The Principal Commissioner Of Central ... vs M/S Narasimhan Engineering ... on 10 September, 2025

Outcome
The Writ Appeal filed by the Revenue was allowed-in-part. The High Court:
* Set aside the Single Judge's finding that a pre-decisional hearing is required before ordering provisional attachment under Section 83 of the CGST Act, holding that no such hearing is mandated.
* Quashed** the provisional attachment of the bank account dated 29.01.2025, on the grounds that the essential statutory condition of "initiation of any proceedings under Chapter XII, Chapter XIV or Chapter XV" of the CGST Act was not met.

2. Core Issue
The High Court considered two core issues:
1. Whether a pre-decisional hearing is required before passing an order of provisional attachment under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act).
2. Whether the provisional attachment dated 29.01.2025 under Section 83 of the CGST Act complied with the requisites of Section 83 of the CGST Act, specifically the requirement of prior initiation of specified proceedings.

3. Key Facts
* M/s Narasimhan Engineering Contractors Private Limited (Respondent No.1/Taxpayer) is registered under the GST Act and is engaged in construction and other taxable services.
* The Revenue (Appellants) issued summons under Section 70 of the CGST Act to the Taxpayer to gather evidence regarding inward and outward supplies.
* The Taxpayer failed to comply with the summons.
* Further investigation by the Revenue allegedly revealed misuse of input tax credit (ITC) and unsubstantiated transactions.
* Based on these findings, the Revenue provisionally attached the Taxpayer's bank account with ICICI Bank Ltd. on 29.01.2025, invoking Section 83 of the CGST Act, citing the initiation of proceedings under Sections 74 and 122 of the Act.
* The Taxpayer filed a Writ Petition (No. 11065/2025) challenging the provisional attachment and blocking of ITC.
* The Learned Single Judge quashed the provisional attachment order on 25.04.2025, on the sole ground that no pre-decisional hearing was provided to the Taxpayer before the attachment.
* The Revenue filed the present Writ Appeal, challenging the Single Judge's order. The appeal was confined to the issue of provisional attachment of the bank account.

4. Arguments

• Revenue (Appellants):

  • Section 83 of the CGST Act does not mandate a pre-decisional hearing before passing an order of provisional attachment.
  • The Single Judge's order effectively "rewrites" Section 83, which is impermissible in statutory interpretation, particularly for fiscal legislation.
  • Granting a pre-decisional hearing would defeat the very purpose of provisional attachment, which is a preventive and precautionary measure to protect government revenue.
  • An adequate post-decisional remedy is available to the aggrieved person under Rule 159(5) of the CGST Rules, which specifically provides for an objection and a hearing.
  • Regarding the initiation of proceedings, the Revenue contended that summons issued under Section 70 of the CGST Act constituted "initiation of proceedings" falling under Chapter XII, thereby satisfying the prerequisite for invoking Section 83.

• Taxpayer (Respondent No.1):

  • The Single Judge's finding regarding the necessity of a pre-decisional hearing was correct and supported by a Division Bench judgment in K-9 Enterprises v. State of Karnataka.
  • Denial of a pre-decisional hearing would lead to arbitrary exercise of power and cause irreparable prejudice.
  • Alternatively, and crucially, the Taxpayer argued that the provisional attachment under Section 83 was not maintainable because the essential ingredient of "initiation of any proceedings under Chapter XII, XIV or XV" of the CGST Act was not met.
  • While the provisional attachment order referred to proceedings under Sections 74 and 122, no such proceedings were, in fact, initiated.
  • Citing Radha Krishan Industries v. State of Himachal Pradesh (SC), the Taxpayer emphasized the strict conditions for invoking Section 83.
  • Further, relying on Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East (SC), the Taxpayer contended that the mere issuance of summons under Section 70 of the CGST Act does not constitute "proceedings" within the meaning of Section 83.

5. Court’s Reasoning

• Regarding Pre-decisional Hearing (Issue 1):

  • The High Court, on a plain reading of Section 83 of the CGST Act, found no express or implied mandate for a pre-decisional hearing. It reiterated the principle of strict interpretation for fiscal statutes, stating that courts cannot add or subtract words (CIT v. Calcutta Knitwears).
  • It noted that when the statute intends to provide an opportunity of hearing, it does so explicitly (e.g., Rule 159(5) of the CGST Rules provides for a post-attachment hearing).
  • The Single Judge's reliance on K-9 Enterprises was deemed misplaced as that judgment did not pertain to Section 83 provisional attachments.
  • Therefore, the High Court concluded that no pre-decisional hearing is required before passing a provisional attachment order under Section 83.

• Regarding Compliance with Section 83 Requisites (Issue 2):

  • The High Court acknowledged that Section 83 requires the Commissioner's opinion to be formed "after the initiation of any proceedings under Chapter XII, Chapter XIV or Chapter XV".
  • The Revenue's claim of initiated proceedings under Sections 74 and 122 could not be substantiated.
  • The Revenue's argument that summons under Section 70 (which falls under Chapter XII) constituted "initiation of proceedings" was explicitly rejected.
  • Citing and extensively quoting the Supreme Court judgment in Armour Security (India) Ltd., the High Court affirmed that the issuance of summons under Section 70 is merely an instrument for inquiry and gathering information, not the "initiation of proceedings" itself. The Department is still in the stage of determining if proceedings should be initiated.
  • The High Court also referred to Radha Krishan Industries (SC), which outlined the draconian nature of Section 83 and the strict fulfillment of its conditions, including the requirement for pending proceedings under specific sections (62, 63, 64, 67, 73, or 74).
  • Although the Revenue demonstrated the formation of an opinion and tangible material for attachment, the crucial prerequisite of "initiation of any proceedings" under the specified Chapters was not met.
  • Consequently, the provisional attachment, being in non-compliance with the fundamental condition of Section 83, was held to be unsustainable and was quashed.

6. Statutory References
* Central Goods and Services Tax Act, 2017 (CGST Act):
* Section 5(3)
* Section 6(2)(b)
* Section 62 (Assessment of non-filers of returns)
* Section 63 (Assessment of unregistered persons)
* Section 64 (Summary assessment)
* Section 67 (Inspection, search, and seizure)
* Section 70 (Power to summon persons to give evidence and produce documents)
* Section 73 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or willful misstatement or suppression of facts)
* Section 74 (Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or willful misstatement or suppression of facts)
* Section 83 (Provisional attachment to protect revenue in certain cases)
* Section 83(1)
* Section 83(2)
* Section 107 (Appeals to Appellate Authority)
* Section 107(1)
* Section 107(6)
* Section 107(7)
* Section 122 (Penalty for certain offences)
* Chapter XII
* Chapter XIV
* Chapter XV
* Central Goods and Services Tax Rules, 2017 (CGST Rules):
* Rule 159 (Provisional attachment of property)
* Rule 159(5)
* Rule 159(6)
* Form GST DRC-23
* Karnataka High Court Act, 1961:
* Section 4
* Constitution of India:
* Article 136
* Article 226

7. Precedents Cited
* Supreme Court of India:
* CIT v. Calcutta Knitwears [(2014) 6 SCC 444]
* Swedish Match AB v. SEBI [(2004) 11 SCC 641 : AIR 2004 SC 4219]
* CIT v. Ajax Products Ltd. [(1965) 55 ITR 741 (SC)]
* Whitney v. IRC [1926 AC 37 (HL)]
* CIT v. Mahaliram Ramjidas [(1939-40) 67 IA 239 : (1940) 52 LW 234 : (1940) 8 ITR 442]
* Indian United Mills Ltd. v. Commr. of Excess Profits Tax [(1955) 27 ITR 20 (SC)]
* Gursahai Saigal v. CIT [(1963) 48 ITR 1 (SC)]
* CWT v. Sharvan Kumar Swarup & Sons [(1994) 6 SCC 623]
* CIT v. National Taj Traders [(1980) 1 SCC 370 : 1980 SCC (Tax) 124]
* Associated Cement Co. Ltd. v. CTO [(1981) 4 SCC 578 : 1982 SCC (Tax) 3 : (1981) 48 STC 466]
* Radha Krishan Industries v. State of Himachal Pradesh [2021 (48) G.S.T.L. 113 (S.C.)]
* Armour Security (India) Ltd. v. Commissioner, CGST, Delhi East Commissionerate [(2025) 33 Centax 222 (S.C.)]
* Karnataka High Court (Division Bench):
* K-9 Enterprises v. State of Karnataka and Another in Writ Appeal No.100425/2023 and connected matters.