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Recently Section 83 of the CGST Act, 2017 was amended in order to widen and raise the Commissioners’ power to provisionally attach the property in the interest of government revenue. Almost one month after that amendment, the Supreme Court made a judgement laying down four-part test to check the aforementioned power of the commissioner. In this article, we shall analyse provisional attachment under GST and examine the amendment with the Supreme Court ruling.
Table of Contents
An order of provisional attachment under Section 83 of the CGST Act, 2017 could be passed by the commissioner at the time when proceedings were pending under the following sections:
Hence a proceeding had to be pending under any of these sections in order to provisionally attach property.
Another condition for provisional attachment under GST was the formation of opinion by the commissioner that the attachment is needed for protecting the interest of government revenue. It was again preconditioned by the necessity of choosing this action and so to do.
Therefore when these conditions were met, then only the property of the taxpayer could be attached. Such order of attachment had to be in written form, and property such as bank account could be attached.
Recently the finance act amended and substituted section 83(1) with a new section. Such substitution means:
In the case of Radha Krishan Industries vs. State of Himachal Pradesh and Ors.
The Supreme Court, while delivering a judgement in the case mentioned above, laid down four-part test to check the aforementioned power of the commissioner to attach the property provisionally in the interest of government revenue.
The four-part test includes the following:
Lets’ understand this one by one:
This requires the commissioner to form an opinion, and the opinion must be before passing an order of provisional attachment under GST. The Commissioners’ opinion should be based upon the tangible material. Further, such opinion should reflect that it’s necessary to attach the property. Such order for attachment should be in writing.
Under this, the commissioner must be content that there is an approximate and live nexus between the provisional attachment and the objective of protecting the interest of govt. revenue.
The commissioner should be satisfied that the government’s revenue can only be protected by provisional attachment and that it is not being done as it is expedient and is not a pre-emptive strike on the property.
This test scrutinizes the existence of an approximate or a live nexus link between the requirement of attachment and the purpose which it seeks to attain; attachment nature and extent vis-a-vis purpose which it seeks to attain.
Applying the Supreme Court’s 4 part test when-
Will show that the commissioner has a considerable burden to discharge before provisionally attaching property. The amendment was made with a view to generalize the powers of provisional attachment and use it more often however the ruling of the apex court in this regard makes it an exception as opposed to a rule.
It seems that attachment of property of other persons is intentional, but due to the four-part test laid down by the apex court, now, unless the commissioner is fully confident, the order of provisional attachment under GST can’t be made.
This ruling of the Supreme Court is a welcome move for the taxpayers as strict adherence will have to be ensured before an order in respect of provisional attachment under GST is made. The ruling has definitely kept a check on the power of the commissioner as compared with previously.
Read our article:Late Fee under CGST Act, 2017 with the Latest Amendments
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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