Can taxable person’s family members banks account be provisionally attached under Section 83?
According to Section 83(1), Where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that to protect 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 in such manner as may be prescribed.
Therefore, during the pendency of any proceedings under Sections 62, 63, 64, 67, 73 and 74, the Commissioner can provisionally attach any property including the bank account belonging to the taxable person. For this purpose, the Commissioner has to form an opinion that it is necessary to do so for protecting the interest of the Government Revenue. These steps have to be taken in such manner as prescribed.
Let us refer to the case of Dharmesh Gandhi vs Assistant Commissioner (Anti Evasion) CGST and Central Excise, where the petitioner sought quashing of communication issued by the respondent to the Branch Manager, Kotak Mahindra Bank Ltd for provisional attachment of property under section 83 of the CGST Act.
Facts of the Case:
- Principal grievance of the petitioner was that the attachment of bank accounts did not only belong to him but also of to his family members
- Out of the nine bank accounts which were attached by the respondent, only 3 accounts belonged to the petitioner whereas the other accounts belong to the family members, namely his mother, wife and son
Reference by HC to the case of Siddhart Mandavia Vs. Union of India
- In the said case, HC had examined a similar issue relating to attachment of bank account of not only the taxable person but also of his family members.
- To enable invocation of section 83, first and foremost there must be pendency of any proceeding either under section 62 or under section 63 or under section 64 or under section 67 or under section 73 or under section 74 of the CGST Act.
- Thereafter, the Commissioner must form an opinion that for the purpose of protecting the interest of the government revenue, it was necessary to attach any property provisionally, including bank account belonging to the taxable person.
- On satisfaction of the above two conditions, the Commissioner must pass an order in writing provisionally attaching any property of the taxable person including bank accounts.
- Because of the very nature of temporary attachment, sub-section (2) made it abundantly clear that such provisional attachment shall not be in excess of 1 year from the date of the order and shall cease to have effect after the expiry of 1 year from the date of the order.
- As per rule 159(1), when the Commissioner decides to attach any property including bank account in terms of section 83, he shall pass an order in Form GST DRC 22 mentioning therein the details of property which is attached.
- Sub-rule (5) says that any person whose property is attached may, within 7 days of attachment, file an objection to such provisional attachment and if such objection is filed, Commissioner may release the said property after affording an opportunity of being heard to the person filing the objection.
- As per sub-rule (6), the Commissioner may, upon satisfaction that the property was or is no longer liable for attachment, release such property.
- From a careful analysis of the provisions what was noted was that the property including the bank account liable to or which has been provisionally attached must belong to the taxable person.
- ‘Taxable person’ has been defined in section 2(107) of the CGST Act to mean a person who is registered or is liable to be registered under sections 22 or 24 of the CGST Act.
- In that context, HC had held that bank account of only the taxable person could be provisionally attached under section 83 of the CGST Act and therefore the provisional attachment of bank account of the family members was set aside.
- As far as the bank account of the taxable person in Siddharth Mandavia (supra) was concerned, HC took note of the provisions contained in sub rules (5) and (6) of Rule 159 and relegated the taxable person to the forum of the Commissioner to take a decision regarding release of the bank account of the taxable person provisionally attached.
Order passed by the HC in the current case
After referring to the above case and on due consideration, HC passed the following order:
- The bank accounts belonging to the family members would be released from provisional attachment.
- In so far, the bank accounts of the petitioner were concerned, petitioner may file objection before the Commissioner i.e., respondent within 7 days.
- If such objection is filed, respondent shall afford an opportunity of hearing to the petitioner and thereafter pass an appropriate order in accordance with law within 3 weeks from the date of filing of objection.
In simple words, taxable person’s family members banks account cannot be provisionally attached in Section 83