NEW DELHI: The Supreme Court on Tuesday termed the power of commissioners under the GST law to provisionally attach properties and bank accounts of assessees as “draconian” and ordered that they have to follow the rule book and pass reasoned orders while exercising such power.
"The power to order provisional attachment of property of the taxable person, including a bank account, is draconian in nature and the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled," a bench of Justices D Y Chandrachud and M R Shah said while quashing the provisional attachment order passed
against Radhakrishnan Industries located in Himachal Pradesh.
"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 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 government revenue," the bench said.
In the case in hand, the SC said, "The joint commissioner, while ordering a provisional attachment under Section 83, was acting as a delegate of the commissioner in pursuance of the delegation effected under Section 5(3) and an appeal against the order of provisional attachment was not available under Section 107(1). Therefore, the writ petition before the high court under Article 226 of the Constitution challenging the order of provisional attachment was maintainable."