Authorities undertaking Provisional Attachment beyond 1 year without Informing Bank is Contrary to Law: Calcutta HC

Case Covered:

M/s. Amazonite Steel Pvt. Ltd. & Anr.

Versus

Union of India & Ors.

Read the full text of the case here.

Facts of the case:

The grievances raised and issues involved in all the six writ petitions are common, and accordingly, they were heard together and are being decided conjointly. This is an application under Article 226 of the Constitution of India wherein the writ petitioners are aggrieved by the orders passed by the Directorate General of Goods and Services Tax Intelligence, Kolkata Zonal Unit [hereinafter referred to as “DGGI”], to provisionally attach the current bank accounts of the writ petitioner under Section 83 of the Central Goods and Services Tax Act, 2017.

Observations of the court:

““Bad facts make bad cases” – the court crafts its decision to create an outcome dictated by the facts, instead of an outcome based on a proper legal analysis” – I am very well aware of the above adage and do not intend to fall prey to the same. Ergo, the interpretation of Section 83 of the CGST Act, 2017 is not based on the facts that have been presented by the respondents in their affidavits, but on the legal principles of interpretation of fiscal statutes and examination of the precedents cited by parties. Upon hearing both the parties on the third issue, the Court is of the opinion that the powers conferred under Section 83 are drastic and extraordinary in nature. The Court also believes that the powers under this section should not be invoked routinely and must be exercised with due caution, circumspection and deliberation. The judgments relied on by the learned counsel for petitioners in Valerius Industries (supra) and Pranit Hem Desai (supra) can be distinguished on the grounds that they only highlight the rationale and nature of the powers conferred under Section 83. These judgments do not deliberate upon the point of fresh issue of an order for provisional attachment which is of principal relevance to this case. The judgments relied upon the learned counsel for respondents, that is, Shrimati Priti (supra) and Kaithal Timber Pvt. Ltd. (supra) interpret a similar provision of provisional attachment in the Gujarat Value Added Tax Act, 2003. The Court in both cases while dealing with a provision that is pari materia to the present Section 83, has categorically held that fresh order for provisional attachment can be issued after the expiry of the time as prescribed under the Act.

The judgement of the court:

The new regime under the GST Act, 2017 is a new legislative creation by which the Union Government along with all the State Governments have streamlined various statutes under which tax was earlier collected to enhance the ease of doing business by preventing multi-point taxation that was extremely cumbersome and time consuming for the citizens of India. The raison d’etre of the GST Act, 2017 is to reduce the burden of tax and also to simplify the procedures. This, however, is coupled with certain far-reaching and drastic measures that would be applicable to persons who evade the payment of such taxes. One need not stress the importance of the responsibility that comes upon the government officials who take such drastic measures upon the citizens of this country. Nonetheless, these drastic provisions come with a purpose, and that is to ensure the collection of taxes so that the inequities in society may be reduced by the Government. Provisions such as provisional attachment are necessary to ensure that persons who intend to evade taxes and/or are a part of a mechanism to defraud the Government are nipped in the bud and appropriate taxes can be collected from such persons.

I would like to show my appreciation to Mr. Chakrabarti and Mrs. Gupta for their diligent work in assisting the Court.

In view of the above conclusion, all the writ petitions are disposed of. Urgent photostat certified copy of this order, if applied for, should be made available to the parties upon compliance with the requisite formalities.

Download the copy: