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THE HIGH COURT OF
JUDICATURE AT MADRAS
DATED: 03.04.2023
CORAM: The HONOURABLE DR.
JUSTICE ANITA SUMANTH
W.P.No.18776 of 2020
Nitesh Jain Mangal
Chand …….
Petitioner
vs
The Senior Intelligence
Officer,
Directorate General of
Goods and Service Tax Intelligence,
Chennai Zonal Unit,
C~3, C~Wing, Rajaji
Bhavan,
Besant Nagar, Chennai ~
600 030. ……..
Respondent
Petition filed under
Article 226 of the Constitution of India praying to issue a writ of mandamus
directing the respondent to remove the provisional attachment of the bank
accounts and return the electronic device seized vide Mahazar dated 24.01.2019.
For Petitioner : Mr.P.Jitendra Kumar
For Respondent : Mr.V.Sundareswaran
Senior
Panel Counsel
Issue in Case:
The petitioner prays
for a mandamus directing the respondents being the Senior Intelligence Officer,
Directorate of Goods and Services Tax Intelligence (DGGSI) to remove the
provisional attachment of the bank accounts of the petitioner and return the
electronic devices seized vide mahazar dated 24.01.2019.
Brief Facts of Case
1.
The petitioner
claims to be engaged in the business of manufacturing aluminium frames, UPVC
windows/shutters and similar goods. There was an inspection in his business
premises on 24.01.2019 for alleged bill trading in violation of the provisions
of the Central Goods and Services Tax Act, 2017 (-CGST Act-, in short).
2.
Based on the
aforesaid allegations, there was seizure effected on various documents and
electronic devices under mahazar dated 24.01.2019. The petitioner was also
arrested and remanded to judicial custody and thereafter incarcerated in
Puzhal. He was subsequently granted bail in Crl.O.P.No.8528 of 2019 on
09.03.2019.
3.
In January,
2019, an order under Section 83 of CGST Act had been issued provisionally
attaching various bank accounts in the name of the petitioner, his father and
other firms operated by him and along with his family members.
The provisions of Section 83 read thus:~
“83.
Provisional attachment to protect revenue in certain cases.
(1)
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.
(2)
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).“
Sub~section
(2) of Section 83 states that any provisional attachment shall cease to have
effect after a period of one year from the date of attachment and thus the
attachment in the petitioner-s case died a natural death in January, 2020.
4.
The petitioners
have re~imposed the attachment twice thereafter and such attachments were valid
till January, 2023. Thus, as on date, and with the efflux
of the period of one year as provided under Section 83(2), the last order of
attachment has worked itself out and the mandamus as sought for is liable to be
issued. Mandamus is thus issued to the respondents to direct the banks to
permit operation of the Bank accounts.
5.
A larger issue
that arise in this case is as to whether Section 83
contemplates a continued attachment of bank accounts for several years as has
happened in the present case. No doubt, the provisional attachment
envisaged is for the protection of revenue and in light of the proceedings
under Chapters XII, XIV and XV of the Act.
6.
The above
chapters encompass all proceedings from inspection till assessment. However, the
question that would arise is as to whether the proceedings may be kept pending
endlessly such that attachments of bank accounts traverse three to four years
seamlessly. It is the case of the respondents that the delay is on account
of the non~response of the petitioner to show~cause notices. However, the
respondents are well aware of the procedure set out under statute, and have to
adhere to the same in a timely fashion, in accordance with law.
Find and Discussion
7.
In the present
case, the show~cause notice has been issued only on 08.10.2022 in respect of
an inspection that had transpired in January, 2019. The time lines as seen
aforesaid would persuade me to arrive at a conclusion that the purpose of Section
83 which is stated to be provisional attachment to protect revenue in certain
cases cannot be deployed so as to work against the assessee continuously for
several years as has happened in the present case.
8.
At paragraph 16
of the counter, the respondent states that -the petitioner is the master
mind and has played a crucial role in executing modus operandi designed by him,
wherein Rs.98 crores of fraudulent ITC has been received by 15 bogus companies
and passed on to 120 companies-.
9.
Additionally,
reliance is placed on the decision of the Calcutta High Court in the case of
Amazonite Steel Pvt Ltd v Union of India (2020 SCC OnLine Cal 3279). This
decision is distinguishable on facts. That apart, they rely upon a decision of
this Court in Muthuraman and Co., v Principal Additional Director General and
others (2022) 107 GSTR 102. At paragraph 30 of the latter decision, it is held
thus:~
10.
“It is made
clear that this order only relates to the impugned proceedings of bank
attachment and will not stand in the way of the revenue taking resort to
Section 83 yet again, if the circumstances so warrant, at a later juncture in
the proceedings, in accordance with law. No costs. Connected Miscellaneous
Petitions are closed.“
11.
In that case,
attachment was dated 23.11.2020 and the petitioner had filed the writ petition
in 2021, that came to be decided on 05.10.2021. At paragraphs 9 to 12, I have
noted the allegations relating to fraudulent claim of ITC. While deciding the
matter in October, 2021, writ petition had been allowed directing the
respondents to issue show~cause notice, directing the petitioner to cooperate
and the proceedings to be finalised within a time fixed period.
12.
I had also
granted liberty to the respondents to resort to Section 83 if need so arose
based on the determination of the tax liability in assessment. The matter was
carried in appeal and the order confirmed except that the period for completion
of assessment was increased by the Division Bench. Thus, reliance on that case
does not advance the case of the respondents in this writ petition, rather, it
militates against their stand now.
Order:
The conclusion that I
have drawn in this case is based specifically on the position that the
inspection in this case is January, 2019 whereas the show~cause notice is issued
only in October, 2022. This delay of nearly four years in issuing show~cause
notice cannot be a reason to continue an attachment under Section 83 of the
Act, which itself is provisional in nature.
Undeniably, Section 83
must be resorted to in appropriate cases, ensuring with equal vigour that the
Department is proceeding in a timely manner, by issuing notice and finalizing
proceedings in a time bound fashion.
For the above reasons,
the petitioner succeeds and this writ petition is allowed. Let the needful, as
above, be done within a period of one week from today. No costs.
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