Case Law Details
Nikhil Gupta Vs Principal Additional Director General DGGI Gurugram Zonal Unit (Delhi High Court)
Principal Additional Director DGGI empowered to pass order for provisional attachment of Bank Account under Section 83 of CGST Act, 2017.
Summary: In Nikhil Gupta v. Principal Additional Director General DGGI Gurugram Zonal Unit, the Delhi High Court confirmed that the Principal Additional Director of the Directorate General of GST Intelligence (DGGI) has the authority to pass an order for the provisional attachment of bank accounts under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017. The petitioner, Nikhil Gupta, challenged the provisional attachment of his bank account and the blocking of his Electronic Credit Ledger (ECL), contending that only the Commissioner could pass such an order. However, the court noted that, as per Section 3(d) of the CGST Act and Notification No. 14/2017, the Principal Additional Director is empowered to exercise the powers of the Commissioner. While rejecting the petitioner’s claims, the court directed the Commissioner to expedite the decision on the petitioner’s objections filed under Rule 159(5) of the CGST Rules. The judgment highlights the authority of specified officers in protecting government revenue under GST provisions.
The Hon’ble Delhi High Court in the case of Nikhil Gupta v. Principal Additional Director General DGGI Gurugram Zonal Unit [W.P. (C) No. 10651 of 2024 dated August 02, 2024] held that the Principal Additional Director, DGGI is empowered to pass the order of provisional attachment of bank account under Section 83 of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).
Facts:
Nikhil Gupta (“the Petitioner”) filed a writ petition challenging the order passed under Section 83 of the CGST Act in Form GST DRC-22 (“the Impugned Order”) wherein the bank account maintained by the Petitioner was directed to be provisionally attached. Also, the Petitioner is aggrieved by the blocking of Electronic Credit Ledger (“ECL”).
The Petitioner against the Impugned Order has filed objection under Rule 159(5) of the Central Goods and Services Tax Rules but the said reply has not been taken into consideration and no order has been passed pursuant to such objection.
The Petitioner contended that only the Commissioner is empowered to pass the order under Section 83(1) of the CGST Act and in the present case, the Impugned Order was not passed by the Commissioner and the said order has been passed without jurisdiction. Also, it was contended that the said order has been passed without any reason to believe that such order is necessary to protect the interest of the Government Revenue.
Issue:
Whether Principal Additional Director of DGGI is empowered to pass order for provisional attachment of Bank Account under Section 83 of the CGST Act?
Held:
The Hon’ble Delhi High Court in W.P (C) No. 10651 of 2024 held as under:
- Observed that, as per Section 83(1) of the CGST Act, only the Commissioner is empowered to pass the order of provisional attachment under Section 83(1) of the CGST Act.
- Further observed that, Section 3(d) of the CGST Act specifically mentions the Commissioner of Central Tax or Additional Director General of Central Tax as the specified classes of officers for the purpose of CGST Act.
- Noted that, the Notification No. 14/2017-Central Tax dated July 1, 2017 specifically empowers the Principal Director General, Goods and Services Tax Intelligence or Principal Director General, Goods and Services Tax to exercise power of the Principal Chief Commissioner.
- Opined that, the contentions made by the Petitioner are not maintainable as the Impugned Order has been passed by the Principal Additional Director General of Goods and Services Tax Intelligence.
- Directed that, the Commissioner should decide the Petitioner objections filed against the Impugned Order expeditiously.
Relevant Provision:
Section 83 of the CGST Act
“Section 83: Provisional attachment to protect revenue in certain cases
(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)”
Notification No. 14/2017-Central Tax dated July 1, 2017
“G.S.R 818 (E).- In exercise of the powers conferred under section 3 read with section 5 of the Central Goods and Services Tax Act, 2017 (12 of 2017) and section 3 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), 1[the Government] hereby appoints the officers in the Directorate General of Goods and Services Tax Intelligence, Directorate General of Goods and Services Tax and Directorate General of Audit as specified in column (2) of the Table below, as central tax officers and invests them with all the powers under the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017 and the rules made there under, throughout the territory of India”
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
1. The petitioner has filed the present petition impugning an order passed under Section 83 of the Central Goods and Services Tax Act, 2017 (hereafter the CGST Act) in FORM GST DRC-22 (hereafter the impugned order) whereby the bank account No.50200064085295 maintained by the petitioner with HDFC Bank Limited, A-38, Anand Vihar, Delhi was directed to be provisionally attached.
2. The petitioner is also aggrieved by the blocking of Electronic Credit Ledger (ECL) to the extent of ₹5,98,936/- [₹2,35,838/- Central Tax; and ₹3,63,098/- State/UT Tax].
3. The petitioner states that he has filed an objection under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 (hereafter the CGST Rules) however, no order has been passed pursuant to such objections.
4. The learned counsel for the petitioner contended that only ‘the Commissioner’ can pass an order under Section 83(1) of the CGST Act and in the present case, the impugned order was not passed by the Commissioner. Thus, the impugned order is without jurisdiction. Additionally, he contends that the impugned order was passed without any reason to believe that such an order is necessary to protect the interest of the Government revenue, which is a necessary pre-condition for passing an order under Section 83(1) of the CGST Act.
5. Section 83 of the CGST Act is set out below:
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).”
6. It is clear from the plain language of Section 83(1) of the CGST Act, that only the Commissioner has the power to pass an order of provisional attachment under Section 83(1) of the CGST Act. Thus, the petitioner’s contention to the aforesaid effect is merited.
7. The term ‘Commissioner’ is defined under Sub-section (24) of Section 2 of the CGST Act as under:
2. Definitions. –
*** *** ***
(24) ― “Commissioner” means the Commissioner of central tax and includes the Principal Commissioner of central tax appointed under section 3 and the Commissioner of integrated tax appointed under the Integrated Goods and Services Tax Act;”
8. Section 3 of the CGST Act specifies the classes of the officers for the purpose of the CGST Act and clause (d) of Section 3 of the CGST Act specifically mentions the Commissioners of Central Tax or Additional Directors General of Central Tax.
9. Mr Harpreet Singh, the learned counsel for the respondents has also shown a soft copy of a notification being Notification No.14/2017 – Central Tax dated 01.07.2017, which specifically provides that the Principal Director General, Goods and Services Tax Intelligence or Principal Director General, Goods and Services Tax to exercise of power of the Principal Chief
10. The impugned order has been passed the Principal Additional Director General of Goods and Services Tax Intelligence. Thus, the petitioner’s contention that the impugned order has not been passed by the Commissioner is unmerited.
11. Insofar as the reasons to believe that an order provisionally attaching the petitioner’s bank account is necessary to protect the interest of the Revenue is concerned, Mr Harpreet Singh submits that the same is available on file and it would be provided to the petitioner, if necessary.
12. In these circumstances, we consider it apposite to dispose of the petition by directing the Commissioner to decide the petitioner’s objections as expeditiously as possible and, in any event, within three weeks from date.
13. The petition is disposed of in the aforesaid terms. Pending application also stands disposed of.
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