pri Property Attachment of CA for GST payment default by client Rumor about attachment of Property of CA/Advocate for lower GST Tax payment by client

Rumor about attachment of Property of CA/Advocate for lower GST Tax payment by client

In Budget 2021, amendment has been proposed in section 83(1) of CGST Act, 2017 regarding Provisional attachment of property in certain cases. This article aims to discuss various media reports/news & rumors regarding attachment of property of Tax Professionals (CA/advocate/Other Tax Consultants) for lower GST Tax payment by client. Let us discuss in detail about the amendment proposed in Budget 2021 regarding provisional attachment of property and its consequences on Tax Professionals like CA/Advocates etc who are involved in GST returns filing & tax compliances on behalf of clients. Screenshot of news heading of one of the leading newspaper, as circulated on social media is as follows-

a) Section 83(1) of CGST Act,2017 : Before Amendment

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 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.

GST and Rumour of CA Property Confiscation

b) Section 83(1) of CGST Act,2017 : Amendment Proposed in Budget 2021

As per clause 106 of finance bill 2021, following amendment is being proposed:-

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.” 

c) Analysis of Amendment

1. Amendment seeks to provisionally attach property, including bank account of:-

    • Taxable Person
    • Any person specified in Section 122(1A) (Amendment)

2. Provisional attachment can be done for the purpose of protecting the interest of the Government revenue, after the initiation of any proceeding under:-

    • Chapter XII : Assessment
    • Chapter XIV : Inspection , Search , Seizure & Arrest
    • Chapter XV: Demands & Recovery

3. Commissioner may, by order in writing, provisionally attach the property of person specified above.

d. Period of Attachment of Property

Clause 106 of the Finance Bill, 2021 seeks to substitute sub-section (1) of section 83 of the Central Goods and Services Tax Act 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 there-under.

Initiate Date:  From the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV

Valid Till: Till the expiry of a period of one year from the date of order made there-under i.e.  proceeding under Chapter XII, Chapter XIV or Chapter XV 

e. Person Specified under section 122(1A)

As per amendment, now any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122,can be attached provisionally.

Sub-section 1A of section 122 prescribes that penalty can levied in case of “specified offences”, on “such persons” “satisfying both the following conditions”:

  • the said person is the instance for conduct of a transaction and
  • also retains the benefit from occurrence of the said transaction

f. Specified Transactions under section 122(1A)

Penalty equivalent to amount of tax evaded or ITC availed or passed on will be levied on a person committing any of the following offences. This provision will apply if such person is a beneficiary and at whose instance such transaction is conducted,

  • Goods / services / both are supplied without issue of invoices / issue of incorrect or false invoice. { clause (i) of section 122(1) }
  • Issue of invoice / bill without supply of goods / services / both { clause (ii) of section 122(1) }
  • Takes / utilises input tax credit without actual receipt of goods / services { clause (vii) of section 122(1) }
  • Takes / distributes Input tax credit in contravention to provisions of Section 20 of CGST Act, 2017 { clause (ix) of section 122(1) }

g. Conclusion

The amendment seeks to curb the malpractice of fake invoices for availing ITC/getting refund of such ITC on the basis of fake invoice. Property of Taxpayer as well other persons (may be tax professional who was involved in these type of transactions), can be provisionally attached as per amendment proposed u/s.83(1) of CGST Act. Thus, amendment has nothing to do with attachment of property of other CA/Advocates/Tax professionals, who are filing/ assisting in GST returns & compliances on behalf of clients in normal due course. Only specified persons involved in transactions as referred in section 122(1A) of CGST Act are liable for provisional attachment of property u/s.83(1).

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Article contributed by:  CA Sagar Gambhir | FCA, DISA (ICAI), DIRM (ICAI), B.COM 

Author can be reached at casagargambhir@gmail.com for any queries, issues & recommendations relating to article. Any feedback for improvement would be really appreciated.

Disclaimer: The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

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12 Comments

  1. Dr A Subrahmanyam says:

    In all such cases (like circular trading, or fake invoicing), while deposing before the Enforcement Officers, the tax payer states that he does n’t know anything and his CA only takes care of his books of accounts. With this amendment in GST Law, CAs / CMAs and consultants must review their work-arrangement with their such clients and ensure that clients follow the fundamental principle of CENVAT — “goods should move under the cover of Invoice” which is squarely applicable in GST era also.

  2. CA. Nitin Bharadwaj says:

    IT and GST are over enthusiastic in implementing such provisions to “provisionally attach” . Case in point ” Coffee Cafe Day : Siddharth” , the MD committed suicide due to provisional attachment of assets. Nothing happened to the IT officer ( DC) who did it.

  3. Tarunkumar D Trivedi says:

    Sir, Now a days, authorities are under misconception that CAs are master minded, hence without finding the requirements sec 122, they will straight way initiate proceedings and may attach provisionally property of CAs. This is the fear.

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