Straight away proceedings u/s 83 to provisionally attach any property including bank accounts of a taxable person merely on the ground of pendency of proceedings under section 67 is not justified and held as arbitrary.
Section 83 of the CGST Act, 2017—Provisional Attachment of Bank Accounts – The petitioner prayed for quashing of order dated 18th/19th November, 2020 provisionally attaching the bank accounts. The petitioner submitted that the respondent initiated investigation with regard to classification of the goods and issued summons on 21st September, 2020. But on 18th/19th November, 2020 attached his bank accounts under section 83 of the Act. He filed objection before respondent and he was told that provisional attachment would not be lifted. The respondent submitted that because of misclassification of the products, it has resulted in short payment of tax to the tune of approximately Rs. 33 crores during the period from December, 2017 to February, 2020. The court observed that because there is a proceeding under section 67 would not mean that recourse to such a drastic power as under section 83 would be an automatic consequence, more so when petitioner has cooperated with the investigation. Further, by use of the word “may” in sub-section (1) of section 83 Parliament has made it quite clear that exercise of such a power is discretionary.
Held that:- The Hon’ble High Court stayed the impugned order dated 18th/ 19th November, 2020 and directed withdrawal of the provisional attachment of the bank accounts of the petitioner. The petitioner shall furnish an undertaking before the Court by way of affidavit that it shall not alienate its land, building, plant and machinery during pendency of the present proceeding. Listed to 9th March, 2021 for final hearing.