No Acts & Articles mentioned in this case
HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
W.P.No.38763 of 2022
Between:
M/s S.A.IRON METAL,
Sy.No.198, Telephone Colony,
Vellore Road, Chittor,
Chittoor District,
Andhra Pradesh,
Rep. by its Proprietor Sri Shaik Samiuddin,
S/o Late G.M.Sahabuddin, aged about 54 years,
13-127, Invate Line St,
Chittoor, Chittoor District. .. Petitioner
And
1) State of Andhra Pradesh,
Rep by its Principal Secretary,
Revenue (CT) Department,
Velagapudi, Amaravathi,
Guntur District, Andhra Pradesh and others .. Respondents
DATE OF JUDGMENT PRONOUNCED: 28.08.2023
SUBMITTED FOR APPROVAL:
HON’BLE SRI JUSTICE U. DURGA PRASAD RAO
HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO
1. Whether Reporters of Local newspapers Yes/No
may be allowed to see the Judgments?
2. Whether the copies of judgment may be Yes/No
marked to Law Reporters/Journals?
3. Whether Their Ladyship/Lordship wish to Yes/No
see the fair copy of the Judgment?
_________________________
U. DURGA PRASAD RAO, J
__________________________
T.MALLIKARJUNA RAO, J
2
*HON'BLE SRI JUSTICE U.DURGA PRASAD RAO
AND
HON’BLE SRI JUSTICE T.MALLIKARJUNA RAO
+ W.P.No.38763 of 2022
%28.08.2023
# M/s S.A.IRON METAL,
Sy.No.198, Telephone Colony,
Vellore Road, Chittor,
Chittoor District,
Andhra Pradesh,
Rep. by its Proprietor Sri Shaik Samiuddin,
S/o Late G.M.Sahabuddin, aged about 54 years,
13-127, Invate Line St,
Chittoor, Chittoor District. .. Petitioner
Vs.
$ State of Andhra Pradesh,
Rep by its Principal Secretary,
Revenue (CT) Department,
Velagapudi, Amaravathi,
Guntur District, Andhra Pradesh and others. .. Respondents
<GIST:
>HEAD NOTE:
! Counsel for petitioner: Sri M.V.J.K.Kumar, learned counsel for petitioner.
Counsel for respondents: Y.N.Vivekananda, learned Government Pleader for
Commercial Taxes-II.
? CASES REFERRED:
1) MANU/KA/3951/2021
2) Manu/gj/1743/2019
3) MANU/PH/2993/2019
4) MANU/SC/0293/2021
5) MANU/GJ/0858/2020 = 2020 GLH (1) 589
6) AIR 2001 SC 1980 =MANU/SC/0191/1980
7) AIR 2011 SC 1925 = MANU/SC/0249/2011
8) (2014) 16 SCC 248
9) (2017) 14 SCC 304
10) (1994) 5 SCC 346
3
HON’BLE SRI JUSTICE U. DURGA PRASAD RAO
AND
HON’BLE SRI JUSTICE T. MALLIKARJUNA RAO
Writ Petition Nos.38763 of 2022
ORDER: (Per Hon’ble Sri Justice U. Durga Prasad Rao)
The petitioner prays for writ of mandamus declaring the
action of the Assistant Commissioner (State Tax-1), Tirupati / 2
nd
respondent in issuing the provisional attachment orders dated
03.11.2022 against respondents 4 to 14, who are the bank and third-
party customers of the petitioner, pending the payment of tax,
penalty and interest, which are claimed against the petitioner before
issuing show cause notice as illegal, arbitrary, unjust and violative of
Rule 142(1A) of the Central Goods and Services Tax Rules, 2017
(for short, ‘the CGST Rules, 2017’) r/w Section 74(5) of the Central
Goods and Services Tax Act, 2017 (for short, ‘the CGST Act’)/ A.P.
Goods and Services Tax Act, 2017 (for short, ‘the SGST Act’) and
also Articles 14, 19(1)(g), 21 and 226 of the Constitution of India
and consequently set aside the provisional attachment orders.
4
2. PETITIONER’S CASE :
The petitioner’s case succinctly is thus:
(a) The petitioner is a proprietary concern engaged in
purchase and sale of iron metal and scrap. The petitioner got
registered under the GST Act, 2017.
(b) While so, on 03.11.2022, the Audit Wing lead by 2
nd
respondent under authorization issued by 3
rd
respondent inspected
the petitioner’s proprietary concern for inspection under Section
67(1) of the CGST / APGST Act, 2017. During such inspection, he
recorded in the proceedings in the Form - DRC 01A certain facts as
if there was no physical stock and the petitioner was not conducting
the business in the premises which is factually not correct. The
stock was very much available in the business premises. It was
further alleged that the business was closed but still invoices and
bills were generated and it was created as if several vehicles were
moved from Krishnagiri, Vellore, Tirupatthur of Tamilnadu to the
business premises of petitioner i.e., Chittoor. However, no enquiry
was conducted with the check post, the parties concerned and
vendor dealers in that regard to find out whether the petitioner really
claimed ITC on fake invoices. Although his allegations were not
5
correct, still the petitioner was by force constrained to sign the audit
statement and panchanama. Accordingly, Form GST DRC-01A was
issued under Rule 142(1A) of the CGST / APGST Act, 2017. It is
submitted that the petitioner has 30 days time u/s 74(8) of the CGST
/ APGST Act, 2017 r/w Rule 142(1A) of Central Goods and
Services Tax Rules, 2017 (for short ‘CGST Rules, 2017) to pay the
tax amount and even without waiting for the said period of 30 days
after issuing Form GST DRC-01A, the 2
nd
respondent issued
provisional attachment order against respondents 4 to 14 which is
illegal and unwarranted.
(c) It is further contended that as per Section 83 of the CGST
Act, 2017, the “Commissioner” and as per Section 83 of the APGST
Act, the “Chief Commissioner” shall issue provisional attachment
order, but in this case without following Section 83, the said
attachment order was issued by the 2
nd
respondent, who is the
Assistant Commissioner. Hence, the attachment is not sustainable.
Further, except mentioning Section 83 of the CGST / SGST Act,
2017, no reasons are mentioned for issuing attachment order.
Hence, the writ petition.
6
3. COUNTER OF RESPONDENTS :
The 2
nd
respondent opposed the writ petition contending that
the writ petition is not maintainable as an efficacious and alternative
remedy of appeal is available to the petitioner.
(a) The petitioner got GST registration certificate w.e.f.
22.02.2022 for doing business in iron scrap. Pursuant to the
authorization issued by 3
rd
respondent to conduct inspection u/s 67
of the APGST Act, 2017, the 2
nd
respondent inspected the business
premises of the petitioner along with the staff and Panchas and
found petitioner’s business was not in the stated place. The
departmental enquires revealed that Sri S.Samiuddin is not doing
any business and in his name the business is carried out by Sri
Mohammad Jaffar and his son Mohammad Saif. When enquired,
Sk. Sameeuddin, the proprietor of the petitioner’s firm stated that he
is not doing any business activities and unknowingly he has signed
on some papers on request of his friend Mohd. Jaffar. He further
stated that Mohd. Jaffar’s family members are doing business
activities in the name of said firm. The 2
nd
respondent and his team
visited the residence of Mohd. Jaffar (D.No.28/1071, KN.Colony,
Chittoor). Mohd. Jaffar and his eldeor son Saif were present . On
7
enquiry, they confessed that they were doing business. They further
confessed that they were buying purchase invoices from Tamilnadu
parties for input purpose without physical receipt of the goods. It
indicates that the tax payer has obtained GST registration with
malafide intention to evade output tax by claiming ITC through fake
invoices and e-way bills without physical receipt of goods.
(b). The enquiry further revealed there was no physical stock
available at the business premises at Chittoor. As seen from
purchase and sale details of taxable persons, it revealed that the
purchases from 02.04.2022 to 21.04.2022 were worth Rs.5,66,769/-
(6583 Kgs only) and in 11 transactions sales were shown as
Rs.49,59,47032 (95,843 Kgs). As such the petitioner’s purchases
and sales details are irregular. Not only there was no physical stock
but also there was no door number to the business premises and no
board was displayed. As stated supra, the petitioner is not related to
Mohammad Jaffar or his son Mohammad Saif. The statement of
those two persons were recorded before the Panchas.
(c) Accordingly, an intimation in Form GST DRC-01A dated
08.11.2022 was issued to the taxable person under Rule 142(1A) of
the CGST Rules, 2017 r/w Section 74(5) of the CGST/SGST Act,
8
2017 for the tax period April 2022 to September 2022 and on
authorization dated 03.11.2022 issued by the Chief Commissioner,
provisional attachment orders were issued against respondents 4 to
10 and 14.
(d) It is further submitted that the toll plaza details of vehicle
movements were compared with the way bills of the taxable persons
utilized both for purchase and sale. All the details and malpractices
are discussed in DRC 01 show cause notice. Further, the details
mentioned in the said notice would reveal that the taxable person
received purchase invoices without actual receipt of the goods.
However, they sold the goods by purchasing from unregistered
persons of other places (other than the places from where purchase
tax invoices were raised). Even for purchasing from unregistered
persons, the petitioner has to pay full tax on sale. Hence, to avoid
output tax, he received invoices without receipt of the goods. All
the purchase place and sale place details are recorded in the e-way
bills of the tax payer which were generated from GST portal. The
details would reveal that the purchases are fake without actual
receipt of goods. The petitioner has shown that he purchased goods
from Tamilnadu through fake invoices. However, he supplied the
9
goods to his recipients actually purchased from unregistered dealers
locally from different parts of A.P., for instance, Allagdda,
Ananatapur, Atmakur, Banagajnapalle, Bapatla, Chandragiri, Darsi,
Dharmavaram, Gooty, Guntakal, Kadiri, Kadapa and Khammam etc.
(e) It is further submitted that all the documentation data and
movement of vehicle was verified. Selling dealers details were also
verified. Yovel enterprises was registered w.e.f. 27.04.2017 but its
registration was cancelled within short period i.e., w.e.f. 17.10.2022.
Further, one B.S.Enterprises who was registered w.e.f. 21.10.2022,
issued entire sale invoices only to the respondents upto the date of
inspection. After inspection of petitioner’s premises, when the 2
nd
respondent tried to make a call to B.S.Enterprise’s mobile
No.8125340784 as available in the registration details, he did not lift
the call and later he switched off the mobile. But the said concern
filed GSTR 1 only to enable the taxable person to utilize the ITC.
However, the said B.S.Enterprises did not file GSTR-3B and did not
pay tax to the Government. In these circumstances, provisional
attachment was made observing the intention of the tax payer to
avoid the output tax and cause loss to revenue of the Government. If
swift action was not taken, the petitioner would have withdrawn the
10
entire amount available in the bank. It is submitted that on the date
of inspection, when the petitioner was sitting with the respondent, at
that time an amount of Rs.15.00 lakhs was transferred to the account
of Bannari Ganesh from the account of the petitioner (Axis Bank,
Chittoor, A/c.No.921020054649987). Hence, the provisional
attachment was ordered. The respondents thus prayed to dismiss the
writ petition.
3. Heard arguments of learned counsel for petitioner Sri
M.V.J.K.Kumar, and Sri Y.N. Vivekananda, learned Government
Pleader for Commercial Taxes-II.
4. ARGUMENTS OF PETITIONER :
Firstly, learned counsel would argue, the impugned
provisional attachment orders dated 03.11.2022 were issued by 2
nd
respondent even before launching any proceedings against the
petitioner under section 74 as contemplated in Section 83 of CGST /
SGST Act, 2017. Therefore, the attachment proceedings per se are
11
illegal and unjust. He placed reliance on Sterne India Pvt Ltd v.
Union of India
1
.
(a) Secondly, learned counsel argued that in the instant case
Form-GST DRC-01A intimation under Rule 142(1A) of CGST
Rules was issued to the petitioner on 08.11.2022. The said Form
GST DRC-01A is only an intimation but not a notice. The said
intimation would be issued before service of notice u/s 74(1) of the
Act to the person chargeable with tax to enable him to pay the tax,
interest and penalty. Receiving the intimation, such a person can
pay the aforesaid amount U/s 74(5) of the Act even before service of
notice U/s 74(1). On his failure, the authority will issue notice U/s
74(1). Learned counsel would submit that even after issuing notice
U/s 74(1) also, the petitioner would have 30 days time to pay the tax
amount in terms of Section 74(8) of the CGST / APGST Act, 2017.
However, without waiting for the mandatory statutory – period, the
2
nd
respondent resorted to the provisional attachment proceedings
against respondent Nos.4 to 10 on 03.11.2022 itself. Therefore, the
provisional attachment proceedings are illegal on that ground also.
1
MANU/KA/3951/2021
12
(b) Thirdly, referring to Section 83 of CGST / SGST Act,
2017, Sri M.V.J.K. Kumar would submit that “The Commissioner”
under CGST Act or “The Chief Commissioner” Under SGST Act,
2017 alone is competent to pass an order directing the provisional
attachment of the property and bank account of a taxable person. He
would submit that since the personal opinion of the designated
officer is the sine qua non for ordering attachment, such power
cannot be delegated by such designated authority to any other
officer. To buttress his argument he relied upon the decision in
Valerius Industries v. Union of India
2
. He would submit that in
the instant case instead of Chief Commissioner/Commissioner, the
Deputy Commissioner (ST), Tirupati/2
nd
respondent has passed the
provisional attachment order which is per se illegal.
(c) The fourth argument of the learned counsel for the
petitioner is that the 2
nd
respondent simply quoted Section 83 and
passed the attachment order without mentioning the reasons for his
order. Therefore, the attachment being bereft of reasons is liable to
be set aside. In this regard he relied upon
2
Manu/gj/1743/2019
13
(1) Valerius Industries v. Union of India (2 supra),
(2) Bindal Smelting Pvt Ltd v. Additional Director
General
3
and
(3) Radhakrishan Industries v. State of Himachal
Pradesh
4
5. ARGUMENTS OF GOVERNMENT PLEADER :
(a) Per contra, learned Government Pleader argued that the
first argument of the petitioner that the provisional attachment
proceedings cannot be initiated under Section 83 without initiating
proceedings u/s 74 is untenable for the reason that Section 83 itself
is clear to the effect that during the pendency of any proceedings u/s
62 or 63 or 64 or 67 or 73 or 74, the provisional attachment
proceedings can be initiated for the purpose of protecting the interest
of the Government revenue. Learned Government Pleader would
argue that in the instant case the 2
nd
respondent having obtained
authorisation dated 01.11.2022 from the 3
rd
respondent, initiated
proceedings U/s 67 of CGST/SGST Act and conducted the
inspection of the premises of the petitioner on 03.11.2022 and
having found many irregularities in the business activities of the
petitioner, most importantly, having found no business was
3
MANU/PH/2993/2019
4
MANU/SC/0293/2021
14
conducted by the petitioner and on the other hand business was
conducted by some third-parties i.e., Mohd. Jaffar and his son,
proposed to initiate provisional attachment proceedings U/s 83 of
the Act. For this purpose, the 2
nd
respondent obtained authorization
from the Chief Commissioner vide order dated 03.11.2022 and
issued provisional attachment orders dated 03.11.2022 against
respondents 4 to 10. Learned GP would submit that since the 2
nd
respondent proceeded U/s 67 and pending the same issued
attachment proceedings, his action is within the purview of Section
83, though he has not resorted to the proceedings U/s 74 by the date
of attachment.
(b) As against the second contention of the petitioner, learned
GP argued that assuming the proceedings were launched u/s 74 r/w
Rule 142(1A), still the 2
nd
respondent need not wait for 30 days in
terms of Section 74(8) of the Act without initiating attachment
proceedings u/s 83, for the reason, Section 83 is not controlled by
section 74, particularly section 74(8). He would logically argue that
after issuing intimation under Rule 142(1A) and thereafter issuing
notice U/s 74(1), if the 2
nd
respondent waits for 30 days without
initiating the provisional attachment proceedings in spite of
15
existence of sufficient grounds, there will be every possibility of
petitioner depleting his bank balance and credit resources to scuttle
the ultimate process of recollection of tax and thereby the interest of
the Government revenue will receive a setback. Learned GP thus
sought to back up the attachment proceedings.
(c) As against the third argument of petitioner, learned
Government Pleader would submit that the Commissioner/Chief
Commissioner by virtue of the power conferred on him U/s 5(3) r/w
Section 167 of CGST/APGST Act, 2017 can delegate the power
exercisable by him U/s 83 to any other officer and accordingly, in
the instant case the Chief Commissioner by virtue of the proceedings
in CCST’s Ref. No. CEW/E2/221/2022, dated 03.11.2022 has
delegated his power to the 2
nd
respondent and therefore the
petitioner cannot take any objection in this regard. Learned
Government Pleader would further submit that the decision in
Valerius Industries (supra 1) case relied upon by the petitioner has
been held per incurium by another Division Bench of High Court of
Gujarat in Nathalal Maganlal Chauhan v. State of Gujarat
5
.
5
MANU/GJ/0858/2020 = 2020 GLH (1) 589
16
(d) As against the fourth argument of the petitioner, learned
Government Pleader would submit that on the basis of tangible
material exhumed during the course of inspection and having
formed a reasonable opinion that the petitioner is likely to defeat the
ultimate tax recovery, the 2
nd
respondent issued attachment orders to
protect the interest of the Government revenue. In expatiation he
would submit that many incriminating facts relating to the business
affairs of the petitioner viz., (i) absence of business activity in the
premises mentioned in the registration details (ii) the petitioner not
doing business but some third-parties were doing business (iii)
passing Input Tax Credit to different industries without supply or
movement of goods (iv) his availment of ITC using the invoices
fraudulently without purchasing and receiving the goods physically,
forced the 2
nd
respondent to take the drastic step. Learned GP thus
sought to defend the attachment proceedings submitting that there
was no other way to safeguard the interest of the Government
revenue.
17
6. FINDINGS OF THE COURT :
Having heard the above and punctiliously scrutinised the
relevant law, we are unable to accept the first argument of the
petitioner that without launching proceedings U/s 74, the 2
nd
respondent should not have issued attachment orders U/s 83 of
CGST/SGST Act, 2017.
It is expedient to extract Section 83 here:
Section 83 of CGST Act:
“83. Provisional attachment to protect revenue in
certain cases.
(1) Where, after the initiation of any proceeding under
Chapter XII, Chapter XIV or Chapter XV, 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 or any person specified
in sub-section (1A) of section 122, 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)”
Section 83 of APGST Act:
“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 Chief 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
18
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)”
7. As can be seen, both the above provisions are in pari materia
with the minor variation regarding the designation of attaching
officer. They say, after initiation and during pendency of any
proceedings U/s 62 or 63 or 64 or 67 or 73 or 74, if the Chief
Commissioner is of the opinion that for the purpose of protecting the
interest of Government revenue it is necessary so to do, he may
order in writing attach provisionally any property including bank
account of the taxable person. Thus, the sine qua non for ordering
provisional attachment is the protection of interest of Government
revenue. The plain language of Section 83 manifests that provisional
attachment proceedings can be initiated by the Commissioner not
invariably during the pendency of the proceedings U/s 74 alone but
also during the pendency of proceedings under other Sections viz.,
Section 62, 63, 64, 67 & 73. The language in Section 83 is plain and
clear and therefore literal rule of interpretation will apply in the
instant case. This interpretation would say that if the provision of a
statute is plain, clear and unambiguous, its literal meaning has to be
19
imported without the necessity of any other external aids. In
Gurudevdatta VKSSS Maryadit v. State of Maharashtra
6
, the Apex Court
observed:
“It is a cardinal principle of interpretation of statute
that the words of a statute must be understood in
their natural, ordinary or popular sense and
construed according to their grammatical meaning,
unless such construction leads to some absurdity or
unless there is something in the context or in the
object of the statute to suggest to the contrary. The
golden rule is that the words of a statute must prima
facie be given their ordinary meaning. It is yet
another rule of construction that when the words of
the statute are clear, plain and unambiguous, then
the Courts are bound to give effect to that meaning,
irrespective of the consequences. It is said that the
words themselves best declare the intention of the
law-giver. The Courts are adhered to the principle
that efforts should be made to give meaning to each
and every word used by the legislature and it is not
a sound principle of construction to brush aside
words in a statute as being inapposite surpluses, if
they can have a proper application in circumstances
conceivable within the contemplation of the
statute.”
In B. Premanand v. Mohan Koikal
7
the Apex Court held thus:
“16. It may be mentioned in this connection that the first and
foremost principle of interpretation of a statute in every system
of interpretation is the literal rule of interpretation. The other
rules of interpretation e.g. the mischief rule, purposive
interpretation etc. can only be resorted to when the plain words
of a statute are ambiguous or lead to no intelligible results or if
read literally would nullify the very object of the statute. Where
the words of a statute are absolutely clear and unambiguous,
recourse cannot be had to the principles of interpretation other
than the literal rule, vide Swedish Match AB v. Securities and
6
AIR 2001 SC 1980 =MANU/SC/0191/1980
7
AIR 2011 SC 1925 = MANU/SC/0249/2011
20
Exchange Board, India MANU/SC/0693/ 2004MANU/SC/
0693/2004 : AIR 2004 SC 4219.”
8. When the above literal rule of construction is applied to
Section 83, the plain and unambiguous meaning portrayed is that
the provisional attachment can be issued during the pendency of not
only the proceedings covered by Section 74 but also some other
provisions including Section 67, after initiating which, the 2
nd
respondent issued provisional attachment. The contra argument of
the petitioner has no force in our view.
9. The decision in Sterne India Pvt Ltd. (supra 1) relied by the
petitioner can be distinguished. In that case investigation was
initiated under GST Act against one M/s Paul Overseas regarding
the alleged issuance of bogus/fake invoices without supply of goods
but claiming ITC. The writ petitioner therein was purchasing
mobile handsets from Ms/ Paul Overseas and selling to its
customers. While so, the 2
nd
respondent therein conducted search in
the head office of the petitioner under Section 67 of CGST Act and
before initiating the proceedings U/s 74 of CGST Act, attached the
bank accounts of the petitioner U/s 83 of CGST Act which was
21
challenged before the High Court of Karnataka. It appears in the
attachment order enclosed to Annexure-A, it was mentioned that
proceedings have been initiated U/s 74 of CGST Act which was
factually not correct. In that context, a learned single Judge while
allowing the writ petition observed that the proceedings were
initiated against a different taxable entity and even without initiation
of proceedings U/s 74 against the petitioner, attachment was made
U/s 83 which is not tenable. Learned Judge observed thus:
“31. In the present case, it must be noticed that the taxable entity
to which the proceedings were taken out is an entity other than the
petitioner and in the context of which search has been conducted
with respect to the petitioner. Admittedly, no proceedings have
been initiated under Section 74 of CGST Act as against the
petitioner till date. What must also be noticed is that though the
statement of objections of the respondent Authority seeks to make
out a case that the proceedings under Section 74 of CGST Act are
sought to be instituted and in the context of which the provisional
attachment under Section 83 of CGST Act is resorted to, the
impending proceedings under Section 74 of the CGST Act cannot
be a ground to exercise power under Section 83 for the
provisional attachment. If the only ground made out in the
statement objections and the very order of attachment at
Annexure-A is the proceedings under Section 74 of the CGST
Act, even if there are other proceedings that may be
considered to be pending against the petitioner as long as the
proceedings under Section 74 are not initiated by issuing a
show-cause notice, the order of attachment purportedly
relating to the proceedings under Section 74 cannot be upheld.
The respondent Authority cannot be permitted to contend
that any other proceedings contemplated under Section 83 of
CGST Act have been initiated, as it is made out in the
provisional order of attachment enclosed at Annexure-A that
proceedings have been initiated under Section 74 of the CGST
Act. Any exercise of power as may be permitted statutorily
22
which has an adverse consequence on the petitioner, would
have to be strictly construed. (emphasis supplied)”
Unlike in the above case, in the instant case, the attachment
orders dated 3
rd
and 4
th
November, 2022 issued against respondents
4 to 10 would clearly depict that proceedings have been launched
against the petitioner U/s 67(1) and 67(2) of the CGST/SGST Act,
2017 but not U/s 74. As already stated supra, pending the
proceedings U/s 67, the provisional attachment U/s 83 can be made.
For this reason we reject the first argument of learned counsel for
the petitioner.
10. The second argument of the petitioner is concerned, in order
to appreciate the same we have to refer to Section 74(1) (5) and (8)
of CGST/SGST Act, 2017 and Rule 142(1A) of CGST Rules, 2017.
Section 74(1) (5) and (8) of CGST Act:
“74. Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or
utilised by reason of fraud or any wilful misstatement or
suppression of facts.—
(1) Where it appears to the proper officer that any tax
has not been paid or short paid or erroneously
refunded or where input tax credit has been wrongly
availed or utilised by reason of fraud, or any wilful-
misstatement or suppression of facts to evade tax,
he shall serve notice on the person chargeable with
tax which has not been so paid or which has been so
23
short paid or to whom the refund has erroneously
been made, or who has wrongly availed or utilised
input tax credit, requiring him to show cause as to
why he should not pay the amount specified in the
notice along with interest payable thereon under
section 50 and a penalty equivalent to the tax
specified in the notice.”
(2) xxx
(3) xxx
(4) xxx
(5) The person chargeable with tax may, before service
of notice under sub-section (1), pay the amount of
tax along with interest payable under section 50 and
a penalty equivalent to fifteen per cent of such tax
on the basis of his own ascertainment of such tax or
the tax as ascertained by the proper officer and
inform the proper officer in writing of such
payment.
(6) xxx
(7) xxx
(8) Where any person chargeable with tax under sub-
section (1) pays the said tax along with interest
payable under section 50 and a penalty equivalent to
twenty-five percent of such tax within thirty days of
issue of the notice, all proceedings in respect of the
said notice shall be deemed to be concluded.”
Section 74(1) (5)and (8) of APGST Act:
“74. Determination of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or
utilised by reason of fraud or any willfulmisstatement or
suppression of facts.—
(1) Where it appears to the proper officer that any tax
has not been paid or short paid or erroneously
refunded or where input tax credit has been wrongly
availed or utilised by reason of fraud, or any wilful-
misstatement or suppression of facts to evade tax,
he shall serve notice on the person chargeable with
tax which has not been so paid or which has been so
short paid or to whom the refund has erroneously
been made, or who has wrongly availed or utilised
input tax credit, requiring him to show cause as to
why he should not pay the amount specified in the
notice along with interest payable thereon under
24
section 50 and a penalty equivalent to the tax
specified in the notice.”
(2) xxxx
(3) xxxx
(4) xxxx
(5) The person chargeable with tax may, before service
of notice under sub-section (1), pay the amount of
tax along with interest payable under section 50 and
a penalty equivalent to fifteen per cent of such tax
on the basis of his own ascertainment of such tax or
the tax as ascertained by the proper officer and
inform the proper officer in writing of such
payment.
(6) xxxx
(7) xxxx
(8) Where any person chargeable with tax under sub-
section (1) pays the said tax along with interest
payable under section 50 and a penalty equivalent to
twenty-five percent of such tax within thirty days of
issue of the notice, all proceedings in respect of the
said notice shall be deemed to be concluded.”
Rule 142 (1A) of CGST Rules, 2017
“142. Notice and order for demand of amounts payable
under the Act.
(1) xxx
(1A) The proper officer may, before service of notice to
the person chargeable with tax, interest and
penalty, under sub-section (1) of Section 73 or sub-
section(1) of Section 74, as the case may be,
communicate the details of any tax, interest and
penalty as ascertained by the said officer, in Part
A of Form GST DRC-01A”
11. The above provisions would show that the proper officer even
before serving notice U/s 74(1), may issue an “intimation of tax”
payable under Rule 142(1A) of the CGST Rules, 2017 and if the
taxable person accordingly pays the amount of tax U/s 74(5), the
25
notice U/s 74(1) cannot be issued. If he fails to pay the amount, the
proper office may issue notice U/s 74(1). Then, if the taxable person
in terms of Section 74(8) of the Act, pays the tax amount with
interest and penalty equivalent to twenty five per cent as mentioned
in notice U/s 74(1) within 30 days of the notice, all the proceedings
shall be deemed to be concluded. Now the argument of the
petitioner is that even if a notice is issued U/s 74(1) still he would
have time of 30 days to comply with but however no notice was
issued U/s 74(1) but only an intimation under Rule 142(1A) was
issued on 08.11.2022 and without waiting for the further time and
following the due procedure U/s 74, the attachment was made even
prior to 08.11.2022 which is illegal.
12. The above argument in our view is wholly irrelevant and
unacceptable for the reason that, the attachment orders were issued
by the 2
nd
respondent on the basis of his proceedings U/s 67 but not
U/s 74. What is to be noted is that after conducting inspection U/s
67 and having found incriminating material against the petitioner,
the 2
nd
respondent immediately issued provisional attachment orders
dated 03 and 04.11.2022 and thereafter issued intimation of tax in
26
Form GST DRC-01A dated 08.11.2022. The said action of the 2
nd
respondent cannot be found fault. Of course whether there are
sufficient grounds to order attachment is a question of fact which we
will discuss presently.
13. The third argument of the petitioner is that in view of the
clause “Commissioner/Chief Commissioner is of the opinion”,
employed in Section 83, such an opinion must be the subjective
opinion of a specified and designated officer but not that of a
delegate. To appreciate this argument we have to examine certain
provisions. In this context, Section 5(3) of CGST Act says thus:
“5. Powers of officers:
1.xxx
2.xxx
3.The Commissioner may, subject to such conditions and
limitations as may be specified in this behalf by him,
delegate his powers to any other officer who is
subordinate to him.
4.xxxx”
Section 5(3) of APGST Act, 2017 is also in pari materia but
for the difference that in the place of “Commissioner”, “Chief
Commissioner” has to be read.
27
14. Then Section 167 of CGST Act reads thus:
“167. Delegation of powers:
The Commissioner may, by notification, direct
that subject to such conditions, if any, as may be
specified in the notification, any power exercisable by
any authority or officer under this Act may be
exercisable also by another authority or officer as may
be specified in such notification.”
15. Section 167 of APGST Act, 2017 is also identical except that
the word “Chief Commissioner” has to be read in the place of
“Commissioner”.
16. Thus as rightly argued by learned Government Pleader, as per
the respective statutes, Commissioner/Chief Commissioner is
authorised to delegate his power to the subordinate officer.
Therefore, the contention of the petitioner that the subjective
satisfaction of the designated officer alone is essential to exercise the
power U/s 83 holds no water. In Valerius Industries (supra 1) cited
by the petitioner, a Division Bench of Gujarat High Court was
dealing with the question whether the State Tax Officer –I can
exercise power U/s 83 of Gujarat Goods and Services Tax Act, 2017
(GGST Act, 2017). It may be noted, Section 83 of GGST Act, 2017
28
is in pari materia with Section 83 of APGST Act, 2017. In that
context, the Division Bench of High Court of Gujarat held thus:
“35. In the case on hand, Section 83 makes it abundantly clear
that it is the Commissioner’s opinion which is relevant. The
Legislature has thought fit to confer this power upon the
Commissioner. Whether such power conferred upon the
Commissioner by the legislature could have been delegated to
the three subordinate officers referred to above by virtue of the
order dated 15
th
January 2018 passed in exercise of power
under sub-section (3) of Section 5 read with clause 19 of
Section 2 of the Act and the rules framed thereunder. In our
opinion, the answer has to be in the negative. Although there is
no specific challenge to the order dated 15
th
January 2015
passed by the Commissioner of State Tax delegating his power
under Section 83 to the subordinate officers, yet, we are of the
view that by virtue of such order, such impugned order of
provisional attachment cannot be defended.”
17. However, subsequently in Nathalal’s case (supra 2) another
Division Bench of High Court of Gujarat, considering the ratio in
the judgments (1) Sidhartha Sarawgi v. Board of Trustee for the
Port of Kolkata,
8
(2) State of Bihar v. Anil Kumar
9
and (3)
Sahni Silk Mills (P) Ltd., v. Employees’ State Insurance
Corporation
10
held as follows:
“43. In Valerius Industries (supra), this Court was dealing with
a matter in which the subject matter of challenge was an order
of provisional attachment under Section 83 of the Act. For the
purpose of Section 83 of the Act, the Legislature thought fit to
confer the power upon the Commissioner. However, in this
regard also, the Commissioner has issued a notification dated
8
(2014) 16 SCC 248
9
(2017) 14 SCC 304
10
(1994) 5 SCC 346
29
15
th
January 2018 delegating his power to three subordinate
officers. While considering the challenge, this Court observed
in para-35 as quoted above.
44. We are of the view that the observations made by this
Court in the above referred para-35 could be termed as per
incurium as such observations run contrary to the Supreme
Court decisions referred to above in this judgment.
45. It is an accepted principle of administrative law that the
repository of power must exercise that power personally.
However, there are two exceptions to this principle:
1. Legislation provides for the power to delegate or authorise:
An express power to delegate, usually in legislation,
allows the person who has the legislative authority to
delegate that authority to others. The individual/s or
position/s having the delegation can exercise the
authority in their own right. An example of an express
power to delegate can be seen in section 5(3) of the Act,
2017.
2. Implied power to authorise:
An implied power to authorise, arises where even
though there may or may not be an express power to
delegate in legislation, there can be an implied power
for an official to exercise the power on the person's
behalf - it is often termed the ‘alter ego’ principle, the
‘Carltona principle’ or an implied power to delegate.
This principle arose from the decision Carltona
Limited v. Commissioner of Works, (1943) 2 All ER
560.
46. The principle is : devolving power is permitted in the cases
where the nature, scope, and purpose of the power in
legislation means that it is unlikely that the Parliament intended
that the power is to be exercised personally, and the only
practical way the power can be exercised is by the officers who
are responsible to the person (who has the power by
legislation).”
Thus in essence, in the subsequent judgment, the Division
Bench of High Court of Gujarat approved the delegating powers of
the Commissioner.
30
18. In the instant case, the Chief Commissioner vide his
proceedings in CCST’s Ref.No.CEW/E2/221/2022, dated
03.11.2022 has delegated his powers U/s 83 of APGST Act, 2017 to
the 2
nd
respondent. The order reads thus:
:ORDER:
The Additional Commissioner of State Tax, Regional
GST Audit and Enforcement Office, Tirupathi unit vide
reference 1
st
cited has requested to accord permission for
provisional attachment of Bank Account or any other
properties of M/s Unique Enterprises,
GSTN:37MFBPK6797J1ZI, Nellore Division under Section 83
of APGST Act, 2017.
After careful examination of the report submitted by the
Additional Commissioner of State Tax, Regional GST Audit
and Enforcement Office, Tirupathi unit and in view of
circumstances explained therein, I am of the opinion that for
the purpose of protecting the interest of the Government
revenue, it is necessary to initiate provisional attachment
provisions under Section 83 read with Rule 159 of APGST
Act, 2017 and accordingly here with delegate all powers vested
with the Undersigned, under Section 83 of APGST Act, 2017
regarding the provisional attachment proceedings relating to
M/s Unique Enterprises, GSTN:37MFBPK6797J1ZI, Nellore
Division to the proper Officer viz, Deputy Commissioner of
State Tax Regional GST Audit and Enforcement Office,
Tirupathi unit office as per the powers vested under the
provisions of Section 167 of APGST Act, 2017.
In view of the above, proper Officer viz, Deputy
Commissioner of State Tax Regional GST Audit and
Enforcement Office, Tirupathi unit is directed to initiate the
provisional attachment as per the provisions under section 83
read with Rule 159 of APGST Act, 2017 and the Additional
Commissioner of State Tax, Regional GST Audit and
Enforcement Office, Tirupathi unit is directed to monitor the
proper Officer and report compliance regarding the provisional
attachment made by the Proper Officer.”
Sd
Chief Commissioner of State Tax
A.P., Vijayawada dt. 03.11.2022
31
19. The above order would manifest that the Chief Commissioner
pursuant to his power U/s 5(3) r/w Section 167 delegated his power
U/s 83 of the CGST/SGST Act, 2017 to the 2
nd
respondent and in
consonance thereof, the said officer has issued provisional
attachment proceedings against the respondents 4 to 10. Therefore,
the delegating power of the Chief Commissioner and consequential
action of the 2
nd
respondent cannot be said to be without power or
jurisdiction. Thus the third argument of the petitioner is rejected.
20. The fourth argument of the petitioner’s counsel is that the
attachment order is bereft of any reasons much less valid reasons
and hence, the same fell fowl of Section 83. Learned GP refuted the
same.
21. The law on the aspects of the draconian nature of Section 83
and the principles to be followed to initiate provisional attachment
proceedings under the said section is no more res integra. In
Radhakrishan Industries’s case (4 supra), the Hon’ble Apex Court
after considering the decisions of different High Courts including
the decision of the High Court of Gujarat in Valerius Industries’s
32
case (2 supra), has laid down the following guidelines to be followed
by the concerned authority for taking up of provisional attachment
proceedings u/s 83.
72. (iv) The power to order a provisional attachment of the
property of the taxable person including a bank account is draconian in
nature and the conditions which are prescribed by the statute for a
valid exercise of the power must be strictly fulfilled;
(v) The exercise of the power for ordering a provisional
attachment must be preceded by the formation of an opinion by the
Commissioner that it is necessary so to do for the purpose of protecting
the interest of the government revenue. Before ordering a provisional
attachment the Commissioner must form an opinion on the basis of
tangible material that the assessee is likely to defeat the demand, if
any, and that therefore, it is necessary so to do for the purpose of
protecting the interest of the government revenue.
(vi) The expression “necessary so to do for protecting the
government revenue” implicates that the interests of the government
revenue cannot be protected without ordering a provisional attachment;
(vii) The formation of an opinion by the Commissioner
under Section 83(1) must be based on tangible material bearing on the
necessity of ordering a provisional attachment for the purpose of
protecting the interest of the government revenue.”
It has now to be seen whether in the instant case the above
guidelines have been scrupulously followed or not.
22. The 2
nd
respondent on obtaining authorisation dated
01.11.2022 issued U/s 67(1) by the 3
rd
respondent, inspected the
business premises of the petitioner on 03.11.2022 in the presence of
two independent mediators and noticed the following grave and
incriminating facts relating to the business affairs of the petitioner
33
and mentioned in the ‘intimation of tax’ vide Form GST DRC-01A,
dated 08.11.2022 served on the petitioner.
i. During inspection of the premises of the petitioner, the 2
nd
respondent and the mediators found that the proprietor GM
Sahabuddin was not doing business and in his name one
Mohammad Jaffar and his Mohammad Saif were doing business
and they are not related to the registered proprietor. The enquiry
of Sahabuddin revealed he is only a name lender. On enquiry,
Mohammad Jaffar and Saif confessed that they were doing
business and they were buying purchase-invoices from
Tamilnadu parties for claiming ITC without physical receipt of
goods meaning thereby, the GST registration was obtained with a
malafide intention to evade output tax by claiming ITC through
fake invoices and e-Way bills without physical receipt of goods.
ii. The enquiry revealed no physical stock was available at the
business premises of the petitioner.
iii. As seen from purchase and sales details of the petitioner they
revealed that purchases were made from 02.04.2022 to
21.04.2022 worth Rs.5,66,769/- (6583 Kgs only) but in 11
transactions sales were shown to be made worth Rs.41,59,473/-
(95,843 Kgs only). As such purchases and sales are irregular.
iv. The petitioner showed e-Way bills upto 30 tones of goods for
light goods vehicles (SGV) but the vehicle’s capacity was upto 7
tones only.
v. The toll plaza details of vehicles movements were verified to
compare the way bills produced by the petitioner which were
utilized for purchases and sales. Verification of the same and
verification of e-Way bill portal revealed that not even a single
vehicle passed through any of the toll gates while moving from
Tamilnadu to Chittoor i.e., the place of delivery. It revealed that
the petitioner showed as if goods were purchased from different
places in tamilnadu. However, the goods were supplied neither
34
from Tamilnadu nor from Chittoor i.e., his business place on the
other hand the outward e-Way bill showed the petitioner made
supplies from various places i.e., Allagadda, Anantapur,
Atmakur, Banaganapalli, Bapatla, Chandragiri, Darsi,
Dharmavaram, Gutti, Guntakal , Kadiri, Kadapa, Khammam etc.
It indicates that the petitioner purchased from unregistered
persons and supplied to the recipients without paying tax and
claimed fake ITC by showing purchases from Tamilnadu.
vi. While the 2
nd
respondent was conducting the inspection at the
time petitioner transferred an amount of Rs.15 lakhs from
petitioner’s account (Axis Bank, Chittoor A/c.No.9210200546-
49987) to the Account of Bannari Ganesh.
23. On the strength of above grave facts, the 2
nd
respondent
obtained authorization dated 03.11.2022 from the Chief
Commissioner and issued the provisional attachment proceedings.
Subsequently, he issued intimation of tax in Form GST DRC-01A,
dated 08.11.2022 incorporating the above facts. However, it appears
so far the petitioner has not submitted any explanation or objections
against the said intimation. In the writ petition, the petitioner simply
denied the allegations without submitting any clarification against
the allegations that G.M. Shaik Samiuddin is only a name lender but
the business is conducted by Mohammad Jaffar and his son Saif and
that the petitioner transferred 15 lakhs from his account to another
account during the inspection and with regard to other allegations.
35
Though all the aforesaid aspects have to be decided after enquiry,
still, prima facie they project grave and suspicious facts regarding
the business affairs of the petitioner. Most importantly he was not
conducting business at his official address and he was only a name
lender for Mohammad Jaffar and his son Saif and he was obtaining
bogus invoices from Tamilnadu without receiving the goods
physically, which speaks volumes of the dubious nature of
petitioner’s business affairs. Considering these facts, it appears the
2
nd
respondent came to the opinion that unless his financial resources
and bank account are attached, it would be difficult to protect the
Government revenue. Therefore, we do not find any illegality or
irregularity in the attachment orders dated 03
rd
and 04
th
of
November, 2022 of the 2
nd
respondent.
Thus, on a conspectus of facts and law, we find no merits in
the writ petition.
24. Accordingly, the writ petition is dismissed with a liberty to
the petitioner to file his objections against the provisional attachment
orders dated 03.11.2022 issued against respondents 4 to 10 and 14
in terms of Rule 159(5) of CGST Rules, 2017 within two weeks
36
from the date of receipt of a copy of this order, if already such
objections were not filed and thereupon the 2
nd
respondent shall
consider such objections and pass an appropriate order within one
week in accordance with governing law and rules and communicate
to the petitioner. No costs.
As a sequel, interlocutory applications, pending if any shall
stand closed.
_________________________
U. DURGA PRASAD RAO, J
__________________________
T. MALLIKARJUNA RAO, J
28.08.2023
krk
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