Hypothecation Question: Provisional Attachment of Bank Account under CGST Act

Hypothecation Question under Central Goods and Service Tax Act on the relevant topic of Provisional attachment of the assesses Bank Account under the relevant Section of the Central Goods and Service Tax Act, 2017 .

Hypothetical Case Study

Background

This is story of a company going by the name Elmore Star 212 Block Private Limited. The company was started by two friends and their respected family members in the city of Elmore Star. The business was operated by the two Directors i.e., Novak Jaw and “Mike Cross 12 X” second generation businessmen.  They were very passionate about minting money and spending on their materialistic desires. They were also of the opinion to generate employment and contributing to the society in Elmore Star. City of Elmore Star had no business with respect the pesticide. They saw amazing scope in the business and have taken Term loan (generally issued for a fix period) to open the business from Elmore Star Bank.

However, when they started the company, they were not aware about the compliance one had to do under the relevant laws and how much money they have to shell out   on the professional to be able to be a law compliant company. They were told while incorporating their company by a professional. They had a mindset that, they can hire the services or offer the employment to a professional and make the company reach the sky. “Mike Cross 12 X” believed if the consumers buying their products or services are not aware about the ingredients used to make the product or services, they can sell the product with ease and when the consumers living in the city or village are aware and well read. They tend to read the label’s and test the quality; they will question the ingredients and their respective use, everything about the product or the service which in a way bad for the business to operate.

However, a professional suggested that the view should not concern them, as the company approach should be of having good product and having good services, the road block will not come in their way as the business can flourish however with the right mindset and product or service.

However, they were not aware as to how to hire and manage the team?  How to create different departments?  How to set the deadlines for them? How to take work and build a positive environment in the company? How to not discriminate based on Caste, Religion, Status, Sex, and other things?   It is pertinent to note that around the world the practice which is of no use/relevance, has been discarded and individuals have adopted the progressive approach and had not sat on those practices which add no value to human life and race.

They needed the services of a professionals as they were not trained themselves to deal with vide variety of public relations, morals and communication. Also, professional comes with the cost and they must be given free hand for delegation of power to take decision in the company.  They were of the strong belief that they will listen to everyone however do what they feel is right for the company and for themselves. Which is sometimes good however sometimes backfires. That is what was happening with the company all the decisions which they were making were not hitting the spot and going in the wrong direction.

The company financials as per the Balance Sheet, Profit and Loss, Cash Flow Statement of past few years is showing that the company is not performing well and as per the Finance team calculations are going into losses. Directors were not ready to give control of any department to the individuals   working for that company.

However, there were challenges with respect to pay parity between the same team members have created a bad atmosphere in the Company.  Also new ideas brought by the Individual were burnished aside on the grounds of lack of experience. The environment was not professional and there was no work timing in the company and the productivity of the employees were going down day by day. The structure was not organized.  They were of the mindset that, the employees can be replaced as there is not dearth of cheap labour in the city. They were facing challenges in the domain of the labour laws as well.

Therefore, to sought the problem in the company, a very old professional suggested to   adopt the liberal approach and rectify the problems faces by the employees on all counts. Since employees are the one who will determine the growth of your company and you may consider taking help from the professionals who know how to build team who can collectively work together and share information and teach each other the right approach in terms of culture, value, and skills with the right mindset.

The Company is built by the Chairman, Directors, Employees, Professionals, Product and Service and their respected leaders. While they were dealing with such problem. One fine day they encountered the problem with respect to Central Goods and Service Tax. The finance team was working up to the mark as the employees were performing well as per the report submitted by the performance review taken by the Human Resources. However, received a Show cause Notice under the Central Goods and Service Tax.

The one of the directors got so angry, as he was not aware that Show Cause Notice is just a procedure to receive information from the assesses and giving them chance to explain themselves that they have not committed any violation of the law. He got so furious that; he shouted on the finance team. He stated and I quote “Why I am paying salary, what are you here for, that we are receiving such notices by the GST department; why team have not found a way out to comply with the GST laws.  On that very day few got fired from their respective jobs. Now the company has deal with the Show Cause Notice.

Hypothetical Case Study

Facts

1. Presuming that the Elmore High Star 212 Block Private  Limited – a company incorporated under the Companies Act …, having its registered office at Elmore City. The Elmore Star 212 Block Private Limited is inter-alia engaged in the business of chemicals relating to the pesticide industry. The Elmore Star 212 Block   Private Limited has two principal places of business. One at a place called “High Rocks” and other places called “Planters.” As the government of Elmore Star  had introduced a reform in the Indirect Taxes. Every trader must register with the GST Department of Elmore Star  subject to certain conditions laid down under the Act. Elmore High Star 212 Block Private  Limited is registered with the GST Department of Elmore under the GSTIN XXXXXXXXXX for its place of business at “Planters” and under GSTIN XXXXXXXXXXX for its business in “Little Rocks.”

2. The business was operated by the two Directors i.e., Novak  Jaw and Mike Cross 12 X second generation businessmen. They were very passionate about generating revenue for the company and for themselves to be able to spend on their materialistic desires like Cars, House, Cloths, Holiday Homes, traveling to different countries and their respected family members. generating employment and contributing to the society in Elmore. City of Elmore had no business with respect the pesticide. They saw amazing scope in the business and have taken Term loan (generally issued for a fix period) to open the business from Elmore Bank.

3. One fine morning after when they were schedule for a meeting with Clients, the supervisor i.e.  Mr Patrick employed with the Elmore Star 212 Block Private Limited was having a casual chat with the admin by the name Miss Rachel. In between Post Man enters the office of the Elmore Star 212 Block Private Limited and deliver the letter to the Admin Miss Rachel. Miss Rachel hand over the letter to Mr. Patrick. He then opens the letter, whereas it appears to be a Summon issued by Superintendent (Anti Evasion) CGST under Section 70 of the Central Goods and Service Tax, 2017.  The Summon was in his name and the Director i.e., Novak jaw. He immediate calls the Finance team and ask question and then along with the Finance team visit the office of the Director Mr. Novak  jaw and provide the summons. In the summons it was mentioned that you are requested to tender the statement in connection with investigation pertaining to fraudulent use of Input tax Credit of 20 million.

4. The Finance team along with the Lawyer engaged by the company have responded to the summons and provided the details with respect to the transaction in question with relevant documents.

5. However, the bank account of the Company opened in the Elmore Banks was provisionally attached, the lawyer suggested to file an objection (in Form GST DRC-22A) under Rule 159(5) of the Central Goods and Service Tax Rules 2017. However, the Department was not deciding on the objection application.

6. Thereafter as per the suggestions of the lawyers the Company filed the Writ Petition before the Hon’ble High Court and the High Court directed the concerned officer to decide on the objection application.

7. However, the department did not stop the investigation and found out other things such as the Company operations in other States such as “Atom” was not operational. Apart of the said state the Company had operations in the State of “Rolling,” however it had no records of purchase, production, sale, stocks etc.

8. The officer concerned alleged that the Authorised representative of the company have not submitted relevant documents, namely, sales invoices of the petitioner’s company, bank statement of all the accounts and trial balance for the year 2020-21.

9. Therefore, the Department under Chapter XIV of the CGST Act were pending, the Commissioner was empowered to provisionally attach the bank account of the taxable person under Section 83(1) of the CGST Act, for the purpose of protecting the interest of the Government.

10. The Company challenged the provisional attachment order passed by the Department before the jurisdictional High Court on the grounds that the attachments is per se illegal because the officer concerned had no jurisdiction under the Central Goods and Service Tax; Second ground that the   Delegation of Power under the Central goods and Service Tax is not proper; third ground that the officer concerned has not evidence to indicate that the company has availed fraudulent ITC as they company has provide all the documents .

Rule

Relevant Provisions invoked by the Department under the Central Goods and Service Tax Act, 2017

•  Provisional attachment of property (The Central Goods and Service Tax Rules, 2017)

Rule 159(5) Any person whose property is attached may, within seven days of the attachment under sub-rule (1), file an objection 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 persons filing the objection, release the said property by an order in FORM GST DRC-23.

• Before Amendment

                    Section 83. Provisional attachment to protect revenue in certain cases

• 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 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 of one year from the date of the order made under sub-section (1).
• After Amendment by way of Finance Act, 2021 received the assent of the President on the 28^th March 2021

Section 83 – Provisional attachment to protect revenue in   certain cases

• Where, after the initiation of any proceedings 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.

• 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).”

• The Circular CBEC-20/16/05/2021-GST/359 dated 23.02.2021 

Subject: Guidelines for provisional attachment of property under section 83 of the CGST Act, 2017 reg.

I am directed to refer to this Section 83 of the Central Goods and Service Tax Act, 2017 . This section provides for provisional attachment of property for the purpose of protecting the interest of revenue during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74 of the Act.

Doubts have been raised by the field formations on various issues pertaining to provisional attachment of property under the provisions of section 83 of the Act read with rule 159 of Central Goods and Service Tax Rules, 2017 (hereinafter referred to as the “CGST Rules”). Besides, in a number of cases, Hon’ble Courts have also made observation on the modalities of implementation of provisions of section 83 of the Act by the tax officers. In view of the same, the following guidelines are hereby issued with respect to the exercise of power under section 83 of the Act.

3.1 Grounds for provisional attachment of property

3.1.1 Section 83 of the Act is reproduced hereunder:

83. Provisional attachment to protect revenue in certain cases –

(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).’

3.1.2 Perusal of the above provisions of the law suggest that the following grounds must exist for resorting to provisional attachment of property under the provisions of section 83 of the Act:

(i) There must be pendency of a proceedings against a taxable person under the sections mentioned in section 83 of the Act:

(ii) 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.

3.1.3 For forming an opinion under section 83, it is important that 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 whom the proceedings referred in section 83 are pending, may dispose of or remove the property, if not attachment provisionally.

3.1.4 The basis, on which, Commissioner has formed such an opinion, should be duly recorded on file.

3.1.5 It is reiterated that the power of provisional attachment must not be exercised in a routine/mechanical manner and 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. The collective evidence, based on the proceedings/enquiry conducted in the case, must indicate that prima-facie a case has been made out against the taxpayer, before going ahead with any provisional attachment. The remedy of attachment being, by its very nature, extraordinary, has to be resorted to with utmost circumspections and with maximum care and caution.

3.2 Procedure for provisional attachment of property

3.2.1 In case, the Commissioner forms an opinion to attach any property, including bank account, of the taxable person in terms of section 83, he should duly record on file the basis, on which he has formed such an opinion. He should, thereafter, pass an order in FORM GST DEC-22 with proper Document Identification Number (DIN) mentioning therein the details of property being attached. 

3.2.2 A copy of the order of attachment should be sent to the concerned Revenue Authority or Transport Authority or Bank or the relevant Authority to place encumbrance on the said movable or immovable property. The property, thus attached, shall be removed only on the written instructions from the Commissioner. 

3.2.3 A copy of such attachment order be provided to the said taxable person as early as possible so that objections, if any, to the said attachment can be made by the taxable person within the time period prescribed under rule 159 of the CGST Rules. If such objection is filed by the taxable person, Commissioner should provide an opportunity of being heard to the person filing the objection. After considering the facts presented by the person in his written objection as well as during the personal hearing, if any, the Commissioner should form a reasoned view whether the property is still required to be continued to be attached or not, and pass an order in writing to this effect. In case, the Commissioner is satisfied that the property was or is no longer liable for attachment, he may release such property by issuing an order in FORM GST DRC-23.

3.2.4 Even in cases where objection is not filed within the time prescribed under rule 159(5) of CGST Rules, the Commissioner may take the grounds mentioned in the said objection/representation on record and pass a reasoned order. Where the Commissioner is satisfied that the property was or is no longer liable for attachment, he may release such property by issuing an order in FORM GST DRC-23.

3.2.5 Each such provisional attachment shall cease to have affect after the expiry of a period of one year from the date of the order of attachment.

3.2.6 If the provisionally attached property is of perishable/hazardous nature, then such property shall be released to the taxable person by issuing order in FORM GST DRC-23, after taxable person pays an amount by the taxable person, whichever is lower, and submits proof of payment. In case the taxable person fails to pay the said amount, then the said property of perishable/hazardous nature may be disposed of and the amount recovered from such disposal of property shall be adjustable against the tax, interest, penalty, fee or any other amount payable by the taxable person. Further, the sale proceeds thus obtained must be deposited in the nearest Government Treasury or branch of any nationalised bank in fixed deposit and the receipt thereof must be retained for record, so that the same can be adjusted against the amount determined to be recoverable from the said taxable person.

3.3 Case fit for provisional attachment of property

3.3.1 As mentioned above, the remedy of attachment being, by its very nature, extraordinary, needs to be resorted to with utmost circumspection and with maximum care and caution. It 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 wrongful passed on. While the specific facts of the case need to be examined in detail before forming an opinion in the matter, the following are some type of cases, where provisional attachment can be considered to be resorted to, subject to specific facts of the case:

Where taxable person has:

1. Supplied any goods or services or both without issues of any invoice, in violation of the provisions of the Act or the rules made there under, with an intention to evade tax; or

2. 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

3. 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

4. Collected any amount as tax but failed to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; or

5. Fraudulently obtained refund; or

6. Passed on input tax credit fraudulently to the recipients but has not pad the commensurate tax

3.3.2 The above list is illustrative only and not exhaustive. The Commissioner, may examine the specific facts of the case and take a reasoned view in the matter. 

3.4 Types of property that can be attached 

3.4.1 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 persons. 

3.4.2 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 point of time subject to the conditions specified in section 83 of the Act. 

3.4.3 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. 

3.4.4 Movable property should normally be attached only if the immovable property, available for attachment; is not sufficient to protect the interest of revenue. 

3.4.5 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 material and inputs required for production or finished goods should not normally be attached by the Department. 

3.4.6 In case 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 nay 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. 

3.5 Attachment Period 

3.5.1 Every provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the provisional attachment order. 

3.5.2 Besides, the provisional attachment order shall cease to have effect if an order in FORM GST DRC-23 for release of such property is made by the Commissioner. 

3.6 Investigation and Adjudication 

As the provisional attachment of property is resorted to protect the interests of the revenue and may also affect the working capital of the taxable person, it may be endeavored that in all such cases, the investigation and adjudication are completed at the earliest, well within the period of attachment, so that the due liability of tax as well as interest, penalty etc. arising upon adjudication can be recovered from the said taxable person and the purpose of attachment is achieved. 

3.7 Share in property 

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-owner, the provisional attachment shall be made by order to the concerned person prohibiting him from transferring the shares or interest or charging it in any way. 

3.8 Property exempt from attachment 

All such property as is by the Code of Civil Procedure, 1908, exempt from attachment and sale for execution of a Decree of a Civil Court shall be exempt from provisional attachment. 

4. It may be noted that an amendment to section 83 has been proposed in Finance Bill 2021. However, such proposed amendment shall come into effect only from a date to be notified in future. The present guidelines, which are based on the existing provisions of section 83 of the Act, shall stand modified according to the amended provisions of section 83, once the said amendment comes into effect. 

5 Difficulty, if any, in the implementation of the above guidelines may please be brought to the notice of the Board.

Section 5 – Powers of officers-

• Subject to such conditions and limitation as the Board may impose, an officer of central tax may exercise the power and discharge the duties conferred or imposed on him under this Act.
• An officer of central tax may exercise the power and discharge the duties conferred or imposed under this Act on any other officer of central tax who is subordinate to him.
• The Commissioner may, subject to such conditions and limitation as may be specified in this behalf by him, delegate his power to any other officer who is subordinate to him.
• Notwithstanding anything contained in this section, an Appellate Authority shall not exercise the power and discharge the duties conferred or imposed on any other officer of central tax.”

Section 2 (24)

“Commissioner” means the commissioner of central tax including the Principal Commissioner of central tax appointed under Section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Service Tax Act.

Section 3

Officer under this Act

The government shall, by notification, appoint the following classes of officers for the purpose of this Act, namely: –

• Principal Chief Commissioners of Central Tax or Principal Directors General of Central Tax
• Chief Commissioners of Central Tax or Directors General of Central Tax,
• Principal Commissioners of Central Tax or Principal Additional Directors General of Central Tax,
• Commissioners of Central Tax or Additional Directors General of Central Tax,
• Additional Commissioners of Central Tax or Additional Directors of Central Tax,
• Joint Commissioners of Central Tax or Joint Directors of Central Tax,
• Deputy Commissioners of Central Tax or Deputy Directors of Central Tax
• Assistant Commissioners of Central Tax or Assistant Directors of Central Tax and
• Any other class of officers as it may deem

Relevant portion of Section 122 Penalty for certain offences. –

• Where a taxable person who-

1. Supplies any goods or services or both without issues of any invoice or issues an incorrect or false invoice with regard to any such supply;

2. Issues any invoice or bill without supply of goods or services in violation of the provisions of this Act or the rules made thereunder

*****                                    *****          ******

vii.     Takes or utilizes input tax credit without actual receipt of goods and services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;

****                            ****                             ***

1. Takes or distributes input tax credit in contravention of section 20, or the rules made thereunder;

****                                 ****                           ***

1A  Any person who retains the benefit of a transaction covered under clause (i), (ii), (vii) or clause (ix) of sub section (1) and at whose instances such transactions is conducted, shall be liable to penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.”

Section 167

Delegation of power – The Commissioner may, by notification direct that subject to such conditions, if any, as may be specified in the notification, any power exercisable by any authority or officer under this Act may be exercisable also by another authority or officer as may be specified in such notification.

Section 83 of the Act, 2017 is in pari materia with the provisions of Section 281B of the Income Tax Act, 1961. Section 281B of the Act, 1961 also provides for a provisional attachment of the property of an assessee pending the adjudication an assessment/reassessment proceeding where the income tax department believes that such attachment is necessary to protest the interest of the revenue.

Analysis 

The finance team of the company may read the following provisions under the Central Goods and Service Tax Act, 2017 as mentioned hereinabove i.e.  Section 83, Section 5, Section 121 and Section 3. The Finance team may read on the lines of the jurisdiction of the Commissioner to issue the provisional attachment order and delegation of power by the Commissioner. Furthermore, read on the lines that how the concerned officer has formed an opinion to attach the property mentioned in the attachment order or the opinion was based on some suspicion.  Also refer to the judgments delivered by the different Courts time and again wherein the Courts have dealt with the interpretation of the sections involved with respect to the jurisdiction and the delegation of power. The following points were discussed in the relevant judgments delivered by the Hon’ble High Courts. The relevant paras are reproduced verbatim hereinbelow:

1. Jurisdiction of the “Commissioner” to pass the order for provisional attachment under Section 83 is important element[1].

 Para 24 “The terms “the Commissioner” as used in Section 83 of the CGST Act would necessarily refer to the Commissioner who exercise jurisdiction under the CGST Act in respect of “the taxable person’. Section 83 of the CGST Act must be read in harmony with section 3 and section 5 of the CGST Act and the Commissioner, whose territorial jurisdiction is confined by the Board to a particular territory, would not have the jurisdiction to discharge the functions under the CGST Act beyond its territorial jurisdiction. Thus, for the purpose of the CGST Act, the expression “the Commissioner” must necessarily be read to be the Commissioner who is empowered to discharge the functions under the CGST Act to pass the attachment order in respect of the petitioners as “the taxable person’.”

2. The formation of an opinion with some credible material and not merely on based of suspicion for attachment[2].

Para 31 “One of the principal conditions necessary for provisionally attaching a property (including the bank account) under Section 83 of the CGST Act is formation of an opinion by the Commissioner that such attachment is necessary for protecting the interest of the government. It is well settled that formation of the opinion cannot be a mere subjective satisfaction of the Commissioner empowered to take measures under 83 of the CGST Act but must necessarily be an opinion, which is formed on credible material having link with formation of the opinion.

Para 32 In the case of Radha Krishan Industries, the Apex court set out parameters for exercising the power under Section 83 of the CGST Act in the following words:

76.4 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.

76.5 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.

76.6 The expression “necessary so to do for protecting the government revenue” implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment.

76.7 The formation of an opinion by the Commissioner under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government.  

The order of attachment in FORM GST DRC-22 does not indicate any reason that had led to form an opinion that the company is liable to defeat any demand of tax or dues if its bank account is not provisionally attached.

3. Delegation of Power[3]

Para 31 “Delegation is the act of making or commissioning a delegate. It generally means parting of power by the person who grants the delegation and conferring of an authority to do things which otherwise that person would have to do himself. Delegation is defined in Black Law Dictionary as “ the act of entrusting another with authority by the empowering another to act as an agent or representative”

In P Ramanatha Aiyar’s, The Law Lexicon, “ delegation is the act of making or commissioning a delegate. Delegation generally means parting of powers by the person who grants the delegation, but it also means conferring of an authority to do things which otherwise that person would have to do himself.”

Para 32  “The broad rule is limited by the operation of the principle that a delegation authority cannot be re-delegated delegatus non potest delegare. The naming of a delegate to do an act involving a discretion indicates that the delegate was selected because of his peculiar skill and the confidence repose in him and there is a presumption that he is required to do the act himself and cannot redelegate his authority.”  As general rule, “if the statute directs that certain acts shall be done in a specified manner or by certain persons, their performance in any other manner that that specified or by any other person than one of those named is impliedly prohibited. Normally a discretion entrusted by the Parliament to an administrative organ must be exercised by the organ itself. At the same time, it is settled position of law that the maxim does not embody a rule of law. It indicates a rule of construction of a statute or other instrument conferring an authority. Prima facie, a discretion conferred by a statute on any authority is intended to be exercised by that authority and by no other. However, the intention may be negative by any contrary indications in the language, scope or object of the statute. The construction that would best achieve the purpose and object of the statute should be adopted.

Para 42 In the absence of any cogent or credible material, if the subjective satisfaction is arrived at by the authority concerned for the purpose of passing an order of provisional attachment under Section 83 of the Act, then such action amounts to malice in law. Malice in its legal sense means such malice as may be assumed from the doing of a wrongful act intentionally but also without just cause or excuse or for want of reasonable or probably cause. Any use of discretionary power exercised for an unauthorised purpose amount to malice in law. It is immaterial whether the authority acted in good faith or bad faith.

Para 52(7) The authority before exercising power under Section 83 of the Act for provisional attachment should take into consideration two things; (i) whether it is a revenue neutral situation (ii) the statement of “output liability or input credit”. Having regard to the amount paid by reversing the input tax credit if the interest of the revenue is sufficiently secured, then the authority may not be justified in invoking its power under Section 83 of the Act for the purpose of provisional attachment.

Conclusion 

In the case in hand, based on the above discussion with respect to section 83, the following elements are very important i.e., Jurisdiction of the officer who is attaching the property; as to how the officer has reached to the conclusion in the attachment order to attach the property as the opinion should be based with relevant facts and not based on some suspicion; is the officer in charge duly authorized by the relevant department with proper authorization.

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[1] WP (c) 17547/2022 ;2023: DHC:3469-DB

[2] WP (c) 17547/2022; 2023:DHC;3469-DB

[3][3] C/SCA/13132/2019; 13132 of 2019