GST no longer citizen-friendly; calls provisional attachment Draconian - SC
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The Parliament had aimed to give the GST a citizen-friendly tax structure. But, the purpose of the Act is lost by the manner of enforcement in our country, Justice DY Chandrachud observed.
The bench of Justice Chandrachud and MR Shah was hearing a plea against powers of provisional attachment under the Himachal Pradesh GST Act. The plea was filed by Radha Krishna Industries, alleging that power of attachment under Sec 83 is draconian.
Senior Advocate Puneet Bali and Advocate Surjeet Bhadu appeared for the petitioner company, before the Supreme Court.
Per the Sec 83 of the HP GST Act, during the pendency of tax proceedings, the department can attach any property (including bank accounts and accounts receivable). This is called Provisional Attachment. It is a protective measure used by the tax officers to ensure the satisfaction of a later judgement by the courts.
The apex court hit out at tax officers for raising huge demands without accountability. Tax officers raise huge demands from businesses with no accountability, the court observed. If a Rs 10,000 crore demand is reduced to Rs 1,000 crore by a court it must reflect in the assessment of the tax officer, the court added.
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 added.
The court observed that officers must strike out a balance between protecting government revenue and allowing genuine businesses to operate.
In Jan 2021, the Himachal Pradesh High Court had dismissed the plea seeking quashing of the provisional attachment under Sec 83.
On Tuesday, SC concluded the hearing after listening to the arguments of both sides and reserved its judgment on the issue.
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