Kriti Agrawal
The Supreme Court on Tuesday described the power of commissioners under the GST law to temporarily attach assesses properties and bank accounts as “draconian”, ordering that they obey the rule book and issue reasoned orders while exercising such power.
While quashing the provisional attachment order against Radhakrishnan Industries in Himachal Pradesh, a bench of Justices D Y Chandrachud and M R Shah said, “The power to order provisional attachment of taxable person’s property, including a bank account, is draconian in nature, and the conditions prescribed by the statute for a valid exercise of the power must be strictly fulfilled.”
The bench said “The commissioner’s exercise of the power to order a provisional attachment must be accompanied by the formation of an opinion by the commissioner that it is necessary to protect government revenue. Before ordering a provisional attachment, the commissioner must determine, based on tangible material, that the assesses is likely to defeat the demand, if any, and that, as a result, it is necessary to do so in order to protect government revenue.”
The court further added that “the expression necessary so to do for protecting government revenue’ implies that the interests of government revenue cannot be protected without ordering a provisional attachment; the commissioner’s formation of an opinion under Section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting government revenue.”
According to GST law, an individual whose property is attached has two procedural safeguards:
- The right to file complaints on the grounds that the property is or is not liable to attachment, and
- The right to be heard.
The bench said in quashing the attachment order that “there has been a violation of Rule 159(5)’s mandatory provision, and the commissioner was clearly mistaken in law in concluding that he had discretion whether or not to offer an opportunity to be heard,”
The court held that the commissioner was required to deal with objections to the attachment by issuing a reasoned order that must be conveyed to the taxable person whose property was attached, and that an aggrieved person may appeal to the high court if the attachment order was improper.
The Supreme Court stated in the case at hand, “While ordering a provisional attachment under Section 83, the joint commissioner was acting as a delegate of the commissioner pursuant to the delegation effected under Section 5(3), and there was no right of appeal against the provisional attachment order under Section 107. (1). As a result, the writ petition challenging the provisional attachment order before the high court under Article 226 of the Constitution was maintainable.”