GST: Section 83 of the CGST Act

Section 83 of the CGST Act empowers the Commissioner to attach provisionally any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122. But such powers must be invoked judiciously and according to the law.

The power to order a provisional attachment under GST is entrusted during the pendency of proceedings under any one of six specified provisions: Sections 62, 63, 64, 67, 73 or 74. In other words, it is when a proceeding under any of these provisions is pending that a provisional attachment can be ordered.

The new amendment reads as “any proceeding under Chapter XII, Chapter XIV or Chapter XV” under GST has been inserted in the place of any proceeding under sections 62, 63, 64, 67, 73, or 74

The power to order a provisional attachment has been vested by the legislature in the Commissioner.

Before exercising the power, the Commissioner must be “of the opinion that for the purpose of protecting the interest of the government revenue, it is necessary so to do”.

The order for attachment must be in writing The provisional attachment which is contemplated is of any property including a bank account belonging to the taxable person; and

The new amendment reads as “or any person specified in sub-section (1A) of section 122” has been inserted after the words belonging to the taxable person.

The manner in which a provisional attachment is levied must be specified in the rules made pursuant to the provisions of the statute.

At present, pending proceedings are required under any of the six sections i.e. 62, 63, 64, 67, 73, or 74. After implementation of the amendment pending proceedings shall be required under any of the twenty-four sections i.e. Chapter XII (sections 59 to 64), Chapter XIV (sections 67 to 72) and Chapter XV (sections 73 to 84).

The next amendment regarding provisional attachment of any property including a bank account maybe belonging to the person section specified under section 122(1A) of the CGST Act in addition to the taxable person.

Section 122(1A) states that “Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose an instance such transaction is conducted shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.”

The person other than the taxable person whose instance any of the transactions stated under clauses (i), (ii), (vii) or clause (ix) of section 122(1) is conducted and such person retains the benefit happened by virtue of the said transactions.

Clause (i) – supplies any goods or services or both without the issue of any invoice or issues an incorrect or false invoice with regard to any such supply.
Clause (ii) – issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder.
Clause (vii) – takes or utilizes input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder.
Clause (ix) – takes or distributes input tax credit in contravention of section 20, or the rules made thereunder.

Plethora of cases have been available and decided by various Hon’ble Courts of the land against the GST Authorities because the relevant authority invoked the proceedings under section 83 very casually and not following the provisions enumerated under the law.

The CBIC also issued guidelines in this regard vide CIRCULAR NO. CBEC20/16/05/2021-GST/359, DATED 23-2-2021.

They said that the power of provisional attachment must not be exercised in a routine/mechanical manner and careful examination of all the facts of the case is important to determine whether the case(s) is fit for exercising power under section 83.

The collective evidence based on the proceedings/enquiry conducted in the case must indicate that prima facie a case has been made out against the taxpayer before going ahead with any provisional attachment.

The remedy of attachment being by its very nature, extraordinary has to be resorted to with utmost circumspection and with maximum care and caution.