The Hon’ble Bombay High Court vide its order dated 28.02.2022 in the matter of Originative Trading Private Limited Vs. Union of India & Others in Writ Petition No. 3786 of 2021 directed the Commissioner to provide a certified copy of reasons/opinion formed by it for provisionally attaching the bank accounts of the petitioner under Section 83 of the CGST Act read with rule 159 of the CGST rules.

The Petitioner preferred the present writ petition before the Hon’ble High Court praying for declaring the circular dated 23 February 2021 is ultra vires the provision of CGST Act, 2017 or to read down the aforesaid circular to make the recording of reasons of attachment mandatory in Form DRC- 22 issued in terms of Rule 159 of the CGST rules.  The petitioner also prayed for quashing and setting aside the impugned freezing orders dated 7^th December 2021 issued by the respondents for attaching its bank accounts.

Facts: –

• The petitioner purchased the goods locally from wholesale traders which are consolidated at the level of whole sale trader and then are dispatched to the warehouse of the logistics, from where the goods are sent to CFS terminals and are released from export only after due verification by the custom officers.
• That on 18^th February 2021 an investigation was initiated against the petitioner by the respondents and the summons were served during the search on the same day.
• Thereafter on the basis of investigation and in view of circular dated 23 February, the bank accounts of the petitioner were attached/froze by the respondents by an attachment order dated 7^th December 2021.

Petitioner Pleas: –

• It was submitted on behalf of the petitioner that the attachment order under Section 83 of the CGST Act, has to be in writing and to be issued in FORM GST DRC -22 as prescribed under rule 159(1) of the CGST rules.
• The impugned letter of provisional attachment was not addressed to the petitioner but to the bank manager with a copy of the same to the petitioner, thus the attachment order is not in compliance with Section 83 read with rule 159 of the CGST rules
• The Petitioner referring to the aforesaid circular dated 23^rd February 2021 and relying on decision of Hon’ble Supreme Court in Radha Krishan Industries vs. State of Himachal Pradesh, 2021 (48) G.S.T.L. 113(S.C.), submitted that unless opinion formed by Commissioner for provisional attachment is not communicated to the petitioner, it would be able to raise any objection and merely recording the opinion by Commissioner in file would not amount to order of provisional attachment under Section 83 of the CGST Act.
• The petitioner further relying on Bachhittar Singh vs. State of Punjab and Another, 1962 Supp (3) SCR 713, submitted that recording the opinion formed for provisional attachment in the file and not communicating to the petitioner would not partake the character of the order.
• Lastly it was submitted that the petitioner has challenged the validity of aforesaid circular dated 23^rd February 2021, the petition is not required to avail the alternate remedy available against the impugned order of provisional attachment.

Respondents Pleas: –

• It was contended on the behalf of the respondents that the impugned circular dated 23^rd February 2021 has been issued in compliance to the principle laid down by the Hon’ble Supreme Court in Radha Krishan Industries, thus validity of the circular cannot be challenged.
• That there is remedy of appeal against the impugned order of provisional attachment under Section 83 and the petitioner instead of raising an objection against the aforesaid order chose to file the present writ, thus the writ shall not be entertained.
• It was further submitted that the petitioner company is being run by various dummy persons and the petitioner has admitted to its offence during appearance in respect of the summons issued.
• If the opinion formed by Commissioner would have been issued to the petitioner, it would withdraw the amount lying in its bank accounts.

Held: –

• The Hon’ble High Court after considering the submissions from the both sides and perusal of Section 83 before and after amendment dated 28.03.2021, observed that the unamended provision of Section 83 was applicable at the time of issuance of the impugned order of provisional attachment.
• In this case the proceedings under Section 67 of the Act were pending against the petitioner and if the Commissioner was of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary to do so, he may, by order in writing attach provisionally any property including bank account belonging to the taxable person.
• That rule 159 provides for modes and manner in which the Commissioner can exercise its powers under Section 83 of the CGST and under this rule the Commissioner is required to attach any property by issuing order in FORM GST DRC – 22, mentioning the details of property or bank accounts attached.
• The Hon’ble High Court observing as above, found that it is quite evident that the copy of attachment order in FORM GST DRC 22 has to be communicated to the party with which the assets of the assesee are lying, thus the contention raised on behalf of the petitioner that the attachment order ought to have been addressed to the petitioner at first instance is not acceptable however the Hon’ble High court conceded with the submissions made on the behalf of revenue.
• It was further observed that under rule 159 (6) any person whose property has been attached may file an objection within seven to the effect the property attached was or is not liable to attachment and the Commissioner may after affording a opportunity of being heard release the said property in FORM GST DRC 23, upon being satisfied that the property is no longer liable for attachment.
• That as per rule 159 read with circular 23^rd February 2021 would clear indicate that while exercising the power of provisional attachment, the Commissioner has to form an opinion with due diligence carefully considering the facts of the case and record the same on file, however the power of provisional attachment must not be exercised in a routine/mechanical manner.
• Thereafter the Hon’ble High Court referring to the decision on Hon’ble Supreme Court in Radha Krishan Industries vs. State of Himachal Pradesh, 2021 (48) G.S.T.L. 113(S.C.), observed that the Hon’ble Supreme Court has also dealt with rule 159 (5) providing the right to the assessee to raise objections and the Commissioner who hears the objections must pass a reasoned order either accepting or rejecting the objections.
• That Section 83 of CGST Act read with rule 159, very clearly indicate the remedy to raise objections can be availed effectively only if the petitioner knows the opinion or reasons formed by the Commissioner before exercising the power of provisional attachment under Section 83.
• Lastly the Hon’ble High Court after perusal of Section 83 read with rule 159 at length as shown above, held that the petitioner would be entitled to the copy of the opinion formed by the Commissioner before filing the objections.

The Hon’ble High Court with the above findings directed the respondents to furnish a certified copy of the opinion/reason formed by the Commissioner under Section 83 read with rule 159 within one week and the petitioner would be allowed to raise objections within one week of the receipt of Commissioner’s opinion. The respondents shall grant a proper opportunity of being heard to the petitioner before passing an order.