GST Dept. Made Attachment Without Recording Opinion And Referring To Any Tangible Material: Allahabad High Court Imposes Cost

The division bench of Justice Surya Prakash Kesarwani and Justice Jayant Banerji has directed the department to pay the cost of Rs. 50,000 to the petitioner/assessee.

The petitioner is the proprietor of M/s S G Plastic Industries, engaged in the manufacturing of plastic granules and their compounding.

The issue raised was whether the order of provisional attachment could be passed by complying with the conditions of forming an opinion, having a tangible material, etc.

The petitioner submitted that without the initiation of proceedings under section 74 of the CGST Act, 2017, the bank account of the petitioner was attached under Section 83 of the CGST Act, 2017.

The petitioner filed the petition to challenge the attachment of the bank account. The writ petition was allowed on the ground that no proceeding under Section 74 of CGST was pending as on the date of attachment. The court observed that the amended provisions of Section 83 of the CGST Act were not available when the attachment order was passed. The department passed the order, intimating the bank that the attachment had been quashed. But on the very next day, the department passed the impugned order, initiating proceedings under Sections 67 and 74.

Section 83 of the CGST Act leaves no manner of doubt that, first, there is the necessity for the formation of an opinion by the Commissioner. Secondly, the opinion must be formed before ordering a provisional attachment. Thirdly, the opinion must indicate that it is necessary to do so for the purpose of protecting the government's revenue. Fourthly, the order must be in writing for the attachment of any property of the taxable person. Lastly, observance of the rules by the Commissioner with regard to the manner of attachment.

The petitioner argued that, as per order, proceedings under Sections 67 and 74 had been launched against him.

However, respondents admitted before that "no proceedings under Sections 74 of the CGST Act, 2017 have yet been initiated."

The court held that the order of provisional attachment had been passed in a most arbitrary and illegal manner and in complete disregard of the provisions of Section 83 of the CGST Act.

Case Title: Varun Gupta Versus Union Of India

Case Citation: 2022 LiveLaw (AB) 431

Date: 29.08.2022

Counsel For Petitioner: Advocate Alok Saxena

Counsel For Respondent: A.S.G.I., Sudarshan Singh

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