What does Section 83 Say?
Section 83 empowers the Commissioner to provisionally attach any property including bank accounts belonging to the Registered Taxable Person for the purpose of protecting the interest of government revenue. Wherever it is necessary to do so 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.
Duration of Order
The order shall stand to remain valid for a period of one year from the date of the order passed under section 83(1) of the CGST ACT 2017.
For the further requirements of Provisional attachment let us understand the rules framed under CGST Rule :
The rules specify the procedural requirements with respect to the orders passed by the Commissioner and the forms and opportunity to be given for the Property attached.
The Rules Framed are hereby described below:
(1) Where the Commissioner decides to attach any property, including bank account in accordance with the provisions of Section 83, he shall pass an order in FORM GST DRC-22 to that effect mentioning therein, the details of the property which is attached.
(2) The Commissioner shall send a copy of the order of attachment in FORM GST DRC-22 to the concerned Revenue Authority or Transport Authority or any such Authority to place an encumbrance on the said movable or immovable property, which shall be removed only on the written instructions from the Commissioner to that effect and a copy of such order shall also be sent to the person whose property is being attached under section 83.
(3) Where the property attached is of perishable or hazardous nature, and if the person, whose property has been attached, pays an amount equivalent to the market price of such property or the amount that is or may become payable by such person, whichever is lower, then such property shall be released forthwith, by an order in FORM GST DRC-23, on proof of payment.
(4) Where such person fails to pay the amount referred to in sub-rule (3) in respect of the said property of perishable or hazardous nature, the Commissioner may dispose of such property and the amount realized thereby shall be adjusted against the tax, interest, penalty, fee or any other amount payable by the taxable person. 159.
(5) Any person whose property is attached may file an objection in FORM GST DRC-22A to the effect that the property attached was or is not liable to attachment, and the Commissioner may, after affording an opportunity of being heard to the person filing the objection, release the said property by an order in FORM GST DRC- 23.
(6) The Commissioner may, upon being satisfied that the property was, or is no longer liable for attachment, release such property by issuing an order in FORM GST DRC- 23.
We have examined the legal rules and regulations framed under CGST ACT 2017 and its Rules, now let us understand under what circumstances the Provisional attachment shall arise for a taxable person:
- Supplied any goods or services or both without the issuance of an invoice with an intent to evade tax.
- Issued any invoice or bill without the supply of goods or services or both with an intent to evade tax.
- Fraudulently availed any Input Tax Credit.
- Availed Input Tax Credit without any invoice.
- Any amount collected as Tax but failed to pay the credit of the Government and remains unpaid for a period of 3 months.
- Fraudulent refund any obtained.
- Any Input Tax Credit has been passed to the Recipient but failed to pay the Tax.
We understand the legal point of view as referred from the Act, Rules and Regulations framed by the Revenue Authorities.
Now let us understand whether any remedy is available for the above-said law framed
The answer to the above said question is affirmative depending upon case to case for example
- If a situation arises where the property is provisionally attached without any opportunity of being heard is not provided then the proceeding is invalid and set aside. (Case Law SKYLARK INFRA ENGINEERING PVT LTD-Punjab HC).
- Cash Credit accounts cannot be provisionally attached. (Manish Scrap Traders VS Principal Commissioner, Gujarat HC).
- Family members accounts cannot be attached where they are not taxable person or has any relation with the person stated in Section 122(1A) (Dharmesh Gandhi, Bombay HC).
- Attachment is only effective when proceeding are pending U/s 62,63,64,67 or 74 of the CGST Act(Kushal LTD vs UOI, Gujarat HC).
Power Conferred under Section 83 empowers the Revenue Authorities to attach the property but over a period of time, the courts have repeatedly emphasized that this power need to be not routinely exercised. The power need to be examined and exercised in a well-defined manner.
The above-said article contains author's viewpoint only, for more clarifications please refer the respective sections, rules framed under GST.