59 to 64];
- Inspection, Search, Seizure and Arrest (Chapter XIV) [Section 67 to 72] and
- Demands & Recovery (Chapter XV) [Section 73 to 84]
which currently are restricted to limited types of assessments [viz. non-filers of returns (Section 62), unregistered person (Section 63), summary assessment in certain special cases (Section 64)] and power of inspection (Section 67) and demands and recovery proceedings under section 73 or 74 of the CGST Act, 2017
It is pertinent to mention herein that in the matter of Gehna Trading LLP Vs Union of India (Bombay High Court order dated 30/01/2020), the Hon’ble Court has directed that in case of specified proceedings have been launched against one taxable person, bank account of another taxable person cannot be provisionally attached merely based on the summons issued under section 70 of the CGST Act, 2017. In this case, The Deputy Commissioner, Central Goods and Service Tax (CGST) informed the Branch Manager where the Petitioner (Ghana Trading LLP in this case) holds a bank account that in view of the proceedings filed against one Yusuf Fauzdar Shaikh, proprietor of M/s. Fashion Creations, proceedings have been launched against the said taxable person and the Respondents (Department in this case) were of the belief that amounts were being transferred to various persons, including the Petitioner. Hence, a direction was issued to the bank not to allow any debit.
The Hon’ble Court directed that Bank account of taxable person could be attached against whom proceedings undersections 62, 63, 64, 67, 73 and 74 of Central Goods and Services Tax, Act, 2017 were initiated. Section 83 of Central Goods and Services Tax, Act, 2017 did not provide for an automatic extension to any other taxable person from an inquiry specifically launched against a taxable person under those provisions. Accordingly, Petitioner was entitled to succeed. Hence, order passed by Deputy Commissioner attaching bank account of Petitioner, was to be quashed and set aside.
Remark: It is also pertinent to note that before the aforesaid amendment, attachment of Property was limited to the taxable person. However, after the amendment, provisional attachment can also be made to the person specified in sub-section (1A) of Section 122 of CGST Act, 2017. Section 1A of Section 122 CGST Act, 2017 refers to those persons who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of section 122(1) of CGST Act,2017 and at whose instance such transaction is conducted.
*****
Disclaimer: Nothing contained in this document is to be construed as a legal opinion or view of either of the authors whatsoever and the content is to be used strictly for educative purposes only.
Author Bio
