Provisional Attachment of Property under GST¹

Facts of the case

The petitioner is carrying out the academic programs in India of the University of Fraser Valley, Canada. The degrees awarded by the UFV, Canada are recognized by the Punjab University. A panchnama was prepared which shows that the authorized persons of the petitioner cooperated with DGGSTI and provided access to all the required documents. The Officer of the DGGSTI sent an e-mail to the petitioner that its bank account has been provisionally attached under Section 83 of the Central Goods and Services Tax Act, 2017.The objection was filed by petitioner against the provisional attachment of the bank account and it was submitted that it had to make the urgent payments, therefore, account may be released from the attachment.

Submission on behalf of the Petitioner

It was submitted that the order of provisional attachment has been passed under Section 83 of the Act on account of launching of the proceedings under Section 67 of the Act.

Section 83 of the CGST Act states that 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.

Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).”

Further it is submitted that the proceedings under Section 67 (which deals with the power of officer to do inspection, search & seizure) have already been over and no proceedings either under Section 63 (which deals with Assessment of unregistered person or 74 which deals with determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts) have been initiated so far, therefore, the attachment order passed under Section 83 has become redundant.

It is to be noted that the petitioner has also relied on a judgment[1] by Gujarat High court where it was held that it may be that pursuant to search, inquiry or other proceedings under the Act may have been undertaken however such inquiry or other proceedings are not under Section 67 of the CGST and hence it cannot be said that any proceedings are pending under Section 67 of the CGST Act.

Further in the absence of pending of any proceedings under Section 63,64,67,73 or 74 of the CGST Act order of the provisional attachment of bank account under Section 83 are without authority of law and rendered unsustainable.

Submission on behalf of the Respondent

The respondents has vehemently argued that the proceedings initiated under Section 83 of the Act has been initiated because the proceedings under Section 67 have been launched which shall culminate into the proceedings under Section 63 or 74 of the Act.

Decision of Honorable Punjab and Haryana High Court

It was held that Account of the petitioner was attached under Section 83 of the Act on the ground that the proceedings have been launched under Section 67 of the Act. It is also to be noted that the proceedings under Section 67 have already been over and no proceedings under any other provisions much less under Section 63 or74 have been initiated so far. Section 83 is only for the purpose of protecting the interest of the Government revenue.

Hence it is necessary to provisionally attach either the property or the bank account belonging to the taxable person by passing an order in writing but this exercise can be made by the Commissioner when any proceedings under Sections 63 or 64 or 67 or 73 or 74 is pending. However it is also to be noted that Section 83 of the Act shall come to an end as soon as the proceedings pending in any of the aforesaid Sections i.e. 63 or 64 or 67 or 73 or 74 are over.

Our View

During the pendency of certain specified proceedings under the CGST Act 2017 viz Sections 63 or 64 or 67 or 73 or 74,the Commissioner can pass an order for attachment of property including bank accounts of the taxpayer to protect the interests of the revenue. However, such attachment provisions are not available, if no action, by way of demand, in terms of above provisions have been undertaken.

¹UFV India Global EducationVs Union of India and Others [2020-TIOL-1541-HC-P&H-GST]

²Kushal Ltd. Vs. Union of India [ 2019-TIOL-2943-HC-AHM-GST]