# M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL PRADESH & ORS

- **Citation:** [2021] 3 S.C.R. 406
- **Court:** Supreme Court of India
- **Decided:** 2021-04-20
- **Case number:** Civil Appeal No. 1155 of 2021
- **Bench:** Dr Dhananjaya Y Chandrachud, M R Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-radha-krishan-industries-v-state-of-himachal-pradesh-ors-35006
- **Pages:** 64

## Headnote

Himachal Pradesh Goods and Service Tax Act, 2017: s. 83 -
Power of the Commissioner to order provisional attachment of the
property of the assessee - Interpretation of - On facts, case of GST
fraud initiated against appellant's supplier - During the course of
proceedings, issuance of orders by the Joint Commissioner u/s 83
for provisional attachment of the appellant's receivables from its
customers - Writ petition under/Art. 226 challenging orders of
provisional attachment - Dismissed by the High Court holding that
there was an alternative and efficacious remedy of an appeal u/s.
107 - On appeal, held: Joint Commissioner while ordering a
provisional attachment u/s. 83 was acting as a delegate of the
Commissioner in pursuance of the delegation effected u/s.5(3) and
an appeal against the order of provisional attachment was not
available u/s.107(1) - Thus, the writ petition before the High Court
challenging the order of provisional attachment was maintainable,
being the only remedy available - There was non-application of
mind by the Joint Commissioner to the provisions of s. 83, rendering
the provisional attachment illegal - There was a breach of the
mandatory requirement of r. 159(5), entitlement to submit objections
and an opportunity of being heard, and the Commissioner
misconstrued in holding that he had a discretion on whether or not
to grant an opportunity of being heard - Furthermore, there were
no pending proceedings against the appellant, the mere fact that
proceedings u/s. 74 had concluded against the supplier, would not
satisfy the requirements of s. 83 - Thus, the order of provisional
attachment was ultra vires s. 83 - Also the High Court did not consider
that both the earlier and the subsequent orders of provisional
attachment were on the same grounds, without there being any
change in the circumstances - Thus, the order passed by the High
[2021] 3 S.C.R. 406
406
A
B
C
D
E
F
G
H
407
Court is set aside - Himachal Pradesh Goods and Service Tax Rules,
2017 - r.159.
s. 83 - Power to order provisional attachment of the property
of the taxable person - Exercise of - Held: Conditions prescribed
by the statute for a valid exercise of the power is to be strictly fulfilled
- 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 - Formation of an opinion by the
Commissioner must be based on tangible material.
Interpretation of statutes: Taxing statute - Interpretation of -
Held: Provision must be construed on its plain terms - Purpose
underlying the provision is to be seen - An interpretation which
effectuates the purpose must be preferred particularly when it is
supported by the plain meaning of the words used.
Constitution of India: Art. 226 - Writ jurisdiction - Principles
of law for entertaining writ petition under Art. 226 - Explained.
Allowing the appeal, the Court
HELD: 1.1 The Joint Commissioner while ordering a
provisional attachment under section 83 of the Himachal Pradesh
Goods and Service Tax Act, 2017 was acting as a delegate of the
Commissioner in pursuance of the delegation effected under
Section 5(3) and an appeal against the order of provisional
attachment was not available under Section 107 (1).[Para 72][467D]
1.2 The writ petition before the High Court under Article
226 of the Constitution challenging the order of provisional
attachment was maintainable. The High Court erred in dismissing
the writ petition on the ground that it was not maintainable.[Para
72][467-E]
1.3 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.[Para 72][467-F-G]
1.4 The exercise of the power for ordering a provisional
attachment must be preceded by the formation of an op

## Text

_Characters 0–39,930 of 133,236. This is a partial read: ask again with offset=39930 for what follows._

A
B
C
D
E
F
G
H
406
SUPREME COURT REPORTS
[2021] 3 S.C.R.
M/S RADHA KRISHAN INDUSTRIES
v.
STATE OF HIMACHAL PRADESH & ORS.
(Civil Appeal No 1155 of 2021)
APRIL 20, 2021
[DR DHANANJAYA Y CHANDRACHUD AND
M R SHAH, JJ.]
Himachal Pradesh Goods and Service Tax Act, 2017: s. 83 -
Power of the Commissioner to order provisional attachment of the
property of the assessee - Interpretation of - On facts, case of GST
fraud initiated against appellant's supplier - During the course of
proceedings, issuance of orders by the Joint Commissioner u/s 83
for provisional attachment of the appellant's receivables from its
customers - Writ petition under/Art. 226 challenging orders of
provisional attachment - Dismissed by the High Court holding that
there was an alternative and efficacious remedy of an appeal u/s.
107 - On appeal, held: Joint Commissioner while ordering a
provisional attachment u/s. 83 was acting as a delegate of the
Commissioner in pursuance of the delegation effected u/s.5(3) and
an appeal against the order of provisional attachment was not
available u/s.107(1) - Thus, the writ petition before the High Court
challenging the order of provisional attachment was maintainable,
being the only remedy available - There was non-application of
mind by the Joint Commissioner to the provisions of s. 83, rendering
the provisional attachment illegal - There was a breach of the
mandatory requirement of r. 159(5), entitlement to submit objections
and an opportunity of being heard, and the Commissioner
misconstrued in holding that he had a discretion on whether or not
to grant an opportunity of being heard - Furthermore, there were
no pending proceedings against the appellant, the mere fact that
proceedings u/s. 74 had concluded against the supplier, would not
satisfy the requirements of s. 83 - Thus, the order of provisional
attachment was ultra vires s. 83 - Also the High Court did not consider
that both the earlier and the subsequent orders of provisional
attachment were on the same grounds, without there being any
change in the circumstances - Thus, the order passed by the High
[2021] 3 S.C.R. 406
406
A
B
C
D
E
F
G
H
407
Court is set aside - Himachal Pradesh Goods and Service Tax Rules,
2017 - r.159.
s. 83 - Power to order provisional attachment of the property
of the taxable person - Exercise of - Held: Conditions prescribed
by the statute for a valid exercise of the power is to be strictly fulfilled
- 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 - Formation of an opinion by the
Commissioner must be based on tangible material.
Interpretation of statutes: Taxing statute - Interpretation of -
Held: Provision must be construed on its plain terms - Purpose
underlying the provision is to be seen - An interpretation which
effectuates the purpose must be preferred particularly when it is
supported by the plain meaning of the words used.
Constitution of India: Art. 226 - Writ jurisdiction - Principles
of law for entertaining writ petition under Art. 226 - Explained.
Allowing the appeal, the Court
HELD: 1.1 The Joint Commissioner while ordering a
provisional attachment under section 83 of the Himachal Pradesh
Goods and Service Tax Act, 2017 was acting as a delegate of the
Commissioner in pursuance of the delegation effected under
Section 5(3) and an appeal against the order of provisional
attachment was not available under Section 107 (1).[Para 72][467D]
1.2 The writ petition before the High Court under Article
226 of the Constitution challenging the order of provisional
attachment was maintainable. The High Court erred in dismissing
the writ petition on the ground that it was not maintainable.[Para
72][467-E]
1.3 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.[Para 72][467-F-G]
1.4 The exercise of the power for ordering a provisional
attachment must be preceded by the formation of an opinion by
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
408
SUPREME COURT REPORTS
[2021] 3 S.C.R.
the Commissioner that it is necessary so to do for the purpose of
protecting the interest of the government revenue. Before
ordering a provisional attachment the Commissioner must form
an opinion on the basis of tangible material that the assessee is
likely to defeat the demand, if any, and that therefore, 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(1) 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.[Para 72][467-G-H; 468-A-C]
1.5 In the facts of the instant case, there was a clear nonapplication of mind by the Joint Commissioner to the provisions
of Section 83, rendering the provisional attachment illegal.[Para
72][468-D]
1.6 Under the provisions of rule 159(5), the person whose
property is attached is entitled to dual procedural safeguards: an
entitlement to submit objections on the ground that the property
was or is not liable to attachment; and an opportunity of being
heard. There has been a breach of the mandatory requirement of
Rule 159(5) and the Commissioner was clearly misconceived in
law in coming into conclusion that he had a discretion on whether
or not to grant an opportunity of being heard. The Commissioner
is duty bound to deal with the objections to the attachment by
passing a reasoned order which must be communicated to the
taxable person whose property is attached.[Para 72][468-E-G]
1.7 A final order having been passed under Section 74(9),
the proceedings under Section 74 are no longer pending as a
result of which the provisional attachment must come to an end;
and the appellant having filed an appeal against the order under
section 74(9), the provisions of sub-Sections 6 and 7 of Section
107 will come into operation in regard to the payment of the tax
and stay on the recovery of the balance as stipulated in those
provisions, pending the disposal of the appeal. [Para 72][468-H;
469-A-B]
A
B
C
D
E
F
G
H
409
2. The principles of law for entertaining the petition under
Article 226 of the Constitution are:
(i) The power under Article 226 of the Constitution to issue
writs can be exercised not only for the enforcement of
fundamental rights, but for any other purpose as well;
(ii) The High Court has the discretion not to entertain a
writ petition. One of the restrictions placed on the power
of the High Court is where an effective alternate remedy is
available to the aggrieved person;
(iii) Exceptions to the rule of alternate remedy arise where
(a) the writ petition has been filed for the enforcement of a
fundamental right protected by Part III of the Constitution;
(b) there has been a violation of the principles of natural
justice; (c) the order or proceedings are wholly without
jurisdiction; or (d) the vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest the High
Court of its powers under Article 226 of the Constitution
in an appropriate case though ordinarily, a writ petition
should not be entertained when an efficacious alternate
remedy is provided by law;
(v) When a right is created by a statute, which itself
prescribes the remedy or procedure for enforcing the right
or liability, resort must be had to that particular statutory
remedy before invoking the discretionary remedy under
Article 226 of the Constitution. This rule of exhaustion of
statutory remedies is a rule of policy, convenience and
discretion;
(vi) In cases where there are disputed questions of fact,
the High Court may decide to decline jurisdiction in a writ
petition. However, if the High Court is objectively of the
view that the nature of the controversy requires the
exercise of its writ jurisdiction, such a view would not readily
be interfered with. [Para 27][435-G-H; 436-A-F]
Seth Chand Ratan v. Pandit Durga Prasad (2003) 5
SCC 399 : [2003] 3 SCR 75; Babubhai Muljibhai Patel
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
410
SUPREME COURT REPORTS
[2021] 3 S.C.R.
v. Nandlal Khodidas Barot (1974) 2 SCC 706 : [1975]
2 SCR 71; Rajasthan SEB v. Union of India (2008) 5
SCC 632 : [2008] 7 SCR 1025 - relied on.
Assistant Commissioner (CT) LTU, Kakinada and
Others v. Glaxo Smith Kline Consumer Health Care
Limited AIR 2020 SC 2819; Whirlpool Corporation v.
Registrar of Trademarks, Mumbai (1998) 8 SCC 1 :
[1998] 2 Suppl. SCR 359; Harbanslal Sahnia v. Indian
Oil Corpn. Ltd. (2003) 2 SCC 107 - referred to.
3.1 The marginal note to Section 83 of the Himachal Pradesh
Goods and Service Tax Act, 2017 provides some indication of
Parliamentary intent. Section 83 provides for "provisional
attachment to protect revenue in certain cases". Marginal notes,
it is well-settled, do not control a statutory provision but provide
some guidance in regard to content. Put differently, a marginal
note indicates the drift of the provision. With these prefatory
comments, the judgment must turn to the essential task of
statutory construction. The language of the statute has to be
interpreted bearing in mind that it is a taxing statute which comes
up for interpretation. The provision must be construed on its
plain terms. Equally, in interpreting the statute, regard must be
to the purpose underlying the provision. An interpretation which
effectuates the purpose must be preferred particularly when it is
supported by the plain meaning of the words used. [Para 40][443D-G]
3.2 Sub-Section (1) of Section 83 can be bifurcated into
several parts. The first part provides an insight on when in point
of time or at which stage the power can be exercised. The second
part specifies the authority to whom the power to order a
provisional attachment is entrusted. The third part defines the
conditions which must be fulfilled to validate the power or ordering
a provisional attachment. The fourth part indicates the manner
in which an attachment is to be leveled. The final and the fifth
part defines the nature of the property which can be attached.
Each of these special divisions, while they are not watertight
compartments, ultimately and together they aid in validating an
understanding of the statute. Each of the five parts is interpreted
and explained as:
A
B
C
D
E
F
G
H
411
(i) The power to order a provisional attachment is entrusted
during the pendency of proceedings under any one of six
specified provisions: Sections 62, 63, 64, 67, 73 or 74. In
other words, it is when a proceeding under any of these
provisions is pending that a provisional attachment can be
ordered;
(ii) The power to order a provisional attachment has been
vested by the legislature in the Commissioner;
(iii) Before exercising the power, the Commissioner must
be "of the opinion that for the purpose of protecting the
interest of the government revenue, it is necessary so to
do";
(iv) The order for attachment must be in writing;
(v) The provisional attachment which is contemplated is of
any property including a bank account belonging to the
taxable person; and the manner in which a provisional
attachment is levied must be specified in the rules made
pursuant to the provisions of the statute. [Para 41][443-H;
444-A-F]
3.3 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. The power to levy a
provisional attachment is draconian in nature. By the exercise of
the power, a property belonging to the taxable person may be
attached, including a bank account. The attachment is provisional
and the statute has contemplated an attachment during the
pendency of the proceedings under the stipulated statutory
provisions. An attachment which is contemplated in Section 83
is, in other words, at a stage which is anterior to the finalization
of an assessment or the raising of a demand. Conscious as the
legislature was of the draconian nature of the power and the
serious consequences which emanate from the attachment of any
property including a bank account of the taxable person, it
conditioned the exercise of the power by employing specific
statutory language which conditions the exercise of the power.
The language of the statute indicates first, the necessity of the
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
412
SUPREME COURT REPORTS
[2021] 3 S.C.R.
formation of opinion by the Commissioner; second, the formation
of opinion before ordering a provisional attachment; third the
existence of opinion that it is necessary so to do for the purpose
of protecting the interest of the government revenue; fourth,
the issuance of an order in writing for the attachment of any
property of the taxable person; and fifth, the observance by the
Commissioner of the provisions contained in the rules in regard
to the manner of attachment. Each of these components of the
statute are integral to a valid exercise of power. In other words,
when the exercise of the power is challenged, the validity of its
exercise will depend on a strict and punctilious observance of
the statutory pre-conditions by the Commissioner. While
conditioning the exercise of the power on the formation of an
opinion by the Commissioner that "for the purpose of protecting
the interest of the government revenue, it is necessary so to
do", it is evident that the statute has not left the formation of
opinion to an unguided subjective discretion of the Commissioner.
The formation of the opinion must bear a proximate and live nexus
to the purpose of protecting the interest of the government
revenue. [Para 48][449-A-G]
3.4 By utilizing the expression "it is necessary so to do"
the legislature has evinced an intent that an attachment is
authorized not merely because it is expedient to do so (or
profitable or practicable for the revenue to do so) but because it
is necessary to do so in order to protect interest of the
government revenue. Necessity postulates that the interest of
the revenue can be protected only by a provisional attachment
without which the interest of the revenue would stand defeated.
Necessity in other words postulates a more stringent requirement
than a mere expediency. A provisional attachment under Section
83 is contemplated during the pendency of certain proceedings,
meaning thereby that a final demand or liability is yet to be
crystallized. An anticipatory attachment of this nature must strictly
conform to the requirements, both substantive and procedural,
embodied in the statute and the rules. The exercise of unguided
discretion cannot be permissible because it will leave citizens
and their legitimate business activities to the peril of arbitrary
power. Each of these ingredients must be strictly applied before
a provisional attachment on the property of an assessee can be
levied. The Commissioner must be alive to the fact that such
A
B
C
D
E
F
G
H
413
provisions are not intended to authorize Commissioners to make
preemptive strikes on the property of the assessee, merely
because property is available for being attached. 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. [Para 49][449-G-H; 450-A-D]
3.5 These expressions in regard to both the purpose and
necessity of provisional attachment implicate the doctrine of
proportionality. Proportionality mandates the existence of a
proximate or live link between the need for the attachment and
the purpose which it is intended to secure. It also postulates the
maintenance of a proportion between the nature and extent of
the attachment and the purpose which is sought to be served by
ordering it. Moreover, the words embodied in sub-Section (1) of
Section 83, would leave no manner of doubt that while ordering a
provisional attachment the Commissioner must in the formation
of the opinion act on the basis of tangible material on the basis of
which the formation of opinion is based in regard to the existence
of the statutory requirement. [Para 50][450-E-G]
Vishwanath Realtor v. State of Gujarat Special Civil
No. 7210 of 2015, decided on 29 April 2015 -
approved.
3.6 The test of the existence of "tangible material" is
adopted. Section 83 of the HPGST Act uses the expression
"opinion" as distinguished from "reasons to believe". The
formation of the opinion must be based on tangible material which
indicates a live link to the necessity to order a provisional
attachment to protect the interest of the government revenue.
[Para 51][452-B-C]
Commissioner of Income Tax v. Kelvinator of India
Limited (2010) 2 SCC 723 : [2010] 1 SCR 768; Income
Tax Officer, Ward No. 162 (2) v. Techspan India Private
Limited (2018) 6 SCC 685 : [2018] 4 SCR 328 -
referred to.
3.7 Rule 159 prescribes modalities for effecting a provisional
attachment of property. A significant aspect of Rule 159(5) is that
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
414
SUPREME COURT REPORTS
[2021] 3 S.C.R.
upon the levy of a provisional attachment, the person whose
property is attached is empowered to file an objection within seven
days on the ground that the property was or is not liable to
attachment. In using the expression "was or is no longer liable
for attachment", the delegate of the legislature has comprehended
two alternative situations. The first, evidenced by the use of the
words "was" indicates that the property was on the date of the
attachment in the past not liable to be attached. That is the reason
for the use of the past tense "was". The expression "is not liable
to attachment indicates a situation in praesenti. Even if the
property, arguably, was validly attached in the past, the person
whose property has been attached may demonstrate to the
Commissioner that it is not liable to be attached in the present.
[Para 52, 55][452-C-D; 454-H; 455-A-C]
3.8 Sub-Rule (5) of rule 159 contains clear language to the
effect that a person whose property is attached is entitled to two
procedural entitlements: first, the right to submit an objection
on the ground that the property was not or is not liable to be
attached; and second, an opportunity of being heard to the person
filing an objection. This is a clear indicator that in addition to the
filing of an objection, the person whose property is attached is
entitled to an opportunity of being heard. This is in consonance
with the principles of natural justice and ensures that a fair
procedure is observed. On facts, it is not open to the
Commissioner to hold the view that the only safeguard under
sub-Rule 5 is to submit an objection without an opportunity of a
personal hearing. Such a construction would be plainly contrary
to sub-Rule 5 which contemplates both the submission of an
objection to the attachment and an opportunity of being heard.
The opportunity of being heard can be availed of as a matter of
right by the person whose property is attached. Both the right to
submit an objection and to be afforded an opportunity of being
heard are valuable safeguards. The consequence of a provisional
attachment is serious. It displaces the person whose property is
attached from dealing with the property. Where a bank account
is attached, it prevents the person from operating the account. A
business entity whose bank account is attached is seriously
prejudiced by the inability to utilize the proceeds of the account
for the purpose of business. The dual procedural safeguards
A
B
C
D
E
F
G
H
415
inserted in sub-Rule 5 of Rule 159 demand strict compliance.
The Commissioner who hears the objections must pass a reasoned
order either accepting or rejecting the objections. To allow the
Commissioner to get by without passing a reasoned order will
make his decision subjective and defeat the purpose of subjecting
it to judicial scrutiny. The Commissioner must deal with the
objections and pass a reasoned order indicating whether, and if
not, why the objections are not being accepted. Sub- Rule 6 of
Rule 159 allows for the release of a property which either was or
is no longer liable for attachment. The form in which such an
order has to be passed, namely form GST DRC-23, states that
"now there is no such proceeding pending against the defaulting
person which warrants attachment" of the account or as the case
may be, the property. Sub- Rules 5 and 6 do not expressly
contemplate a situation in which the person whose property is
attached can object on the ground that the attachment is in excess
of the amount likely to be due for which proceedings have been
launched under the Act. Nor does it provide for a specific
opportunity to the taxable person to offer any alternative form of
security in lieu of the attachment. Such an opportunity must be
read in to the provision to allow for a fair working in practice.
Whether any alternative security that is furnished by the taxable
person should be accepted and if so, its sufficiency, is a matter
for the Commissioner to determine. Undoubtedly, the taxable
person may not have a right to demand that only a particular form
of security must be accepted. The Commissioner has to decide
whether the form of security offered would secure the interest of
the revenue. Where the taxable person sets up the plea that the
extent of the attachment is excessive or where the taxable person
offers an alternative form of security, these are also matters which
ought to be determined by the Commissioner in the exercise of
powers under Rule 159(5). The scope of objection can also extend
to the nature of the property which is being provisionally attached.
[Para 56][455-D-H; 456-A-G]
4.1 The sole ground which weighed with the High Court in
holding that the writ proceedings were not maintainable is that
"the writ petitioner has not only (an) efficacious remedy, rather
alternative remedy under the GST Act"; and that the writ petition
filed by the supplier of the appellant against whom similar
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
416
SUPREME COURT REPORTS
[2021] 3 S.C.R.
allegations have been leveled had been dismissed by relegating
it to the pursuit of an alternative remedy. It was submitted by the
appellant that its supplier had been relegated to the pursuit of an
alternative remedy since an order of assessment had been passed
against it; however, insofar as the appellant is concerned, the
writ proceedings were instituted to challenge the levy of a
provisional attachment under Section 83 and there is no
alternative remedy provided under the Act for challenging an
order under Section 83. [Para 59][459-B-D]
4.2 It is evident that the expression 'adjudicating authority'
as defined in s.2(4) does not include among other authorities,
the Commissioner. In the instant case, the narration of facts
indicates that on 21 October 2020, the Commissioner had in
exercise of his powers under Section 5(3) made a delegation inter
alia to the Joint Commissioner of State Taxes and Excise in
respect of the powers vested under Section 83(1). The Joint
Commissioner, in other words, was exercising the powers which
are vested in the Commissioner under Section 83(1) to order a
provisional attachment in pursuance of the delegation exercised
on 21 October 2020. This being the position, clearly the order
passed by the Joint Commissioner as a delegate of the
Commissioner was not subject to an appeal under Section 107(1)
and the only remedy that was available was in the form of the
invocation of the writ jurisdiction under Article 226 of the
Constitution. Thus, the High Court was clearly in error in declining
to entertain the writ proceedings. [Para 62][460-D-G]
4.3 The entire procedure which has been followed by the
Joint Commissioner in the instant case is contrary to the
provisions contained in Section 83 read with Rule 159. The Joint
Commissioner (acting on behalf of the Commissioner) has
proceeded on an understanding that an opportunity of being heard
to the person whose property is provisionally attached is a matter
of discretion, the discretion of being that of the Commissioner.
This understanding of the Commissioner is in the teeth of and
clearly contrary to the provisions of Rule 159(5). Rule 159(5), as
explained earlier contemplates two safeguards to the person
A
B
C
D
E
F
G
H
417
whose property is attached. Firstly, it permits such a person to
submit objections to the order of attachment on the ground that
the property was or is not liable for attachment. Secondly, Rule
159(5) posits an opportunity of being heard. Both requirements
are cumulative. The Commissioner's understanding that an
opportunity of being heard was at the discretion of the
Commissioner is therefore flawed and contrary to the provisions
of Rule 159(5). Thus, there has been a fundamental breach of the
principles of natural justice. [Para 63, 64][460-G-H; 461-D-F]
4.4 The order passed by the Joint Commissioner purporting
to justify the levy of a provisional attachment does not indicate
any basis for the formation of the opinion that the levy of a
provisional attachment was necessary to protect the interest of
the government revenue. The order in the file noting refers to
the fact that the case of the supplier had been decided under
Section 74 resulting in an additional demand of Rs. 39 crores on
account of a fraudulent claim of Input Tax Credit (ITC) for FY
2017-18 and 2018-19. The supplier is alleged to have passed on
the ITC to various Registered Tax Persons situated in Himachal
Pradesh by issuing invoices inter alia to the appellant during 201819 for which a case under Section 74 had been initiated. The
order records that the appellant had claimed ITC of Rs 3.25 crores
on the strength of the invoices issued by the supplier. The order
merely records that the submissions which were urged by the
appellant on 5 August 2020 "are not sustainable". "In view of
the facts involved in the case", the Joint Commissioner concluded
that it is necessary at this stage to safeguard the government
revenue and since the appellant had sold goods to F companycustomer of the appellant the payment due to it was being attached
provisionally. The order of the Joint Commissioner contains
absolutely no basis for the formation of the opinion that a
provisional attachment was necessary to safeguard the interest
of the revenue. No tangible material has been disclosed. The
record clearly reveals a breach of the mandatory pre- conditions
for the valid exercise of powers under Section 83 of the HPGST
Act. [Para 66][464-E-H; 465-A-B]
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
418
SUPREME COURT REPORTS
[2021] 3 S.C.R.
4.5 The order of provisional attachment under Section 83(1)
is to be issued "during the pendency of any proceedings under
Section 62 or Section 63 or Section 64 or Section 67 or Section
73 or Section 74". In the instant case, the notice to show cause
under Section 74(1) of the HPGST Act was issued to the appellant
on 27 November 2020. After the High Court dismissed the writ
petition, this Court was moved under Article 136 of the
Constitution. Notice was issued in the Special Leave Petition on
4 February 2021 returnable on 19 February 2021. A day before
the case was listed, on 18 February 2021, an ex parte order was
passed by the Joint Commissioner u/s. 74 (9) of the HPGST Act
confirming the demand of Rs 8,30,27,218 in the notice to show
cause. [Para 67][465-C-D]
4.6 The order of provisional attachment was passed before
the proceedings against the appellant were initiated under Section
74 of the HPGST Act. Section 83 of the Act requires that there
must be pendency of proceedings under the relevant provisions
mentioned against the taxable person whose property is sought
to be attached. The submission that merely because proceedings
were pending/concluded against another taxable entity, that is
the supplier, the powers of Sections 83 could also be attracted
against the appellant cannot be accepted. This interpretation
would be an expansion of a draconian power such as that contained
in Section 83, which must necessarily be interpreted restrictively.
Given that there were no pending proceedings against the
appellant, the mere fact that proceedings under Section 74 had
concluded against the supplier, would not satisfy the requirements
of Section 83. Thus, the order of provisional attachment was ultra
vires Section 83 of the Act. [Para 68][465-E-G]
4.7 The appellant, having filed an appeal under Section 107,
is required to comply with the provisions of sub-Section (6) of
Section 107 while the recovery of the balance is deemed to be
stayed under the provisions of sub-Section (7). Under Section
83, the order of provisional attachment may be passed during
the pendency of any proceedings under Section 62 or Section 63
or Section 64 or Section 67 or Section 73 or Section 74. Therefore,
once the final order of assessment is passed under Section 74
A
B
C
D
E
F
G
H
419
the order of provisional attachment must cease to subsist.
Therefore, after the final order under Section 74 of the HPGST
Act was passed on 18 February, 2021, the order of provisional
attachment must come to an end. [Para 70][466-E-G]
4.8 Moreover, an order of provisional attachment was
issued by the Joint Commissioner which was withdrawn on 30
January 2019, after considering the representations made by the
petitioner. On the very ground, without any material change in
circumstances. Another order of provisional attachment came to
be issued by another Joint Commissioner. Therefore, it was the
contention of the petitioner before the High Court that the
subsequent order of provisional attachment is in substance and
effect an order reviewing the earlier order withdrawing the order
of provisional attachment which was not permissible and therefore
the subsequent order of provisional attachment is without
jurisdiction. The High Court has not considered this aspect. Both
the earlier and the subsequent orders of provisional attachment
are on the same grounds. Therefore, unless there was a change
in the circumstances, it was not open for the Joint Commissioner
to pass another order of provisional attachment, after the earlier
order of provisional attachment was withdrawn after considering
the representations made by the petitioner. This is an additional
ground to set aside the subsequent order of provisional
attachment. [Para 71][466-G-H; 467-A-C]
5. The order of the High Court is set aside. The writ
petition filed by the appellant is allowed by setting aside the
orders of provisional attachment. [Para 73-74][469-B-C]
Valerius Industries v. Union of India 2019 (30) GSTL
15(Gujarat); Jai Ambey Filament Pvt Ltd v. Union of
India 2021 (44) GSTL 41 (Gujarat); Patran Steel
Rolling Mill v. Assistant Commissioner of State Tax Unit
2019 (20) GSTL 732 (Gujarat) - approved.
Rajasthan SEB v. Union of India (2008) 5 SCC 632 :
[2008] 7 SCR 1025; GM Powertech and Others v. State
of H.P CWP No. 5462 of 2020; Calcutta Discount Co.
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
420
SUPREME COURT REPORTS
[2021] 3 S.C.R.
Ltd. v. Income Tax Officer, Companies District I,
Calcutta AIR 1961 SC 372 : [1961] SCR 241;
Commissioner of Income Tax, Gujarat v. M/s A Raman
and Co. AIR 1968 SC 49 : [1968] SCR 10; Raman
Tech Process Engg Co and Anr v. Solanki Traders 2008
(1) R.C.R. (Civil) 195; Proex Fashion Private Limited
v. Government of India WP(C) 11245 of 2020 dated
6 January 2021; Bindal Smelting Private Limited v. Addl.
Director General of GST Intelligence, 2020 (34 G.S.T.L
592 (P&H); Society for Integrated Development of
Urban and Rural Areas v. Commissioner of Income Tax,
A.P. II, Hyd, 2001 (252) ITR 642; Vinod Kumar
Murlidhar Prop. Of Chechani Trading Co v. State of
Gujarat, Special Civil Application No. 12498 of 2020
dated 9 December 2020; UFV India Global Education
v. Union of India 2020 (43) GSTL 472; Kaish Impex
Private Limited v. Union of India (2020) 6 AIR Bom R
122; Nathanlal Maganlal Chauhan v. State of Gujarat
(2020) SCC Online Guj 1811 - referred to.
Case Law Reference
[1998] 2 Suppl. SCR 359
referred to
Para 19 B.1 (ii)
[1961] SCR 241
referred to
Para 19 B.1 (vii)
[1968] SCR 10
referred to
Para 19 B.1 (vii)
AIR 2020 SC 2819
referred to
Para 24
(2003) 2 SCC 107
referred to
Para 26
[2003] 3 SCR 75
relied on
Para 28
[1975] 2 SCR 71
relied on
Para 28
[2008] 7 SCR 1025
relied on
Para 28
2008 (1) R.C.R. (Civil) 195
referred to
Para 30
2019 (30) GSTL 15 (Gujarat)
approved
Para 31
2021 (44) GSTL 41 (Gujarat)
approved
Para 32
2019 (20) GSTL 732 (Gujarat)
approved
Para 33
2020 (34 G.S.T.L 592 (P&H)
referred to
Para 34
A
B
C
D
E
F
G
H
421
2001 (252) ITR 642
referred to
Para 34
2020 (43) GSTL 472
referred to
Para 36
(2020) 6 AIR Bom R 122
referred to
Para 37
[2010] 1 SCR 768
referred to
Para 51
[2018] 4 SCR 328
referred to
Para 51
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1155 of
2021.
From the Judgment and Order dated 01.01.2021 of the High Court
of Himachal Pradesh at Shimla in Civil Writ Petition No. 5648 of 2020.
Puneet Bali, Sr. Adv., Surjeet Bhadu, Hittan Nehra, Sachin Jain,
Aditya Soni, Advs. for the Appellant.
Akshay Amritanshu, Ankit Kumar Lal, Advs. for the Respondents.
The Judgment of the Court was delivered by
DR DHANANJAYA Y CHANDRACHUD, J.
A Factual Background
B Submissions
 B.1 Maintainability of the writ petition before the High Court
 B.2 Challenge on merits: improper invocation of Section 83
C Legal Position
 C.1 Maintainability of writ petition before the High Court
 C.2 Provisional Attachment
 C.3 Delegation of authority under CGST Act
D Analysis
E Summary of findings
A Factual Background
1. This appeal raises significant issues of public importance,
engaging as it does, the interface between citizens and their businesses
with the fiscal administration. Legislation enacted for the levy of goods
and services tax confers a power on the taxation authorities to impose a
provisional attachment on the properties of the assessee, including bank
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS.
A
B
C
D
E
F
G
H
422
SUPREME COURT REPORTS
[2021] 3 S.C.R.
accounts. The legislation in Himachal Pradesh, which comes up for
interpretation in the present case, has conferred the power on the
Commissioner to order provisional attachment of the property of the
assessee, subject to the formation of an opinion that such attachment is
necessary in the interest of protecting the government revenue. What
specifically, is the ambit of this power? What are the safeguards available
to the citizen? In interpreting the law, the court has to chart a course
which will ensure a fair exercise of statutory powers. The legitimate
concerns of citizens over arbitrary exercises of power have to be
protected while ensuring that the legislative purpose in entrusting the
authority to order a provisional attachment is fulfilled. The rule of law in
a constitutional framework is fulfilled when law is substantively fair,
procedurally fair and applied in a fair manner. Each of these three
components will need to be addressed in the course of interpreting the
tax statute in the present case.
2. This appeal arises from a judgment and order dated 1 January
2021 of a Division Bench of the High Court of Himachal Pradesh. The
High Court dismissed the writ petition instituted under Article 226 of the
Constitution challenging orders of provisional attachment on the ground
that an alternate remedy is available. The appellant challenged the orders
issued on 28 October 2020 by the Joint Commissioner of State Taxes
and Excise, Parwanoo1 provisionally attaching the appellant's receivables
from its customers. The provisional attachment was ordered while invoking
Section 83 of the Himachal Pradesh Goods and Service Tax Act, 20172
and Rule 159 of Himachal Pradesh Goods and Service Tax Rules, 20173.
While dismissing the writ petition on grounds of maintainability the High
Court was of the view that the appellant had an 'alternative and
efficacious remedy' of an appeal under Section 107 of the HPGST Act.
3. At issue in this case is whether the orders of provisional
attachment issued by the third respondent against the appellant on
28 October 2020 are in consonance with the conditions stipulated in
Section 83 of the HPGST Act. The answer to this will require the court
to embark on an interpretative journey of unravelling the substantive and
procedural content of the power. The preliminary issue is whether the
1 "third respondent''
2 "HPGST Act''
3 "HPGST Rules''
A
B
C
D
E
F
G
H
423
High Court was right in concluding that the provisional attachment could
not be challenged in a petition under Article 226.
4. The facts in the context of which this case arises are thus: the
appellant manufactures lead according to the specific requirements of
its clients, and has a factory at village Meerpur Gurudwara, Kala-Amb
in the District of Sirmaur of Himachal Pradesh. The appellant has been
in the same line of business since 2008. Upon the introduction of the
Goods and Services tax4, the appellant migrated to and was registered
under GST - GSTIN No. O2AAKFR7402H2ZE - with effect from
1 July 2017.
5. On 3 October 2018, a notice5 was issued to the appellant under
Section 74 of the HPGST Act and the Central Goods and Services Tax
Act6 by the third respondent requiring it to appear on 9 October 2018
and produce (i) invoices pertaining to inward and outward supplies for
the years 2017-18 and 2018-19; (ii) party-wise summary/ledger of inward
supplies; (iii) proof of payment of GST with a commodity-wise breakup;
and (iv) copies of GSTR-1, GSTR-2 and GSTR-3 returns from July
2017 to July 2018. The appellant appeared before the third respondent
and submitted original tax invoices pertaining to inward and outward
supplies for 2017-18 and 2018-19 by a letter dated 15 October 2018.
6. On 10 October 2018, a 'detection case' was registered against
GM Powertech, Kala-Amb7, one of the suppliers of the appellant, under
Section 74 of the HPGST Act and the CGST Act read with Section 20
of the Integrated Goods and Services Tax Act, 20178. This was through
a search and seizure under Section 67 of the HPGST Act and CGST
Act. The partners of GM Powertech were arrested on 3 December
2018 on the ground of raising fraudulent claims of input tax credit9 from
fake/fictitious firms in Delhi and Kanpur.
7. The appellant received a memo byan e-mail dated 15 December
2018 from the third respondent directing it to be present on 17 December
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]
4 "GST''
5 The respondents before this Court have stated that the said document was in fact a
memo under Section 70 of HPGST Act and not a show cause notice, and it was
inadvertently mentioned that it was a notice issued under Section 74 of the HPGST
Act.
6 "CGST Act''
7 "GM Powertech''
8 "IGST Act''
9 "ITC''
A
B
C
D
E
F
G
H
424
SUPREME COURT REPORTS
[2021] 3 S.C.R.
2018 for explaining the allegedly illegal claim of ITC made during 201718 and 2018-19. By its letter dated 17 December 2018, the appellant
contended that it had validly claimed ITC as it fulfilled the conditions
under Section 16 and other provisions of the HPGST Act and the CGST
Act.
8.