PROEX FASHION PRIVATE LIMITED  Vs GOVERNMENT OF INDIA & ORS.

W.P.(C) 11245/2020 Page 1 of 12
$~21
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision : 6th January , 2021
+ W.P.(C) 11245/2020 & CM APPL. 35053/2020

PROEX FASHION PRIVATE LIMITED ….. Petitioner
Through: Mr.Govind Rishi, Advocate

versus

GOVERNMENT OF INDIA & ORS. ….. Respondents
Through: Mr.Harpreet Singh, Adv . for R -2
Mr.S.K.Tanwar , Adv. for R-3

CORAM:
HON’BLE MR. JUSTICE PRATEEK JALAN

PRATEEK JALAN, J. (ORAL)

%
The proceedings in the matter have been conducted through
video conferencing.
1. By way of the pres ent pet ition, the petitioner seeks to challenge
a communication dated 25.11.2020/01.12.2020 (Annexure -9 to the
writ petition), by which the bank account of the pet itioner in the
respondent no.3 -Bank (“the Bank”) has been attached by respondent
no. 2, purpo rtedly under Section 83 of the Central Go ods and Services
Tax Act, 2017 (“the Act”) .
2. The contention of Mr. Govind Rishi, learned counsel for the
petitioner, is that the respondent authorities have take n action against
the petitioner under Section 83 of t he Act, pursuant to proceedings
2021:DHC:39

W.P.(C) 11245/2020 Page 2 of 12
initiated under Section 71 of the Act, whereas Section 83 of the Act,
on its terms, cannot be invoked in such a situation.
3. By an order passed on 30.12.2020, notice was issued to the
respondents and they were directed to fi le a counter affidavit.
Although time was extended for the said purpose yesterday, Mr.
Harpreet Singh, learned counsel for respondent no.2, states that the
counter affidavit has been filed only this morning and is thus not on
record. However , a copy of th e counter affidavit has been supplied to
learned counsel for the petitioner and has also been made available to
me electronically . Mr. Singh is directed to ensure that the counter
affidavit is brought on record during the course of the day.
4. The relevant provisions of the Act are set out below:
―67. Power of inspection, search and seizure – (1)
Where the proper officer, not below the rank of Joint
Commissioner, has reasons to believe that ––
(a) a taxable person has suppressed any
transaction relating to supply of goods or services or
both or the stock of goods in hand, or has claimed input
tax credit in excess of his entitlement under this Act or
has indulged in contravention of any of the provisions of
this Act or the rules made thereunder to evade tax under
this Act; or
(b) any person engaged in the business of
transporting goods or an owner or operator of a
warehouse or a godown or any other place is keeping
goods which have escaped payment of tax or has kept his
accounts or goods in such a manner as is likely to cause
evasion of tax payable under this Act,
he may authorise in writing any other officer of central
tax to inspect any places of business of the taxable person
or the persons engaged in the business of transporting
2021:DHC:39

W.P.(C) 11245/2020 Page 3 of 12
goods or the owner or the operator of warehouse or
godown or any other place.
(2) Where the proper officer, not below the rank of Joint
Commissioner, either pursuant to an inspection carried
out under sub -section (1) or otherwise, has rea sons to
believe that any goods liable to confiscation or any
documents or books or things, which in his opinion shall
be useful for or relevant to any proceedings under this
Act, are secreted in any place, he may authorise in
writing any other officer of c entral tax to search and
seize or may himself search and seize such goods,
documents or books or things:
Provided that where it is not practicable to seize any such
goods, the proper officer, or any officer authorised by
him, may serve on the owner or the custodian of the
goods an order that he shall not remove, part with, or
otherwise deal with the goods except with the previous
permission of such officer:
Provided further that the documents or books or things so
seized shall be retained by such officer only for so long as
may be necessary for their examination and for any
inquiry or proceedings under this Act.
(3) The documents, books or things referred to in sub –
section (2) or any other documents, books or things
produced by a taxable person or any oth er person, which
have not been relied upon for the issue of notice under
this Act or the rules made thereunder, shall be returned
to such person within a period not exceeding thirty days
of the issue of the said notice.
(4) The officer authorised under su b-section (2) shall
have the power to seal or break open the door of any
premises or to break open any almirah, electronic
devices, box, receptacle in which any goods, accounts,
registers or documents of the person are suspected to be
concealed, where acce ss to such premises, almirah,
electronic devices, box or receptacle is denied.
(5) The person from whose custody any documents are
seized under sub -section (2) shall be entitled to make
2021:DHC:39

W.P.(C) 11245/2020 Page 4 of 12
copies thereof or take extracts therefrom in the presence
of an autho rised officer at such place and time as such
officer may indicate in this behalf except where making
such copies or taking such extracts may, in the opinion of
the proper officer, prejudicially affect the investigation.
(6) The goods so seized under sub -section (2) shall be
released, on a provisional basis, upon execution of a
bond and furnishing of a security, in such manner and of
such quantum, respectively, as may be prescribed or on
payment of applicable tax, interest and penalty payable,
as the case m ay be.
(7) Where any goods are seized under sub -section (2) and
no notice in respect thereof is given within six months of
the seizure of the goods, the goods shall be returned to
the person from whose possession they were seized:
Provided that the perio d of six months may, on sufficient
cause being shown, be extended by the proper officer for
a further period not exceeding six months.
(8) The Government may, having regard to the perishable
or hazardous nature of any goods, depreciation in the
value of t he goods with the passage of time, constraints of
storage space for the goods or any other relevant
considerations, by notification, specify the goods or class
of goods which shall, as soon as may be after its seizure
under sub -section (2), be disposed of by the proper
officer in such manner as may be prescribed.
(9) Where any goods, being goods specified under sub –
section (8), have been seized by a proper officer, or any
officer authorised by him under sub -section (2), he shall
prepare an inventory of suc h goods in such manner as
may be prescribed.
(10) The provisions of the Code of Criminal Procedure,
1973, relating to search and seizure, shall, so far as may
be, apply to search and seizure under this section subject
to the modification that sub -section (5) of section 165 of
the said Code shall have effect as if for the word
―Magistrate‖, wherever it occurs, the word
―Commissioner‖ were substituted.
2021:DHC:39

W.P.(C) 11245/2020 Page 5 of 12
(11) Where the proper officer has reasons to believe that
any person has evaded or is attempting to evade the
payment of any tax, he may, for reasons to be recorded in
writing, seize the accounts, registers or documents of
such person produced before him and shall grant a
receipt for the same, and shall retain the same for so long
as may be necessary in connec tion with any proceedings
under this Act or the rules made thereunder for
prosecution.
(12) The Commissioner or an officer authorised by him
may cause purchase of any goods or services or both by
any person authorised by him from the business premises
of any taxable person, to check the issue of tax invoices
or bills of supply by such taxable person, and on return of
goods so purchased by such officer, such taxable person
or any person in charge of the business premises shall
refund the amount so paid towa rds the goods after
cancelling any tax invoice or bill of supply issued
earlier. ‖

―71. Access to business premises – (1) Any officer under
this Act, authorised by the proper officer not below the
rank of Joint C ommissioner, shall have access to any
place of business of a registered person to inspect books
of account, documents, computers, computer programs,
computer software whether installed in a computer or
otherwise and such other things as he may require and
which may be available at such place, for the purposes of
carrying out any audit, scrutiny, verification and checks
as may be necessary to safeguard the interest of revenue.
(2) Every person in charge of place referred to in sub –
section (1) shall, on dem and, make available to the
officer authorised under sub -section (1) or the audit party
deputed by the proper officer or a cost accountant or
chartered accountant nominated under section 66 —
(i) such records as prepared or maintained by the
registered person a nd declared to the proper
officer in such manner as may be prescribed;
2021:DHC:39

W.P.(C) 11245/2020 Page 6 of 12
(ii) trial balance or its equivalent;
(iii) statements of annual financial accounts, duly
audited, wherever required;
(iv) cost audit report, if any, under section 148 of the
Companies Act, 2013;
(v) the income -tax audit report, if any, under section
44AB of the Income -tax Act, 1961; and
(vi) any other relevant record,
for the scrutiny by the officer or audit party or the
chartered accountant or cost accountant within a
period not exceeding fifteen workin g days from the
day when such demand is made, or such further
period as may be allowed by the said officer or the
audit party or the chartered accountant or cost
accountant. ‖
―83. Provisional attachment to protect revenue in
certain cases – (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 for the purpose of
protecting the interest of the G overnment 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.
(2) Every such provisional attachment shall cease to ha ve
effect after the expiry of a period of one year from the
date of the order made under sub -section (1). ‖
(Emphasis supplied.)

5. The communication dated 25.11.2020/01.12.2020 reads as
follows:
―F NO. 1 -26(225)GST/Adt -1/Gr -64/C-7/Proex/2020 -21
Dated: 25.11.2020

FORM GST DRC – 22
2021:DHC:39

W.P.(C) 11245/2020 Page 7 of 12
[See Rule 159(1)]

To
The Branch Manager,
Oriental Bank of Commerce,
B/1 Ground Floor, Abdul Aziz Road,
Karol Bagh, New Delhi 110005

Provisional attachment of property under section 83 of
CGST Act, 2017

It is to inform that M/S PROEX FASHION PRIVATE
LIMITED, 1125, 2nd Floor, Mukherjee Nagar Delhi –
110009 bearing PAN AADCR8078H is a registered
taxable person under CGST Act. Proceedings have been
launched against the aforesaid taxable person under
section 71 of the said Act to determine the tax or any
other amount due from the said person. As per
information available with the department, it has come to
my notice that the said person has an account in your
bank having account number 00124011000368.
In order to protect the interests of revenue and in
exerci se of the powers conferred under section 83 of the
Act and on approval of the competent authority, I Anand
Pal Singh Assistant Commissioner of Central Tax hereby
provisionally attach the aforesaid account.
No debit shall be allowed to be made from the sai d
account or any other account operated by the aforesaid
person on the said PAN without the prior permission of
this department.

(Anand Pal Singh)
Assistant Commissioner ‖
(Emphasis supplied.)
6. In the counter affidavit filed by respondent no.2, it has been
stated that proceed ings were initiated against the petitioner pursuant to
a communication from the Directorate General of Analytics and Risk
2021:DHC:39

W.P.(C) 11245/2020 Page 8 of 12
Management (DGARM). The petitioner was declared as a „risky
exporter‟, and an attempt was made to elicit certain information and
docu ments from the petitioner. However, according to respondent
No.2, several communications addressed to the petitioner at its
registered office were returned undelivered. Proceedings under
Section 71 of the Act were therefore initiated against the petitioner ,
and the attachment of the bank account under Section 83 of the Act is
pursuant to those proceedings.
7. Mr. Singh submits, relying upon the Standard Operating
Procedure dated 23.01.2020 (Annexure A -1 to the counter affidavit of
respondent no.2) , that the circumstances set out in the counter affidavit
would have justified exercise of power under Section 67 of the Act,
which is one of the provisions on the basis of which Section 83 of the
Act can be invoked. However, he concedes that no proceedings under
Section 67 of the Act were in fact taken against the petitioner, and the
only provision under which action was taken against the petitioner was
Section 71 of the Act.
8. Having considered the submissions of the parties, I am of the
view that the impu gned order cannot be sustained. It is clear from a
plain reading of Section 83 that action thereunder is predicated upon
pendency of proceedings under Sections 62, 63, 64, 67, 73 or 74 of the
Act. A Division Bench of the Bombay High Court, in Kaish Impex
Private Lim ited vs. Union of India & Ors. 2020 SCC OnLine Bom 125
has held as follows with regard to the scope of Section 83:
―13. Section 83 of the Act refers to the pendency of
proceeding under Section 62, 63, 64, 67, 73 and 74.
2021:DHC:39

W.P.(C) 11245/2020 Page 9 of 12
Section 63 deals with the assessment of unregistered
persons. Section 64 is regarding a summary assessment
in respect of certain special cases. Section 67 falls in
Chapter XIV and refers to the power of inspection, search
and seizure. Section 73 is in Chapter XV wherein it deals
with the det ermination of tax not paid or short paid or
erroneously refunded or wrongly availed, utilised for any
reason other than fraud or any willful mis -statement
made on suppression of facts. Section 70 confers power
on the proper officer to summon any person who se
attendance he considers necessary to give evidence or to
produce documents or any other thing in any inquiry.
Such inquiry is deemed to be a judicial proceeding under
Penal Code, 1860.
xxxx xxxx xxxx
16. The impugned order dated 22 October 2019 procee ds
on the assertion that proceedings have been launched
against the Petitioner under section 67 section 70 of the
Act. As far as section 67, i.e. search is concerned, it is an
uncontroverted position that no proceedings have been
initiated against the Peti tioner under section 67 of the
Act. On the date of provisional attachment of the bank
account, only a summons under of the Act was issued to
the Petitioner. Section 70 is not mentioned in Section 83
of the Act. No proceedings were pending against the
Petit ioner under section 62, 63, 64, 73 and 74 of the Act.
Thus the Petitioner contends that power under section 83
could not have been invoked against the Petitioner.
17. Primary defence of the Respondents is that even if
section 62, 63, 64, 67, 73 and 74 ment ioned in section 83
of the Act are not referable to the case of the Petitioner,
since a summons is issued to the Petitioner in pursuant to
the inquiry initiated against M/s. Maps Global under
section 67 of the Act, by the issuance of summons the
proceeding s get extended to the Petitioner also.
18. The analysis of section 83 of the Act will show that
such interpretation is not permissible and not
2021:DHC:39

W.P.(C) 11245/2020 Page 10 of 12
contemplated by the legislature. Section 83 read with
Rule 159(1), and the form GST DRC -22, lay down a
scheme as to how provisional attachment in certain cases
is to be levied. Section 83 though uses the phrase
‗pendency of any proceedings‘, the proceedings are
referable to section 62, 63, 64, 67, 73 and 74 of the Act
and none other. The bank account of the taxable p erson
can be attached against whom the proceedings under the
sections mentioned above are initiated. Section 83 does
not provide for an automatic extension to any other
taxable person from an inquiry specifically launched
against a taxable person under the se provisions. Section
83 read with section 159(2), and the form GST DRC -22
show that a proceeding has to be initiated against a
specific taxable person, an opinion has to be formed that
to protect the interest of Revenue an order of provisional
attachment is necessary. The format of the order, i.e. the
form GST DRC -22 also specifies the particulars of a
registered taxable person and which proceedings have
been launched against the aforesaid taxable person
indicating a nexus between the proceedings to be
initiated against a taxable person and provisional
attachment of bank account of such taxable person.
19. Power to provisionally attach bank accounts is a
drastic power. Considering the consequences that ensue
from provisional attachment of bank accounts, th e Courts
have repeatedly emphasized that this power is not to be
routinely exercised. Under Section 83, the legislature has
no doubt conferred power on the authorities to
provisionally attach bank accounts to safeguard
government revenue, but the same is w ithin well -defined
ambit. Only upon contingencies provided therein that the
power under section 83 can be exercised. This power is to
be used in only limited circumstances and it is not an
omnibus power. ” (Emphasis supplied.)
9. The Division Bench decision of the Punjab and Harya na High
Court in Bindal Smelting Pvt. Ltd. vs. Additional Director General
2021:DHC:39

W.P.(C) 11245/2020 Page 11 of 12
MANU/PH/2993/2019 is to similar effect. In paragraph 7 , the
Division Bench has identified the following safeguards from an
analysis of the statutory regime:
―i) Order should be pas sed by Commissioner;
ii) Proceeding under Section 62 or 63 or 64 or 67 or 73
or 74 should be pending;
iii) Commissioner must form an opinion
iv) Order should be passed to protect interest of revenue.
v) It must be necessary to attach property. ‖
The Punjab and Haryana High Court, in paragraph 10 of the said
decision, and a Division Bench of the Gujarat High Court, in Valerius
Industries vs. Union of India , MANU/GJ/1743/2019 (paragraph 44
and 52) have also commented upon the drastic nature of an order of
attachment under Section 83 , albeit in the context of the subjective
satisfaction to be recorded by the authority.
10. As held in the aforesaid judgements , the attachment of bank
account entails serious consequences to the assessee, particularly in
the case of a running concern such as the petitioner herein. The power
to attach the bank account must therefore be exercised only in strict
compliance with the statutory power , and cannot be extended to cover
situations which are not expressly conte mplated by the section. Abse nt
the statutory precondition for exercise of the power of attachment, any
order under Section 83 is wholly illegal and unsustainable.
11. In the present case, without going into the merits of the
allegations made against the petitioner, the admitted position is that no
proceedings under any of the provisions mentioned in Section 83 of
2021:DHC:39

W.P.(C) 11245/2020 Page 12 of 12
the Act were in fact initiated against the petitioner. In these
circumstances, the impugned order dated 25.11.2020/01.12.2020
(Annexure -9 to the writ petition) is ultra vires the statutory powers of
the respondent no. 2, and is hereby quashed.
12. This order will not preclude the respondents from taking such
action against the petitioner as they may be entitled to in law,
including passing of any orders under Section 83 of the Act in
accordan ce with the conditions of that S ection. However, Mr. Rishi
assures the Court that the petitioner will supply information and
documents to respondent no. 2 as and when called for.
13. Learned counsel for respondent no.3 will conv ey this order to
the Bank forthwith.
14. The writ petition is allowed in the aforesaid terms . The pending
application also sta nds disposed of .

PRATEEK JALAN, J
JANUARY 6, 2021
‗hkaur‘

2021:DHC:39