GST - Provisional Attachment Power 'Draconian'; Not Intended To Authorize Commissioners To Make Preemptive Strikes On Assessee's Property: Supreme Court

The Supreme Court has held that the power of provisional attachment under GST laws must be strictly construed, being a draconian power, and that the same should be exercised only on the basis of tangible material.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. 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, the Supreme Court observed while interpreting Section 83 of the Himachal Pradesh Goods and Service Tax Act. There must be a valid formation of the opinion that a provisional attachment is necessary for the purpose of protecting the interest of the government revenue", the bench observed while issuing the following guidelines: 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. 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; The formation of an opinion by the Commissioner under Section 83 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; In this case, the provisional attachment was ordered against the appellant while invoking Section 83 of Himachal Pradesh Goods and Service Tax Act, 2017 and Rule 159 of Himachal Pradesh Goods and Service Tax Rules, 2017. Before the Commissioner can levy a provisional attachment, there must be a formation of "the opinion" and that it is necessary "so to do" for the purpose of protecting the interest of the government revenue.