Case Law Details
Tvl. Maxtile AAC Block Vs State Tax Officer (Madras High Court)
Introduction: In a significant ruling, the Madras High Court addressed the legality of provisional property attachment under Section 83 of the CGST Act, 2017. This article explores the court’s decision in the case of TVL Maxtile AAC Block Vs State Tax Officer, shedding light on key aspects regarding tax demand and recovery procedures.
Background:
We are aware of the Section 83 of the CGST Act,2017 pertaining to the provisional attachment of the property, where as a procedure of demand and recovery, the authorities initiates the provisional attachment of property to avoid evasion of tax by the taxpayer. In the present case, the Madras High Court held one of the important aspects regarding the attachment of the property.
Facts of the Case:
1. The Demand order had been issued in favour of the taxpayer for mismatch of ITC declared in GSTR-3B vs amount reflecting in GSTR-2A. Upon issuance of the Order, the tax authorities had to stay the proceedings in relation with the provisional attachment of property for the span of 3 months until the tax payer files an appeal. In contrary, if the appeal is not filed then the proceedings must be initiated.
2. In the present case, the provisional attachment was made on 22.08.2023 when the last date for filing the appeal was 30.08.2023. Whereas, the Appeal had been filed by the taxpayer by paying the pre-deposit of 10% on 24.08.2023 . Hence, the Taxpayer approached the Madras High Court for the violation of the provisions and improper attachment of the property.
3. It was held by the High Court that, “Such attachment is contrary to the statutory prescription and cannot be sustained” and remanded back to the authorities to stay the proceedings.
Conclusion: The Madras High Court, in its judgment, declared the provisional attachment of immovable properties as contrary to statutory provisions. It directed the release of the attachment and removal of related entries from encumbrance certificates. This decision sets a precedent for adherence to prescribed procedures in tax-related matters.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
By this writ petition, the petitioner seeks a direction for the release of attachment of the immovable properties bearing Survey Nos. 1305/4, 1305/4B, 1306/1B and 1306/2A2 are situated in Kamandoddi Village of Shoolagiri Taluk.
2. An order dated 30.05.2023 was issued against the petitioner by confirming the tax proposal pertaining to the discrepancy between the petitioner’s GSTR 3B returns and the auto populated GSTR 2A. Such order was carried in appeal before the appellate authority by the petitioner on 24.08.2023. In relation to the filing of such appeal, the petitioner made the requisite pre deposit as per Section 107 of applicable GST enactments. Since the attachment was effected earlier on 22.08.2023, the present writ petition was filed seeking release of such attachment.
3. Learned counsel for the petitioner contends that recovery measures should not be undertaken for a period of three months after the order in original is issued so as to enable the tax payer to file a statutory appeal. By pointing out that the order in original is dated 30.05.2023, learned counsel submits that the appeal was lodged within the prescribed three month period. Since the order of attachment was issued within the said three month period, learned counsel contends that such order is not sustainable.
4. Mr. T.N.C.Kaushik, learned Additional Government Pleader, accepts notice for the first respondent and Mr.P.Anantha Kumar, learned Government Advocate, accepts notice for the second respondent.
5. The petitioner has placed on record the order in original dated 30.05.2023. Proof of filing of the appeal has also been placed on record. From the document at pages 16 to 18 of the typed set of papers, it is evident that the petitioner has made the requisite pre deposit of 10% of the disputed tax demand by remitting a sum of Rs.4,94,956/-. Once such pre deposit is made, under sub-section (7) of Section 107, recovery proceedings in respect of the balance amount shall be deemed to be stayed. In this case, without waiting for the statutory period of three months, an attachment was effected of the petitioner’s immovable property. Such attachment is contrary to the statutory prescription and cannot be sustained.
6. In the above facts and circumstances, W.P.No.10670 of 2024 is allowed by directing the first respondent to release the attachment over the immovable property bearing Survey Nos.1305/4, 1305/4B, 1306/1B and 1306/2A2 and situated in Kamandoddi Village of Shoolagiri Taluk. The second respondent is further directed to delete the entry pertaining to the attachment from the encumbrance certificate relating to the property. These actions shall be completed within a maximum period of one week from the date of receipt of a copy of this order. No costs. Consequently, W.M.P.No.11757 of 2024 is closed.
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