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Whether GST Authority can pass order for provisional attachment of property u/s 83 of CGST Act after passing the final order in form GST DRC-07?

The answer is negative, says High Court. 

By this writ application under Article 226 of the Constitution of India, the writ applicant has prayed for the following reliefs:

“(a) to quash and to set aside the action under section 83 taken by the respondent no.4;

(b) Pending admission, hearing and final disposal of this petition, Your Lordships may be pleased to direct the Respondents

(i) To lift the attachment of property;

(ii) Not to take any coercive action against the petitioner.

(c) To issue order(s), direction(s), writ(s) or any other relief(s) as this Hon’ble Court deems fit and proper in the facts and circumstances of the case and in the interest of justice;

(d) To award costs of and incidental to this application be paid by the Respondents.”

It is not in dispute that form GST DRC-07 order was passed on 16.03.2020 by which the authority has fixed the liability to the tune of Rs.3,56,15,507/- only towards the penalty, to be paid by the writ applicant. Counsel of petitioner pointed out that his client has challenged this order in form GST DRC- 07 dated 16.03.2020 by filing an appeal before the first appellate authority.

The short point for our consideration is that after passing order in form GST DRC-07 dated 16.03.2020 whether the authority could have passed an order of provisional attachment of property under Section 83 of the Act.

In our opinion, the answer has to be in the negative. There is no question of invoking Section 83 of the Act for the purpose of provisional attachment once the final order in form GST DRC-07 is passed. At this stage, we may look into sub clause 3 of Section 79 of the Act. Section 79(3) reads thus:

“(3) Where any amount of tax, interest or penalty is payable by a person to the Government under any of the provisions of this Act or the rules made thereunder and which remains unpaid, the proper officer of State tax or Union territory tax, during the course of recovery of said tax arrears, may recover the amount from the said person as if it were an arrear of State tax or Union territory tax and credit the amount so recovered to the account of the Government.”

The plain reading of the above referred provision would indicate that if any amount of tax, interest or penalty like the one in our case is payable by a person to the Government under any of the provision of this Act or the Rule then such amount can be recovered by a proper Officer of State Tax or the Union Territory as the case may be, as if it were an arrear of State Tax or the Union Territory Tax. In other words, this provision can be interpreted or can be understood as recovery of any debts, interest or penalty by way of revenue measures. This is possible or rather permissible only after proper attachment of any property of the assessee. This attachment which we are talking about has nothing to do with the provisional attachment under Section 83 of the Act. 

In such circumstances referred to above, the impugned order of provisional attachment purported to have been passed under Section 83 of the Act could be said to be without jurisdiction. The same is hereby quashed and set aside.


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Author:

TaxReply


Sep 9, 2021

Comments


This is a smart judgement
By: Sharad Goel | Dt: Sep 11, 2021


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