1. The challenge in this writ petition is to an order dated May 17, 2021 passed by the Commissioner, CGST & Central Excise, Belapur Commissionerate, respondent no.3, under Rule 159(5) of the Central Goods and Services Tax Rules, 2017 (for short “the CGST Rules”, hereafter). By the impugned order, the respondent no.3 declined to lift the order of provisional attachment of the petitioner’s bank account, which was earlier ordered in purported exercise of power conferred by Section 83 of the Central Goods and Services Tax Act, 2017 (for short “the CGST Act”, hereafter) read with Rule 159(1) of the CGST Rules.

2. The ground on which Mr. Kadam, learned advocate for the petitioner, mounts a challenge to the impugned order is that no proceedings are pending against the petitioner under Sections 62 or 63 or 64 or 67 or 73 or 74 of the CGST Act and, therefore, the jurisdictional fact for invocation of the power conferred by Section 83 of the CGST Act read with Rule 159(1) of the CGST Rules did not exist; hence, the order of provisional attachment, passed under Section 83 read with Rule 159(1), together with the order declining to lift the provisional attachment, passed under Rule 159(5), are entirely without jurisdiction. In support of his contention, Mr. Kadam has placed reliance on the decision of the Supreme Court in M/s. Radha Krishan Industries v/s. State of Himachal Pradesh & others, reported in 2021 SCC Online SC 334. In such decision, it has been held by the Supreme Court that the power to 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 statute for a valid exercise of the power must be strictly fulfilled. Reliance has also been placed on the Bench decision of this Court in Kaish Impex (Pvt.) Ltd. v/s. Union of India & Ors., reported in 2020 SCC OnLine Bom 125, wherein it has been laid down that initiation of proceedings against one taxable person would not authorize the revenue to provisionally attach the bank account of another taxable person. Based on the above submissions, Mr. Kadam prays for quashing of the impugned order as well as for a direction on the respondents to defreeze the petitioner’s bank account.

3. Per contra, Mr. Mishra, learned advocate appearing for the respondents has invited our attention to the impugned order dated May 17, 2021. According to him, the respondent no.3 has discussed in detail to what an extent fraud has been practiced on the revenue by generation of fraudulent Input Tax Credit (ITC), based on issuance of fake invoices, which was availed of by the petitioner causing loss to the revenue. He, thus, contends that since fraud vitiates even the most solemn proceedings, the respondent no.3 was justified in spurning the request of the petitioner for lifting of the order of provisional attachment.

4. During the course of his arguments, Mr. Mishra has referred to a Bench decision of Gujarat High Court in Kushal Ltd. v. Union of India, reported in 2020(34) G.S.T.L. 203 (Guj.). Referring to paragraph 14 of such decision, it is pointed out by him to the Court that the Gujarat High Court in similar circumstances had held that in the absence of proceedings pending under sections 62 or 63 or 64 or 67 or 73 or 74 of the CGST Act, the revenue would not be authorized to provisionally attach the property including a bank account of the taxable person and, therefore, such action would not be in consonance with the provisions of the statute. The decision in Kushal Ltd. (supra), according to Mr. Mishra, has been challenged by the revenue before the Supreme Court in SLP (C) No.10070 of 2020, whereupon the Supreme Court has observed in its order dated October 27, 2020 that the view expressed in the impugned judgment has to be kept in abeyance and cannot be followed in other cases till the issue is finally answered/decided by the Supreme Court. In view of such observation, Mr. Mishra urges that no order should be passed on this writ petition till such time the issue is finally decided by the Supreme Court.

5. We have heard learned advocates for the parties and perused the materials on record.

6. Since Mr. Mishra has referred to the order dated October 27, 2020 of the Supreme Court in SLP (C) No.10070 of 2020 to persuade us not to make any order, as prayed for by the petitioner, we propose to deal with the same first.

7. The order in SLP (C) No.10070 of 2020, to which the Court’s attention has been invited by Mr. Mishra, is dated October 27, 2020. On that date, it was the desire of the Supreme Court that till such time the issue is finally decided by the Court, the view expressed in Kushal Ltd. (supra) by the Gujarat High Court should not be followed in other cases. However, the decision in M/s. Radha Krishan Industries (supra) is dated April 20, 2021. It is, therefore, a decision rendered subsequent to the interim order in SLP (C) No.10070 of 2020. We can safely proceed on the premise that the Supreme Court, by its decision in M/s. Radha Krishan Industries (supra), has settled the issue of power to order provisional attachment to the effect that unless proceedings are pending against a taxable person under any of the provisions referred to in Section 83 of the CGST Act, no order of provisional attachment could be made and if any such order is made, the same would be ultra vires Section 83 of the CGST Act. It matters little at this stage that such statement of law was not made by the Supreme Court while deciding SLP (C) No.10070 of 2020. We are further of the view, having read the decision in M/s. Radha Krishan Industries (supra), that such decision, in effect, approves the view taken by the Gujarat High Court in Kushal Ltd. (supra).

8. A reading of paragraph 20 of the impugned order dated May 17, 2021 reveals a specific contention having been raised on behalf of the petitioner that no proceedings under Sections 62 or 63 or 64 or 67 or 73 or 74 of the CGST Act were pending against the petitioner and, therefore, the order of provisional attachment of its bank account is illegal. The respondent no.3 did not specifically deal with such contention of the petitioner; however, the impugned order came to be made merely because of a satisfaction recorded by the respondent no.3 that the petitioner had availed benefits of fake ITC from non-existing and fake firms on the strength of invoices issued by such fake firms. It is also noted that the respondent no.3 in paragraph 22 of the impugned order has observed that the petitioner has failed to appreciate Section 83 of CGST Act in letter and spirit, which authorized her to provisionally attach any property to protect the interest of the revenue.

9. That fraud vitiates even the most solemn proceedings in any civilized system of jurisprudence does not admit of any doubt. However, what is of significance is that the provision of a taxing statute is under consideration and it is settled law that a taxing statute has to be strictly construed. As has been held in M/s.Radha Krishan Industries (supra), the conditions which are prescribed by the statute for a valid exercise of the power must be strictly fulfilled. In the considered opinion of the Court, the approach of the respondent no.3 that a fraud has been practiced, by itself and without there being any provision in the relevant statute conferring power which could be invoked for such purpose, was not sufficient ground to clothe her with the power to order provisional attachment of a bank account under Section 83 read with Rule 159(1). It is also well settled that where a person on whom fraud is committed is in a position to discover the truth by due diligence, fraud is not proved. [see: Shri Krishnan v. Kurukshetra University, reported in AIR 1976 SC 376]. It is not the case of the Commissioner that the alleged fraudulent acts could not have been detected by exercise of due diligence. In the absence thereof, the inference to be drawn is that due diligence had not been exercised at the end of the revenue, and the orders impugned cannot be defended by reference to the principle urged by the respondent no.3 that since there has been an alleged fraud, the power to order provisional attachment can be exercised. To empower a Commissioner to order provisional attachment on account of presence of vitiating circumstances as the one under consideration before the respondent no.3, the statute itself ought to have provided so and the power to attach property, which is of a drastic nature, ought not to have been exercised on facts and in the circumstances. As a matter of fact, no proceedings under Sections 62 or 63 or 64 or 67 or 73 or 74 of the CGST Act are pending; hence, the respondent no.3 committed an error of jurisdictional fact for which the Court is constrained to hold that she had no authority to invoke the power conferred by Section 83 of the CGST Act read with Rule 159(1) of the CGST Rules.

10. True it is, Section 83 of the CGST Act read with Rule 159(1) of the CGST Rules empowers a Commissioner to protect the interests of the revenue by way of provisional attachment, but such provisional attachment cannot be ordered without fulfillment of the condition(s) precedent, as referred to above. In the absence of fulfillment of such conditions(s) precedent, the respondent no.3 could not have protected the interest of the revenue in the manner she proceeded to pass the impugned order.

11. For the reasons aforesaid, the order impugned cannot be sustained. It stands set aside. The respondent no.3 is directed to forthwith defreeze the bank account of the petitioner.

12. The writ petition stands allowed. There shall, however, be no order as to costs.