The Supreme Court, this week has slammed the manner in which Goods and Services Tax
(GST) was being enforced by the tax authorities and has observed that the Taxman cannot see all businesses being fraudulent.
The Parliament had aimed and tried to give GST a friendly structure however Justice DY Chandrachud observed that the main motive of the Act is deeply buried and fogged by the manner of enforcement in our country.
The bench comprising of Justice Chandrachud and Justice MR Shah heard a plea against powers of provisional attachment under the Himachal Pradesh GST Act, 2017. The given plea was filed by Radha Krishna Industries, alleging that power of attachment under section 83 is draconian.
Senior Advocate Puneet Bali and Advocate Surjeet Bhadu appeared as counsels on behalf of the petitioner.
Per the Section 83 of the HP GST Act, during the pendency of tax proceedings, the department can attach any property (including back accounts and accounts receivable.) This is called provisional attachment. It is a protective measure used by tax officers to ensure the satisfaction of a later judgement by the courts.
The Apex Court questions the tax officers for stating such huge amounts without accountability. Tax officers ask for huge sum of money from business, without any accountability, the court observed.
The court further termed provisional attachment as ‘draconian’ and ‘pre-emptive strike’:
“Tax Authorities can’t start attaching assets unless there’s alienation, winding up or liquidation of assets,” Justice Chandrachud observed.
The Court concluded that the officers must strike out a balance between protecting government revenue and allowing genuine businesses to thrive and operate.
The SC concluded the hearing after listening to the arguments of both sides and reserved its judgement on the issue.
