HIGH COURT OF KERALA: Provisional attachment order under Section 83 of the Central Goods and Services Tax (CGST) Act, 2017, Cannot extend beyond one year

Provisional attachment order under Section 83 of the CGST Act, 2017, Cannot extend beyond one year

THE HIGH COURT OF KERELA

The Additional Director General
vs
Ali K

Date of Judgment: 30 January 2025
WA No. 63 of 2025

Brief Facts:

Relevant Section: – Section 83 of the CGST Act, 2017

The petitioners are the partners of ‘SR Traders’ dealing primarily in the trade of scrap. On 4.5.2023, a notice to show cause was issued in terms of Section 74 of the Central Goods and Services Tax Act, 2017 (CGST Act, for short). Immediately thereof, the appellants issued a notice of provisional attachment over immovable properties as well as freezing of Bank accounts. The said action of the appellants were questioned before this Court in WP(C) No.12519/2023, which resulted in dismissal of Writ Petition by judgment. On appeal preferred against judgment, a Division Bench of this Court in W.A.No.1250/2023 allowed the writ petitioner to operate two accounts while confirming the order of attachment over the other accounts. Thereafter, after a period of one year, the first appellant issued a fresh order under Section 83(1) of the CGST Act and issued an intimation to the Sub Registrar’s office intimating the order of attachment.  Challenging re- issuance of the order of attachment, the petitioners approached the writ court. On consideration of the writ petition, the learned Single Judge held that Section 83 of the CGST Act has to be construed strictly and the statute does not authorise the authorities to re-issue the order of attachment which has ceased to have operational on expiry of one year. While forming an opinion, the learned Single Judge followed the settled rule of interpretation of statutes.

The Division Bench dismissed the Revenue’s appeal and upheld the Single Judge’s finding that a provisional attachment order under Section 83 of the CGST Act, 2017 automatically lapses after one year and cannot be re-issued on the same set of facts. The Court held that permitting re-issuance would amount to supplying words into the statute, which is impermissible in tax law, and emphasized the need for strict interpretation of such provisions. The judgment also invoked Article 300A of the Constitution and the doctrine of eminent domain, reaffirming that citizens’ property rights cannot be indefinitely restrained without explicit statutory authority.

IMPORTANT PARAS

Para 7: Section 83 of the CGST Act reads as under:

“83. Provisional attachment to protect revenue in certain cases.—

(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of Section 122, in such manner as may be prescribed.

(2) Every such provisional attachment shall cease to have effect after the expiry of a period of one year from the date of the order made under sub-section (1).” Although Section 83 underwent an amendment by the Finance Act 2021, the provision of sub-Section (2) remained unamended. This shows that the Parliament intended to confer the validity on the order of attachment only for a period of one year from the date of issuance of the order. Hence, on expiry of a period of one year, the provisional attachment loses its efficacy and automatically pales into insignificance. We are not impressed by the argument of the learned counsel for the appellants that in order to protect the interest of the Revenue, it has to be construed as conferring power on the authorities to issue fresh orders of attachment. Accepting the argument of the learned counsel for the appellants would certainly amount to supplying words to the statute. It is in this context that we should consider the principles laid down by the Division Bench of the Gujarat High Court in Shrimati Priti W/o Anil Amrutlal Gandhi (supra). A reading of paragraph 13 of the decision of the Gujarat High Court shows that the Division bench held that though the order of attachment will expire within a period of one year from the date of issuance of the same, nothing prevents the authority from re-issuing the same, since to hold otherwise would be supplying words into the statute. 

Para 8. We are unable to persuade ourselves to concur with the views held by the co-ordinate bench of the Gujarat High Court in Shrimati Priti W/o Anil Amrutlal Gandhi (supra). In fact, in our considered view, adopting the interpretation placed by the Gujarat High Court, will amount to conferring the power on GST authorities to re-issue the order of attachment in respect of the same property over which the earlier order of provisional attachment ceased to have effect which is not intended by the legislature. Moreover, the same would amount to supplying words into the statute, which is impermissible under law. It is well settled in taxation laws, there cannot be any intendment in a taxing statute. Courts are required to interpret the words in a taxing statute strictly. Nothing can be read in and nothing can be read out of the statute. (Cape Brandy Syndicate v. Inland Revenue Commissioners [(1921) 1 K.B.64] – per Rowlatt J.)

Para 9: We must note that the view taken by us is also guided by the principles governing the doctrine of “eminent domain”. The doctrine of eminent domain will apply where the State tries to deprive its citizens of the right over the property without due process of law. The right of property is not merely confined to the rights over the immovable properties, but also over any materialistic matter. We must also remember that the right to hold property is a constitutional right which is protected under Article 300A of the Constitution of India. Therefore, it is all the more reason why the State should be cautious when dealing with the property rights of citizens.

Para 10: Keeping in mind the principles governing the doctrine of eminent domain, when we look into the statute, i.e. CGST/SGST Act, we do not find any enabling provision which permits the authorities to re- issue the order of attachment which had ceased to operate by operation of law. Normally, an attachment of property belonging to a
citizen is part of execution proceedings that follow an adjudication. A provision providing for provisional attachment before adjudication has, therefore, to be interpreted strictly being in the nature of an exception to the general rule, more so in a taxing statute. We are also equally not impressed with the argument of the learned counsel for the appellants that it is with a view to protect the interest of the Revenue that the interpretation sought to be placed by the Revenue has to be accepted. In our considered view, there are sufficient safeguards under the statute which would protect the interest of the Revenue which requires no elaboration. Suffice to say, it is not only through a provisional order of attachment that the interest of the Revenue is protected.

Para 11. We also further noticed that the learned Single Judge has extensively considered the position of law flowing out of the decision of the Hon’ble Supreme Court in Radha Krishna Industries v. State of Himachal Pradesh and Others [(2021) 6 SCC 771], in which the provision of Section 83 of the Himachal Pradesh GST Act was interpreted and was held that the provisional order of attachment ceases to have effect after a period of one year. We see no reason to take adifferent view than what is expressed by the learned Single Judge.

In the light of the principles discussed above, we are of the considered view that the appellants have not made out any case which requires us to call upon the respondents/writ petitioners on notice to answer the contentions in the appeal. The writ appeal thus lacks merits and accordingly, the same is dismissed. No Order as to costs.

Sd/-
DR.A.K.JAYASANKARAN NAMBIAR,
JUDGE

Sd/-
EASWARAN S.,
JUDGE