Section 83 of CGST Act: Provisional attachment to protect revenue in certain cases

Section 83 of CGST Act enables the ‘Tax Officer’ to attach any property of ‘Taxable person’ including the bank account when there is pendency of any proceeding under Section 62, 63, 64, 73 and 74 of the CGST Act, 2017.

However, the Finance Act 2021 replaced the word the “Pendency of any proceeding” with the word “initiation of any proceeding”, to enable the tax officer to protect the revenue even before issue of show cause notice to taxable person.

Above backdrop, I am going to discuss validity of few actions initiated by the tax officer against the taxable person.

Q1. The assets of the Partners is also covered under the above section?

Ans:- No.

As above section can be invoked only against the taxable person, not with another taxable person.

Sec 2(84) Person Includes:

a) an individual;…………………………………….

(d) a firm;

(e) a Limited Liability Partnership;

Sec 2 (107): taxable person means a person who is registered or liable to be registered under section 22 or section 24 of CGST Act.

So, the law recognizing the, Firm and LLP as “person” as well as taxable person under GST.

The Section 83 can be invoked only against the” taxable person” so the Tax officer can’t attach the property of the another taxable person “ ie partner’s” property by invocation of the sec 83.

Even after meaning full reading the “ Form GST DRC-22” (i.e. Provisional attachment of property under section83) one can conclude that the above form can be issued against to the Taxable person not against of another taxable person.

Q2. If section 83 can’t be invoked against the partners of the firm means any other remedy available for tax officer to recover the amount from partners?

Ans:   Yes.

After the determination of tax liability on completion of assessment, The tax officer can invoke sec.90 (Liability of partners of firm to pay tax) of CGST Act recover the amount from the partners.

Note: Section 90 of the CGST Act drafted in order with sec 25 of Partnership act 1932.

Q3. Summons issued to the taxable person under sec.70  CGST Act, during summons can tax officer invoke sec.83?

Ans: No

As the sec 83 covers only FIVE section i.e. Sec 62, 63, 64, 73 and 74 of the CGST Act 2017. One can conclude that during summons tax officer can’t invoke the section 83.

This presumption can be applicable for section 67, 71 proceeding also.