Kerala HC stayed order of provisional attachment as power exercised without application of mind

Case Details: Kerala Communicators Cable Ltd. v. Commissioner of Central Tax and Central Excise - [2021] 133 taxmann.com 210 (Kerala)

Judiciary and Counsel Details

• • Bechu Kurian Thomas, J.
  • Suresh Kumar P.P. for the Petitioner. 
  • Sreelal N. Warriar, Adv. for the Respondent.

Facts of the Case

The Competent Authority invoking powers under section 83 provisionally attached the bank accounts of petitioner. The petitioner challenged the order of the provisional attachments of property.

High Court Held

The honorable High Court observed that in the decision in Radha Krishan Industries v. State of Himachal Pradesh [2021] 127 taxmann.com 26, the Hon’ble Supreme Court had occasion to consider the exercise of powers under section 83 of the CGST Act and after elaborate consideration, laid down the manner and mode in which the powers are to be exercised.

The Condition No. 4, 5, 6 and 7 which would be relevant are:

(iv) The power of order a provisional attachment of the property of the taxable person including a bank account is draconian in nature and the conditions which are prescribed by the status for a valid exercise of the power must be strictly fulfilled;

(v) The exercise of the power for ordering a provisional attachment must be preceded by the formation of an opinion by the Commissioner that it is necessary so to do for the purpose of protecting the interest of the government revenue. Before ordering a provisional attachment the Commissioner must form an opinion on the basis of tangible material that the Assessee is likely to defeat the demand, if any, and that therefore, it is necessary so to do for the purpose of protecting the interest of the government revenue.

(vi) The expression “necessary so to do for protecting the government revenue” implicates that the interests of the government revenue cannot be protected without ordering a provisional attachment;

(vii) The formation of an opinion by the Commissioner under section 83(1) must be based on tangible material bearing on the necessity of ordering a provisional attachment for the purpose of protecting the interest of the government revenue”

It was observed after analyzing order of provisional attachment that there was non-application of mind to the purport of power exercisable by the authority in the instant case and none of stipulations specified in above judgment were evident in order impugned. Thus, impugned order required to be stayed for a period of eight weeks.

Case Review

• • Radha Krishan Industries v. State of Himachal Pradesh [2021] 127 taxmann.com 26/86 GST 665 (SC) (para 8) followed.

List of Cases Referred to

• • Radha Krishan Industries v. State of Himachal Pradesh [2021] 127 taxmann.com 26/86 GST 665 (SC) (para 7).