1. Home

SGST High Court Cases

GST - Sections 2(24), 3, 5 and 83 of the CGST Act, 2017 - Provisional attachment of bank account – Interpretation of term ‘the Commissioner’ in Section 83 of the CGST Act - exercise of extra-territorial jurisdictional power – Petitioner challenge the jurisdiction of Principal Commissioner, CGST, Meerut to attach petitioner’s bank account when the petitioner is registered as a taxable person in respect of its principal places of business at Sonipat, Haryana and Bulandshahar, Uttar Pradesh - petitioner claims that its place of business falls within the jurisdiction of Gautam Buddha Nagar Commissionerate and not the Meerut Commissionerate – Revenue contention that respondent no.1 had the jurisdiction to pass the attachment order as the petitioner had transferred fraudulent Input Tax Credit to M/s Best Crop Science Pvt Ltd., which was being investigated by Respondent no.1 i.e. Principal Commissioner, CGST, Meerut – HELD - Admittedly, the territorial jurisdiction of respondent no.1 (Principal Commissioner, CGST, Meerut) neither covers Kundli, Sonipat, Haryana nor extends to Bulandshahar, Uttar Pradesh - A plain reading of Section 83 of the CGST Act indicates that ‘the Commissioner’ can take an action under the said Section provided that the conditions enumerated in the said Section are fulfilled - the term ‘the Commissioner’ as used in Section 83 of the CGST Act would necessarily refer to the Commissioner who exercises jurisdiction under the CGST Act in respect of ‘the taxable person’ - Section 83 of the CGST Act must be read in harmony with Section 3 and Section 5 of the CGST Act and the Commissioner, whose territorial jurisdiction is confined by the Board to a particular territory, would not have the jurisdiction to discharge the functions under the CGST Act beyond its territorial jurisdiction. Thus, for the purposes of the CGST Act, the expression ‘the Commissioner’ must necessarily be read to be the Commissioner who is empowered to discharge the functions under the CGST Act. In the present case, it is conceded that Principal Commissioner, CGST, Meerut does not exercise jurisdiction in respect of territories where the petitioner’s principal place of business is located. Thus, respondent no.1 had no jurisdiction to pass the attachment order in respect of the petitioner as ‘the taxable person’ - It is necessary to bear in mind that attachment of a bank account would in effect result in the closure of the business of a taxpayer and has the propensity to cause irretrievable harm. The said drastic action is impermissible merely on the basis of suspicion and without any tangible material – the impugned attachment order is set aside, however, the authorities are not precluded from proceeding against the petitioner in accordance with law – writ petition is allowed - Section 122 of the CGST Act - Jurisdiction to pass orders in respect of other taxable persons who do not fall within the jurisdiction – HELD - The contention that respondent no.1 has the jurisdiction to attach the bank account of the petitioner as it was a person specified under Sub-section (1A) of Section 122 of the CGST Act is also unpersuasive - the opening sentence of Section 122(1) of the CGST Act also refers to a taxable person. Thus, the assets of a person falling under Sub-section (1A) of Section 122 of the CGST Act can be attached only by a Commissioner who exercises jurisdiction in respect of the said taxable person - Sub-section (1A) of Section 122 of the CGST Act is applicable to any person who retains the benefit of the transaction covered under Clauses (i), (ii), (vii) and (ix) of Section 122(1) of the CGST Act and at whose instance such transaction is conducted. There is no allegation that the petitioner has retained the benefit of any of the alleged transactions covered under any of the specified clauses of Section 122(1) of the CGST Act. On the contrary, the allegation is that the petitioner has facilitated M/s Best Crop Science LLP / M/s Best Crop Science Pvt. Ltd. to avail fraudulent ITC. More importantly, there is no allegation that any of the allegedly offending transactions were conducted at the instance of the petitioner. On the contrary, it is alleged that the petitioner company was set up by the promoters of M/s Best Crop Science Pvt. Ltd. for availing fraudulent ITC - The impugned order is, thus, liable to be set aside on this ground alone - Validity of exercise of powers under Section 83 – HELD - The language of Section 83 of the CGST Act requires the Commissioner to form an opinion that it is necessary to attach the property of a taxable person. However, the said opinion is required to be based on relevant facts and not merely on grounds of suspicion. It is difficult to imagine that a company would survive if its bank accounts are frozen for a protracted period of time. Thus, the nature of the power makes it necessary that the same is exercised with due caution and only when it is necessary - Mere suspicion that the petitioner is a dummy company, which is founded on the basis of statements that one of the directors of the petitioner company was, or is an employee of M/s Best Agrolife Group, and is in complete disregard of the corporate documents of the petitioner, would clearly fall foul of the requirement of forming an opinion, as it does not meet the standards required for taking an action under Section 83 of the CGST Act.
Download File
show more Judgements  

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

Handling GST Investigations...
CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?