Holding

The Supreme Court held that the writ petition was maintainable, the order of provisional attachment was ultra vires Section 83, and no appeal under Section 107 was available, thereby setting aside the High Court’s dismissal.

Summary

M/s Radha Krishan Industries challenged two orders of provisional attachment of its receivables issued by the Joint Commissioner under Section 83 of the Himachal Pradesh Goods and Service Tax Act, 2017, alleging that the orders were ultra vires, lacked a requisite opinion based on tangible material, and violated Rule 159(5) by denying a hearing. The High Court dismissed the writ petition on the ground that an appeal under Section 107 was an alternative remedy. The Supreme Court held that the Joint Commissioner was acting as a delegate of the Commissioner, that no appeal under Section 107 was available, and that the writ petition was maintainable as the only remedy. It found that the Commissioner had not formed a proper opinion, had no pending proceedings against the appellant, and had breached procedural safeguards, rendering the attachment illegal. Consequently, the Court set aside the High Court judgment and the orders of provisional attachment. The appeal was allowed and the writ petition was upheld.

Issues considered

Whether a writ petition under Article 226 is maintainable when an appeal under Section 107 of the HPGST Act is available.
Whether the Joint Commissioner, acting as a delegate, could be appealed against under Section 107(1).
Whether the order of provisional attachment under Section 83 complied with the statutory conditions, including the formation of an opinion based on tangible material and adherence to Rule 159(5).
Whether pendency of proceedings against a third party (the supplier) suffices for invoking Section 83 against the appellant.
Whether the procedural requirement of granting an opportunity of being heard was complied with.

Legislation cited

Central Goods and Services Tax Act, 2017
Himachal Pradesh Goods and Service Tax Act, 2017s. 107, s. 5(3), s. 74, s. 83
Himachal Pradesh Goods and Service Tax Rules, 2017s. 159
Income Tax Act, 1961s. 147

Subjects

GSTProvisional attachmentSection 83Article 226Natural justiceDelegation of powersRule 159Alternative remedyTax fraud

Judgment

406 [2021]REPORTS
SUPREME COURT 3 S.C.R. 406 [2021] 3 S.C.R.

A M/S RADHA KRISHAN INDUSTRIES
v.
STATE OF HIMACHAL PRADESH & ORS.
(Civil Appeal No 1155 of 2021)
B 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
C
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
D 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
E
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
F 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
G
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
H
406
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 407
PRADESH & ORS.

Court is set aside – Himachal Pradesh Goods and Service Tax Rules, A
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 B
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 C
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. D
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 E
Section 5(3) and an appeal against the order of provisional
attachment was not available under Section 107 (1).[Para 72][467-
D]
1.2 The writ petition before the High Court under Article
226 of the Constitution challenging the order of provisional F
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
G
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
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408 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B
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
C 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 non-
application of mind by the Joint Commissioner to the provisions
D 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
E 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
F 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;
G 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]
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 409
PRADESH & ORS.

2. The principles of law for entertaining the petition under A
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 B
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 C
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 D
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 E
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 F
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
G
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
H
410 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B 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
C 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
D 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
E 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][443-
D-G]
3.2 Sub-Section (1) of Section 83 can be bifurcated into
F 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
G 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
H and explained as:
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 411
PRADESH & ORS.

(i) The power to order a provisional attachment is entrusted A
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;
B
(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 C
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 D
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 E
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
F
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 G
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
H
412 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B
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
C 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.
D
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
E 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
F 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
G 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
H
levied. The Commissioner must be alive to the fact that such
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 413
PRADESH & ORS.

provisions are not intended to authorize Commissioners to make A
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]
B
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 C
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 D
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. E
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 F
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
G
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
H
414 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B
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
C 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
D 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
E 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
F 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
G 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
H for the purpose of business. The dual procedural safeguards
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 415
PRADESH & ORS.

inserted in sub-Rule 5 of Rule 159 demand strict compliance. A
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
B
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 C
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
D
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 E
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
F
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] 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 H
416 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B
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,
C 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
D 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)
E 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
F 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
G 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

H
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PRADESH & ORS.

whose property is attached. Firstly, it permits such a person to A
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
B
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 C
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 D
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 2018-
19 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 E
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 company- F
customer 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 G
for the valid exercise of powers under Section 83 of the HPGST
Act. [Para 66][464-E-H; 465-A-B]

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418 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B
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
C 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
D 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
E 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
F 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
G 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

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PRADESH & ORS.

the order of provisional attachment must cease to subsist. A
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 B
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 C
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 D
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 E
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]
F
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.
G
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.

H
420 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B
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,
C 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
D
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)
E [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
F
[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
G
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
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 421
PRADESH & ORS.

2001 (252) ITR 642 referred to Para 34 A
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 B
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.
C
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
D
DR DHANANJAYA Y CHANDRACHUD, J.
A Factual Background
B Submissions
B.1 Maintainability of the writ petition before the High Court
E
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 F
C.3 Delegation of authority under CGST Act
D Analysis
E Summary of findings
A Factual Background G
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 H
422 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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
B
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
C 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
D 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
E from its customers. The provisional attachment was ordered while invoking
Section 83 of the Himachal Pradesh Goods and Service Tax Act, 2017 2
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
F 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
G 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
H “HPGST Rules’’
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 423
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

High Court was right in concluding that the provisional attachment could A
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 B
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 C
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 D
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 E
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 credit 9 from F
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
4
“GST’’
5
The respondents before this Court have stated that the said document was in fact a G
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’’ H
424 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 2018 for explaining the allegedly illegal claim of ITC made during 2017-
18 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.
B 8. On 9 January 2019, a notice10 was issued to Fujikawa Power,
Bagbania, BBN Baddi, one of the customers of the appellant, for
provisionally attaching an amount of Rs. 5 crores due to the appellant,
under Section 83 of the HPGST Act. On 19 January 2019, the third
respondent passed an order of provisional attachment in respect of
receivables worth Rs. 5 crores due from Fujikawa Power. This order
C inadvertently referred to Sarika Industries instead of the appellant. The
appellant responded bya representation dated 29 January 2019, claiming
inter alia, that the order of attachment was without affording a hearing.
The appellant also claimed that on 26 December 2018, they had noticed
that the ITC had been blocked without prior notice. On 30 January 2019,
D the notice of attachment was withdrawn by the third respondent.
9. According to the respondents, after the case of GM Powertech
was investigated, tax evasion was detected. GM Powertech was found
to have claimed and utilized ITC against invoices issued by “fake fictitious
firms without actual movement of goods…” GM Powertech had issued
E invoices to various recipients in Himachal Pradesh including the appellant.
On 4 July 2020, the third respondent issued an intimation to the appellant
under Section 74(5) of the HPGST Act of tax ascertained as being
payable11, advising it to pay tax, interest and penalty of Rs. 5.03 crores.
The appellant was given an opportunity to file its submissions against the
ascertainment of the amount by 4 August 2020.
F
10. A tax liability of Rs 39.48 crores was confirmed against GM
Powertech on the conclusion of the proceedings against it. GM
Powertech was found to have no business establishment or property in
Himachal Pradesh and the case was considered to fall into the category
of a serious tax fraud.
G
11. On 21 October 2020, the Commissioner of State Taxes and
Excise, Himachal Pradesh12 delegated his powers under Section 83 of
the HPGST Act to the third respondent. In exercise of the powers
10
“SCN’’
11
Form GST DRC-01A
H 12
“second respondent/Commissioner’’
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 425
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

delegated by the Commissioner, the third respondent issued two orders A
of provisional attachment13 dated 28 October 2020 attaching the
receivables of the appellant from its customers, Fujikawa Power and
M/s Deepak International. The attachment order issued to Fujikawa
Power under Rule 159(1) of the HPGST Rules noted that it owed about
Rs. 4 crores to the appellant. The order states that the appellant was
B
found to be involved in an ITC fraud amounting to Rs.5,03,82,554/-
(Rs. 5.03 crores) during 2017-18 and 2018-19. The order, in its relevant
part, provides:
“In order to protect the interests of revenue and in exercise of the
powers conferred/delegated by Commissioner of the State Taxes
& Excise, HP vide office order No.12-4/78-EXN-Tax-Part-278/ C
22(a)- 26780-82 dated 21.10.2020 under section 83 of the Act, I,
U.S. Rana, Joint Commissioner of State Taxes & Excise, South
Enforcement Zone, Parwanoo, hereby provisionally attach the
payment to the extent of Rs.5,03,82,554/- of M/s Radha Krishan
Industries, Kala-Amb. Henceforth, no payment shall be allowed D
to be made from your company to M/s RadhaKrishan Industries
without the prior permission of this department / office.”
A similar order was issued to Deepak International, noting that a
payment of Rs. 2.91 crores was owed by it to the appellant.
12. On 4 November 2020, the appellant filed a representation and E
objections against the attachment and denied liability. By an order dated
6 November 2020, the third respondent rejected the objections of the
appellant. The third respondent stated that collectively payments “only”
worth Rs. 4.92 crores from both of the appellant’s customers were
attached. F
13. On 27 November 2020,the third respondent issued a notice to
show cause to the appellant under Section 74(1) of the HPGST Act for
recovering the ITC, interest and penalty. The notice was issued on the
basis that the appellant had claimed ITC on the supplies received from
GM Powertech and since the inward supplies made by GM Powertech G
were found to be fake, the appellant’s claim of ITC was also in question.
14. The orders of provisional attachment and the order passed by
the Commissioner on 21 October 2020 delegating his powers under
13
DRC-22 vide Memo No EXN-JCSTE/SEZParwanoo/2020-21/1171 and EXN-JCSTE/
SEZ Parwanoo/2020-21/1167 (“orders of provisional attachment’’) H
426 SUPREME COURT REPORTS [2021] 3 S.C.R.

A Section 83 of the HPGST Act to the third respondent, were challenged
by the appellant before the High Court in a writ petition14 under Article
226.
15. While dismissing the writ petition, the High Court held that it
was undisputed that the third respondent and the Divisional Commissioner,
B who has been appointed as Commissioner (Appeals) under the GST
Act, are constituted under the HPGST Act, and therefore, it is assumed
that there is no illegal or irregular exercise of jurisdiction. The High
Court further observed that even if there is some defect in the procedure
followed during the hearing of the case, it does not follow that the authority
acted without jurisdiction, and though the order may be irregular or
C defective, it cannot be a nullity so long it has been passed by the competent
authority.
16. The High Court held that a writ is ordinarily not maintainable
when there exists an alternative remedy. The exceptions to this rule are
where the statutory authority has not acted in accordance with the
D provisions of the legislation; or acted in defiance of the fundamental
principles of judicial procedure or where an order has been passed in
violation of the principles of natural justice. The High Court held that it
would not entertain a petition under Article 226 of the Constitution, if an
efficacious remedy is available to the aggrieved person or where the
E statute under which the action complained of has been taken contains a
mechanism for redressal of grievances. The High Court held that when
a statutory forum of appeal exists, an appeal should “not be entertained
ignoring the statutory dispensation”.
17. Noting that the appellant has an alternative and efficacious
F remedy of appeal under Section 107 of the HPGST Act, the High Court
refused to entertain the writ petition. The High Court held that it was
fortified in this view by the fact that the writ petition filed by GM
Powertech, has also not been entertained and that it has been relegated
to avail of the alternative remedy.

G 18. Subsequent to the dismissal of the writ petition by the High
Court, certain developments have taken place. On 12 January 2021, the
appellant sought toinspect the files for GM Powertech and stated that
no documents in this regard had been provided to it in context of the
proceedings initiated under Section 74. In response, the third respondent
14
H Writ Petition No. 5648 of 2020
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 427
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

allowed the appellant to inspect the contents of the appellant’s case file. A
According to the respondent, the appellant failed to exercise this option
and did not reply to the show cause notice dated 27 November 2020.
Thereafter, on 18 February 2021, an order under Section 74(9) of the
HPGST Act was passed bythe third respondent confirming a tax demand
of Rs. 8,30,27,218. This order under Section 74(9) has been assailed by
B
the appellant before the appellate authority under Section 107. The
dismissal of the petition challenging the orders of provisional attachment
is in question in the present proceedings.
B Submissions
19. Mr Puneet Bali, learned senior counsel appearing on behalf of C
the appellant addressed the following submissions:
B.1 Maintainability of the writ petition before the High
Court:
(i) No efficacious alternative remedy is available against
the orders of provisional attachment passed under Section D
83 of the HPGST Act. The jurisdiction to pass an order
under Section 83 is conferred on the Commissioner of
State Taxes. Although the power stands delegated to
the third respondent, the order is still deemed to be passed
by the Commissioner (second respondent). Under the E
GST Act, an appeal against the order of the Commissioner
lies before the GST Appellate Tribunal which has not
been constituted till date. Thus, the only remedy available
to the appellant was by filing a writ petition;
(ii) Reliance was placed on Whirlpool Corporation v F
Registrar of Trademarks, Mumbai15 to argue that
an alternative remedy is not a bar to the exercise of the
writ jurisdiction of the High Court if the writ petition is
filed for enforcement of fundamental rights; where there
has been a violation of the principles of natural justice;
where the order or the proceedings are wholly without G
jurisdiction; or when the vires of an Act is challenged;
(iii) The third respondent had withdrawn the earlier orders
of provisional attachment issued in January 2019 after
15
(1998) 8 SCC 1 H
428 SUPREME COURT REPORTS [2021] 3 S.C.R.

A considering the representation filed by the appellant. The
impugned orders of provisional attachment were issued
on 28 October 2020, on the same set of facts and
allegations. Thus, the impugned orders of provisional
attachment amount to a review of the earlier orders by
the same respondent, which is contrary to the HPGST
B
Act, as it does not provide for powers of review;
(iv) The impugned orders of provisional attachment are in
violation of the procedure established under sub-rule (5)
of Rule 159 of HPGST Rules, which provides that an
opportunity of being heard is to be given against the
C provisional attachment as a mandatory requirement. In
this case, the appellant filed objections to the orders of
provisional attachment on 4 November 2020 and the
objections were rejected by the third respondent on 6
November 2020, without providing an opportunity of
D being heard to the appellant;
(v) The reliance placed by the High Court on the judgment
in the case of GM Powertech and others v State of
H.P16 to state that a similar petition was not entertained
is misplaced. In that case, GM Powertech had challenged
E the order of assessment in the writ petition, while the
appellant has challenged the orders of provisional
attachment made prior to the assessment. Additionally,
the case of GM Powertech did not fall within the
exceptions to the rule of alternate remedy;

F (vi) The High Courts should not have dismissed the writ
petitionon grounds of maintainability if the facts of the
case are not disputed by the State as held in Rajasthan
State Electricity Board v Union of India17; and
(vii) Reliance was placed on Calcutta Discount Co. Ltd.
G v Income Tax Officer, Companies District I,
Calcutta 18 and Commissioner of Income Tax,
Gujarat v M/s A Raman and Co.19 to argue that the
16
CWP No. 5462 of 2020
17
2008 (5) SCC 632
18
AIR 1961 SC 372
H 19
AIR 1968 SC 49
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 429
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

High Court can exercise its powers under Article 226 of A
the Constitution to issue an order prohibiting the tax
officer from proceedings to assess the liability, if the
conditions precedent to the exercise of such jurisdiction
have not been met.
B.2 Challenge on merits: improper invocation of B
Section 83
(i) The power of provisional attachment under Section 83
of the HPGST Act is a drastic power and must be
exercised with extreme care and caution;
(ii) The power under Section 83 of the HPGST Act cannot C
be exercised unless there is sufficient material on record
to justify that the assessee is about to dispose of the
whole or part of its property to thwart the ultimate
collection of tax;
(iii) The existence of relevant material is a pre-condition to D
the formation of an opinion by the Commissioner;
(iv) The third respondent failed to show any material on
record to indicate that the appellant is a “fly by night
operator” or is disposing off assets to defeat the
collection of tax; E
(v) The stated reason for provisional attachment- the
initiation of proceedings and passing of an order under
Section 74 against the appellant’s supplier, GM
Powertech-is insufficient to invoke the powers of
provisional attachment against the appellant; F
(vi) The third respondent has failed to show that there is a
threat to the interests of the revenue on account of the
appellant’s alleged involvement in the said ITC fraud of
GM Powertech;
(vii) The appellant has paid an output tax of Rs. G
12,49,90,267.14 (Rs. 12.49 crores) for the relevant
period, which is more than the ITC of Rs. 3.25 crores
which the appellant has allegedly taken fraudulently;

H
430 SUPREME COURT REPORTS [2021] 3 S.C.R.

A (viii) Even if the revenue has to attach the properties of the
assessee, immovable properties must be attached.
Attachment of bank accounts and trading assets should
be a last resort only as it paralyses the business of the
assessee;
B (ix) The pendency of proceedings under Sections 62, 63, 64,
67, 73 or 74, of the HPGST Act, is a pre-condition for
invoking the provisions of Section 83 of the HPGST Act;
(x) The provisional attachment of the appellant’s assets was
made on 28 October 2020, before the proceedings were
C initiated against the appellant under Section 74 of the
HPGST Act on 27 November 2020. Thus, the provisional
attachment was made without jurisdiction and in violation
of Section 83;
(xi) The provisions of Section 83 of the HPGST Act do not
D provide for making provisional attachment a second time,
once the first attachment is withdrawn. Moreover, the
HPGST Act, does not providethe third respondent the
power of review to review his earlier decision regarding
provisional attachment;

E (xii) The first provisional attachment against the appellant
was “withdrawn completely with immediate effect” in
January 2019 and the same had gained finality. Thus,
the impugned orders of provisional attachmentfor the
second time, are without the authority of law and should
be set aside;
F
(xiii) Provisional attachment of 100% of the alleged amount
is not permissible as per law;
(xiv) While Section 83 of the HPGST Act does not provide
for the percentage of alleged amount to be attached, the
powers under this section must be guided by other
G
provisions of the Act;
(xv) Under Section 74 of the HPGST Act, once the tax
demand becomes payable, an assessee can only
challenge this demand in appeal after depositing 10% of
the disputed amount and the remaining demand is stayed.
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 431
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

In contrast, the provisional attachment of 100% of the A
alleged amount even before the finalisation of the tax
demand is contrary to the legislative intent;
(xvi) Thethird respondent has taken a contradictory stand with
respect to collection of tax from the appellant. Even if it
is admitted that the transaction between the appellant B
and GM Powertech was a fake transaction without
actual movement of goods, it follows that the appellant
cannot claim refund of ITC and nor would the appellant
be liable to pay tax on outward supplies. However, the
appellant has already paid Rs. 12.49 crores of tax on
outward supplies; C

(xvii) The third respondent has raised a demand of
Rs. 39 crores against GM Powertech for illegally availing
ITC. Once the tax demand has been confirmed against
GM Powertech, refusal to grant ITC to the appellant
would amount to double collection of tax. D

20. Opposing these submissions, Mr Akshay Amritanshu, learned
counsel appearing on behalf of the State of Himachal Pradesh, submitted
that:
(i) The SLP should be dismissed as the appellant has an E
alternate and efficacious remedy of an appeal under
Section 107 of the HPGST Act. Moreover, the SLP has
been rendered infructuous due to the order dated 18
February 2021 under Section 74(9) of the HPGST Act
and the consequent appeal filed by the appellant against
this order before the appellate authority; F
(ii) In paragraph 4 of the impugned judgment, it has been
noted that the appellant had admitted that it had an
alternative remedy by way of an appeal under Section
107 of the HPGST Act;
G
(iii) The delegation of powers under Section 83 of the HPGST
Act by the second respondent to the third respondent
does not imply that there was an irregular or illegal
exercise of jurisdiction by the second respondent;

H
432 SUPREME COURT REPORTS [2021] 3 S.C.R.

A (iv) The order under Section 74(9) against GM Powertech
has not been challenged and has gained finality. Since it
has been found that all purchases of GM Powertech
were fraudulent, there could have been no outward sale
to the appellant. Thus, the transaction between GM
Powertech and appellant would also be fraudulent;
B
(v) The orders of provisional attachment were issued after
the proceedings against GM Powertech had concluded;
(vi) GM Powertech had no property or business
establishment in Himachal Pradesh. In order to avoid a
C similar situation against the appellant and to protect the
interests of revenue, the impugned orders of provisional
attachment were passed;
(vii) The proceedings of provisional attachment under Section
83 of the HPGST Act had concluded after rejection of
D the objections filed by the appellant on 6 November 2020.
The appellant participated in these proceedings and did
not challenge the orders of provisional attachment. Thus,
the appellant is estopped from challenging the initiation
of proceedings under Section 83 of the HPGST Act;

E (viii) The impugned orders of provisional attachment were
based on a fresh set of allegations, after the proceedings
against GM Powertech had been concluded and it was
found that GM Powertech had no business or properties
in Himachal Pradesh;

F (ix) After the appellant filed objections to the orders of
provisional attachment, it was in the discretion of the
Commissioner whether or not to grant an opportunity of
a hearing to the appellant;
(x) Merely because the appellant has paid Rs. 12 crores of
tax, does not imply that the appellant did not engage in
G
the ITC fraud;
(xi) There was no violation of the principles of natural justice
as an order of provisional attachment does not require a
prior notice to be issued to the assessee;
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 433
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

(xii) The necessary prerequisites for triggering Section 83 of A
the HPGST Act were complied with;
(xiii) The appellant had not sought any prior stay on the orders
of provisional attachment and thus, it is not conceivable
that the business of the appellant has become paralyzed
due to these orders; B
(xiv) The provisional attachment is not only for the purpose
of recovery, but is intended to safeguard the interests of
the revenue while the proceedings are pending; and
(xv) The legislature did not provide any quantum or percentage
for the purpose of provisional attachment under Section C
83 of the Act. Thus, a comparison with other provisions
of the HPGST Act, including Section 107, is incorrect.
C Legal Position
21. The following issues arise in the present case: D
(i) Whether a writ petition challenging the orders of
provisional attachment was maintainable under Article
226 of the Constitution before the High Court; and
(ii) If the answer to (i) is in the affirmative, whether the
orders of provisional attachment constitute a valid E
exercise of power.
22. The appellant has advanced submissions on and adverted to
the merits of the proceedings initiated under Section 74 of the HPGST
Act. The order dated 18 February 2021 under Section 74 (9) of the
HPGST Act is not in challenge before this Court. An appeal against the F
order is pending before the appellate authority under Section 107 of the
HPGST Act. We will not adjudicate upon the merits of the order under
section 74(9). This judgment is confined to the two issues formulated
above.
23. We shall now review the position of law on the questions G
before us.
C.1 Maintainability of writ petition before the High Court
24. The High Court has dealt with the maintainability of the petition
under Article 226 of the Constitution. Relying on the decision of this
H
434 SUPREME COURT REPORTS [2021] 3 S.C.R.

A Court in Assistant Commissioner (CT) LTU, Kakinada and others
v Glaxo Smith Kline Consumer Health Care Limited20, the High
Court noted that although it can entertain a petition under Article 226 of
the Constitution, it must not do so when the aggrieved person has an
effective alternate remedy available in law. However, certain exceptions
to this “rule of alternate remedy” include where, the statutory authority
B
has not acted in accordance with the provisions of the law or acted in
defiance of the fundamental principles of judicial procedure; or has
resorted to invoke provisions, which are repealed; or where an order
has been passed in violation of the principles of natural justice. Applying
this formulation, the High Court noted that the appellant has an alternate
C remedy available under the GST Act and thus, the petition was not
maintainable.
25. In this background, it becomes necessary for this Court, to
dwell on the “rule of alternate remedy” and its judicial exposition. In
Whirlpool Corporation v Registrar of Trademarks, Mumbai21, a
D two judge Bench of this Court after reviewing the case law on this point,
noted:
“14. The power to issue prerogative writs under Article 226 of
the Constitution is plenary in nature and is not limited by any other
provision of the Constitution. This power can be exercised by the
E High Court not only for issuing writs in the nature of habeas corpus,
mandamus, prohibition, quo warranto and certiorari for the
enforcement of any of the Fundamental Rights contained in Part
III of the Constitution but also for “any other purpose”.
15. Under Article 226 of the Constitution, the High Court, having
F regard to the facts of the case, has a discretion to entertain or not
to entertain a writ petition. But the High Court has imposed upon
itself certain restrictions one of which is that if an effective and
efficacious remedy is available, the High Court would not normally
exercise its jurisdiction. But the alternative remedy has been
consistently held by this Court not to operate as a bar in at
G least three contingencies, namely, where the writ petition
has been filed for the enforcement of any of the Fundamental
Rights or where there has been a violation of the principle
of natural justice or where the order or proceedings are
20
AIR 2020 SC 2819
H 21
(1998) 8 SCC 1 (“Whirlpool’’)
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 435
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

wholly without jurisdiction or the vires of an Act is A
challenged. There is a plethora of case-law on this point but to
cut down this circle of forensic whirlpool, we would rely on some
old decisions of the evolutionary era of the constitutional law as
they still hold the field.”
(emphasis supplied) B
26. Following the dictum of this Court in Whirlpool (supra), in
Harbanslal Sahnia v Indian Oil Corpn. Ltd.22, this court noted that
“7. So far as the view taken by the High Court that the remedy by
way of recourse to arbitration clause was available to the appellants
and therefore the writ petition filed by the appellants was liable to C
be dismissed is concerned, suffice it to observe that the rule of
exclusion of writ jurisdiction by availability of an alternative remedy
is a rule of discretion and not one of compulsion. In an
appropriate case, in spite of availability of the alternative
remedy, the High Court may still exercise its writ D
jurisdiction in at least three contingencies: (i) where the
writ petition seeks enforcement of any of the fundamental
rights; (ii) where there is failure of principles of natural
justice; or (iii) where the orders or proceedings are wholly
without jurisdiction or the vires of an Act is challenged.
(See Whirlpool Corpn. v. Registrar of Trade Marks [(1998) E
8 SCC 1].) The present case attracts applicability of the first two
contingencies. Moreover, as noted, the appellants’ dealership,
which is their bread and butter, came to be terminated for an
irrelevant and non-existent cause. In such circumstances, we feel
that the appellants should have been allowed relief by the High F
Court itself instead of driving them to the need of initiating
arbitration proceedings.” (emphasis supplied)
27. The principles of law which emerge are that :
(i) The power under Article 226 of the Constitution to issue
writs can be exercised not only for the enforcement of G
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
22
(2003) 2 SCC 107 H
436 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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 (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
C 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,
D 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; and
(vi) In cases where there are disputed questions of fact, the
E 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.

F 28. These principles have been consistently upheld by this Court
in Seth Chand Ratan v Pandit Durga Prasad23, Babubhai Muljibhai
Patel v Nandlal Khodidas Barot24 and Rajasthan SEB v. Union of
India,25 among other decisions.
C.2 Provisional Attachment
G 29. At this stage, we will advert to relevant precedents outlining
the contours of the power of provisional attachment and specifically, in
the context of provisions worded similarly to Section 83 of the HPGST
Act.
23
(2003) 5 SCC 399
24
(1974) 2 SCC 706
H 25
(2008) 5 SCC 632
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 437
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

30. The decision of this Court in Raman Tech Process Engg A
Co and Anr v Solanki Traders26 was concerned with the power of a
civil court under Order 38 Rule 5 of the CPC to order an attachment
before judgment. In that case, proceedings had been instituted by the
respondent, for the recovery of moneys due for the supply of material to
the appellant. The plaintiff moved an application under Order 38 Rule 5,
B
for a direction to the defendants to furnish security for the suit claim and
if they failed to do so, for attachment before judgment. This Court
described the power of attachment before judgment in the following
terms:
“5. The power under Order 38, Rule 5 Civil Procedure Code is a
drastic and extraordinary power. Such power should not be C
exercised mechanically or merely for the asking. It should be used
sparingly and strictly in accordance with the Rule. The purpose
of Order 38, Rule 5 not to convert an unsecured debt into a
secured debt. Any attempt by a plaintiff to utilize the provisions of
Order 38 Rule 5 as a leverage for coercing the defendant to settle D
the suit claim should be discouraged. Instances are not wanting
where bloated and doubtful claims are realized by unscrupulous
plaintiffs, by obtaining orders of attachment before judgment and
forcing the defendants for out of court settlements, under threat
of attachment.
E
6. A defendant is not debarred from dealing with his property
merely because a suit is filed or about to be filed against him.
Shifting of business from one premises to another premises or
removal of machinery to another premises by itself is not a ground
for granting attachment before judgment. A plaintiff should show,
prima facie, that his claim is bona fide and valid and also satisfy F
the court that the defendant is about to remove or dispose of the
whole or part of his property, with the intention of obstructing or
delaying the execution of any decree that may be passed against
him, before power is exercised under Order 38, Rule 5 CPC.
Courts should also keep in view the principles relating to grant of G
attachment before judgment [internal citation omitted].”
31. A body of precedent has emerged in the High Courts on the
exercise of the power under Section 83 of the CGST Act (akin to the

26
2008(1) R.C.R.(Civil) 195 H
438 SUPREME COURT REPORTS [2021] 3 S.C.R.

A State GST Act27). The shared learning which emerges from these
decisions of the High Court needs recognition. In Valerius Industries
v Union of India28, the Gujarat High Court laid down the principles for
the construction of Section 83 of the SGST/CGST Act. The High Court
noted that a provisional attachment on the basis of a subjective satisfaction,
absent any cogent or credible material, constitutes malice in law. It further
B
outlined the principles for the exercise of the power:
“52. […]
The order of provisional attachment before the assessment order
is made, may be justified if the assessing authority or any other
C authority empowered in law is of the opinion that it is necessary
to protect the interest of revenue. However, the subjective
satisfaction should be based on some credible materials or
information…It is not any and every material, howsoever vague
and indefinite or distant, remote or far-fetching, which would
warrant the formation of the belief.
D
(1) The power conferred upon the authority under Section 83
of the Act for provisional attachment could be termed as a
very drastic and far-reaching power. Such power should
be used sparingly and only on substantive weighty grounds
and reasons.
E
(3) The power of provisional attachment under Section 83 of
the Act should be exercised by the authority only if there is
a reasonable apprehension that the assessee may default
the ultimate collection of the demand that is likely to be
raised on completion of the assessment. It should, therefore,
F be exercised with extreme care and caution.
(4) The power under Section 83 of the Act for provisional
attachment should be exercised only if there is
sufficient material on record to justify the satisfaction
that the assessee is about to dispose of wholly or any
G part of his/her property with a view to thwarting the
ultimate collection of demand and in order to achieve
the said objective, the attachment should be of the

27
“SGST Act’’
28
H 2019 (30) GSTL 15 (Gujarat)
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 439
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

properties and to that extent, it is required to achieve A
this objective.
(5) The power under Section 83 of the Act should neither
be used as a tool to harass the assessee nor should it
be used in a manner which may have an irreversible
detrimental effect on the business of the assessee. B
(6) The attachment of bank account and trading assets
should be resorted to only as a last resort or measure.
The provisional attachment under Section 83 of the
Act should not be equated with the attachment in the
course of the recovery proceedings. C
(7) The authority before exercising power under Section 83 of
the Act for provisional attachment should take into
consideration two things:
(i) whether it is a revenue neutral situation.
D
(ii) the statement of “output liability or input credit”. Having
regard to the amount paid by reversing the input tax credit
if the interest of the revenue is sufficiently secured, then
the authority may not be justified in invoking its power under
Section 83 of the Act for the purpose of provisional
attachment.” (emphasis supplied) E
32. In the same vein, in Jai Ambey Filament Pvt Ltd v Union
of India 29, the Gujarat High Court reiterated that the subjective
satisfaction as to the need for provisional attachment must be based on
credible information that the attachment is necessary. This opinion cannot
be formed based on “imaginary grounds, wishful thinking, howsoever F
laudable that may be.” The High Court further held, that on his opinion
being challenged, the competent officer must be able to show the material
on the basis of which the belief is formed.
33. In Patran Steel Rolling Mill v Assistant Commissioner
of State Tax Unit 230, the Gujarat High Court cited two instances in G
which provisional attachment would be apposite, these being where the
assessee is a ‘fly by night operator’ and if the assessee will not be able
to pay its dues after assessment.
29
2021 (44) GSTL 41 (Gujarat)
30
2019 (20) GSTL 732 (Gujarat) H
440 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 34. Similar to the decisions of the Gujarat High Court, other High
Courts have recognized the restrictive nature of the power of provisional
attachment under Section 83 of the SGST Act and the need for it to be
based on adequate substantive material. The High Courts have also
underscored the extraordinary nature of this power, necessitating due
caution in its exercise.31
B
35. The Delhi High Court, in Proex Fashion Private Limited v
Government of India32 outlined the following statutorily stipulated
conditions for the invocation of Section 83 of the SGST Act:
“i) Order should be passed by Commissioner;
C ii) Proceeding under Section 62 or 63 or 64 or 67 or 73 or 74
should be pending;
iii) Commissioner must form an opinion;
iv) Order should be passed to protect interest of revenue;
D v) It must be necessary to attach property.”
36. In UFV India Global Education v Union of India33, the
Punjab and Haryana High Court held that pendency of proceedings under
the sections mentioned in Section 83 viz. Sections 62 or 63 or 64 or 67 or
73 or 74 is the sine qua non for an order of provisional attachment to be
E issued under Section 83.
37. Another case which is relevant for our purposes is the decision
of the Bombay High Court in Kaish Impex Private Limited v Union
of India34. In this case, the taxation authorities were enquiring into
fraudulent claiming of ITC on the basis of fictitious transactions by an
F export firm in Delhi, against whom proceedings under Section 67 of the
CGST Act had been initiated. On tracing the money trail, the petitioner
was summoned under Section 70 of the CGST Act and his bank accounts
were provisionally attached under Section 83 of the CGST Act. On dealing
with the question of whether the bank accounts of the petitioner could
31
G 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
32
WP(C) 11245 of 2020 dated 6 January 2021
33
2020 (43) GSTL 472
H 34
(2020) 6 AIR Bom R 122
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 441
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

be attached, when there were no pending proceedings against him and A
proceedings were pending against another taxable entity, the High Court
held that the proceedings referred to under Section 83 of the Act must
be pending against the taxable entity whose property is being attached.
The High Court noted that:
“18. […] Section 83 though uses the phrase ‘pendency of any B
proceedings’, the proceedings are referable to section 62, 63, 64,
67, 73 and 74 of the Act and none other. The bank account of
the taxable person can be attached against whom the
proceedings under the sections mentioned above are
initiated. Section 83 does not provide for an automatic
extension to any other taxable person from an inquiry C
specifically launched against a taxable person under these
provisions. Section 83 read with section 159(2), and the form
GST DRC-22 show that a proceeding has to be initiated against a
specific taxable person, an opinion has to be formed that to protect
the interest of Revenue an order of provisional attachment is D
necessary. The format of the order, i.e. the form GST DRC-
22 also specifies the particulars of a registered taxable
person and which proceedings have been launched against
the aforesaid taxable person indicating a nexus between
the proceedings to be initiated against a taxable person
and provisional attachment of bank account of such taxable E
person.” (emphasis supplied)
C.3 Delegation of authority under CGST Act
38. The learned counsel for the respondent State, during the course
of his submissions, has also sought to justify the delegation of powers by F
the Commissioner to the Joint Commissioner by way of the impugned
notification dated 21 October 2020 for the purpose of attachment of
properties under Section 83 of the HPGST Act. In this regard, reliance
was placed on Nathanlal Maganlal Chauhan v State of Gujarat,35
where the Gujarat High Court was considering the validity of a notification
by which the Commissioner of State Tax had delegated all the functions G
under the SGST Act to the Special Commissioner and Additional
Commissioners of State Tax. In rejecting a challenge to this notification,
the High Court held that:

35
2020 SCC Online Guj 1811 H
442 SUPREME COURT REPORTS [2021] 3 S.C.R.

A “39. As pointed out by the Supreme Court in the case of Sahni
Silk Mills [internal citation omitted], the courts should normally
berigorous while requiring the power to be exercised by the
persons or the bodies authorized by the statutes. As noted above,
it is essential that the delegated power should be exercised by the
authority upon whom it is conferred and by no one else. At the
B
same time, in the present administrative setup, the extreme judicial
aversion to delegation should not be carried to an extreme. There
is only one Commissioner of State Tax in the State of Gujarat, and
having regard to the enormous functions and duties to be discharged
under the new tax regime, he has been empowered to delegate
C his powers to the Special Commissioner of State Tax and the
Additional Commissioners of State Tax.
40. We take notice of the fact that the delegation has been
authorized expressly under Section 5(3) of the Act. We would
have definitely interfered if the Special Commissioner or the
D Additional Commissioners would have further delegated the power
to officers subordinate to them. Such is not the case over here.
41. In the impugned notification it has been stated that the functions
delegated shall be under the overall supervision of the
Commissioner. When the Commissioner stated that his
E functions were delegated subject to his overall supervision,
it did not mean or should not be construed as if he reserved
to himself the right to intervene to impose his own decision
upon his delegate. The words in the last part of the impugned
notification would mean that the Commissioner could
control the exercise administratively as to the kinds of
F cases in which the delegate could take action. In other
words, the administrative side of the delegate’s duties were
to be the subject of control and revision but not the essential
power to decide, whether to take action or not in a particular
case. Once the powers are delegated for the purpose of
G Section 69 of the Act, the subjective satisfaction, or rather,
the reasonable belief should be that of the delegated
authority.”
(emphasis supplied)

H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 443
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

D Analysis A
39. The essence of the present case lies in how the power to
order a provisional attachment under Section 83 of the HPGST Act is
construed. Before interpreting it, the provision is extracted below for
convenience of reference:
“83. Provisional attachment to protect revenue in certain cases. - B
(1) Where during the pendency of any proceedings under section
62 or section 63 or section 64 or section 67 or section 73 or section
74, the Commissioner is of the opinion that for the purpose of
protecting the interest of the Government revenue, it is necessary
so to do, he may, by order in writing attach provisionally any C
property, including bank account, belonging to the taxable person
in such manner as may be prescribed.
(2) Every such provisional attachment shall cease to have effect
after the expiry of a period of one year from the date of the order
made under sub-section (1).” D
40. The marginal note to Section 83 provides some indication of
Parliamentary intent. Section 83 provides for “provisional attachment to
protect revenue in certain cases”. The first point to note is that the
attachment is provisional – provisional in the sense that it is in aid of
something else. The second point to note is that the purpose is to protect E
the revenue. The third point is the expression “in certain cases” which
shows that in order to effect a provisional attachment, the conditions
which have been spelt out in the statute must be fulfilled. 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 F
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, we must have regard
to the purpose underlying the provision. An interpretation which G
effectuates the purpose must be preferred particularly when it is supported
by the plain meaning of the words used.
41. 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
H
444 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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 which have been explained
B
above is for convenience of exposition. While they are not watertight
compartments, ultimately and together they aid in validating an
understanding of the statute. Each of the above five parts is now
interpreted and explained below:
(i) The power to order a provisional attachment is entrusted
C 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;
D (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”;
E
(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
F (vi) The manner in which a provisional attachment is levied must
be specified in the rules made pursuant to the provisions of
the statute.
42. Under sub-Section (2) of Section 83, a provisional attachment
ceases to have effect upon the expiry of a period of one year of the
G order being passed under sub-Section (1). The power to levy a provisional
attachment has been entrusted to the Commissioner during the pendency
of proceedings under Sections 62, 63, 64, 67, 73 or as the case may be,
Section 74. Section 62 contains provisions for assessment for non-filing
of returns. Section 63 provides for assessment of unregistered persons.
Section 64 contains provisions for summary assessment. Section 67
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 445
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

elucidates provisions for inspection, search and seizure. Before we dwell A
on Section 74, it would be material to note the provisions of Section 70
which are extracted below:
“70. Power to summon persons to give evidence and produce
documents. - (1) The proper officer under this Act shall have
powers to summon any person whose attendance he considers B
necessary either to give evidence or to produce a document or
any other thing in any inquiry in the same manner, as provided in
the case of a civil court under the provisions of the Code of Civil
Procedure, 1908, (5 of 1908).
(2) Every such inquiry referred to in sub-section (1) shall be C
deemed to be a “judicial proceedings” within the meaning of section
193 and section 228 of the Indian Penal Code, 1860, (45 of 1860).”
43. A power is conferred by Section 70 upon the proper officer to
summon a person whose attendance is considered necessary to give
evidence or produce a document or any other things in any enquiry in D
the manner which is provided in the case of a civil court under the CPC.
44. Section 74 is extracted below:
“74. Determination of tax not paid or short paid or erroneously
refunded or input tax credit wrongly availed or utilised by
reason of fraud or any wilful mis-statement or suppression E
of facts. –
(1) Where it appears to the proper officer that any tax has not
been paid or short paid or erroneously refunded or where
input tax credit has been wrongly availed or utilised by reason
of fraud, or any wilful mis-statement or suppression of facts F
to evade tax, he shall serve notice on the person chargeable
with tax which has not been so paid or which has been so
short paid or to whom the refund has erroneously been made,
or who has wrongly availed or utilised input tax credit,
requiring him to show cause as to why he should not pay
G
the amount specified in the notice alongwith interest payable
thereon under section 50 and a penalty equivalent to the
tax specified in the notice.
(2) The proper officer shall issue the notice under sub-section
(1) at least six months prior to the time limit specified in
sub-section (10) for issuance of order. H
446 SUPREME COURT REPORTS [2021] 3 S.C.R.

A (3) Where a notice has been issued for any period under
sub-section (1), the proper officer may serve a statement,
containing the details of tax not paid or short paid or
erroneously refunded or input tax credit wrongly availed or
utilised for such periods other than those covered under
subsection (1), on the person chargeable with tax.
B
(4) The service of statement under sub-section (3) shall be
deemed to be service of notice under sub-section (1) of
section 73, subject to the condition that the grounds relied
upon in the said statement, except the ground of fraud, or
any wilful mis-statement or suppression of facts to evade
C tax, for periods other than those covered under sub-section
(1) are the same as are mentioned in the earlier notice.
(5) The person chargeable with tax may, before service of notice
under sub-section (1), pay the amount of tax alongwith
interest payable under section 50 and a penalty equivalent
D to fifteen per cent of such tax on the basis of his own
ascertainment of such tax or the tax as ascertained by the
proper officer and inform the proper officer in writing of
such payment.
(6) The proper officer, on receipt of such information, shall not
E serve any notice under sub-section (1), in respect of the
tax so paid or any penalty payable under the provisions of
this Act or the rules made thereunder.
(7) Where the proper officer is of the opinion that the amount
paid under sub-section (5) falls short of the amount actually
F payable, he shall proceed to issue the notice as provided
for in sub-section (1) in respect of such amount which falls
short of the amount actually payable.
(8) Where any person chargeable with tax under sub-section
(1) pays the said tax alongwith interest payable under section
G 50 and a penalty equivalent to twenty five per cent of such
tax within thirty days of issue of the notice, all proceedings
in respect of the said notice shall be deemed to be concluded.
(9) The proper officer shall, after considering the representation,
if any, made by the person chargeable with tax, determine
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 447
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

the amount of tax, interest and penalty due from such person A
and issue an order.
(10) The proper officer shall issue the order under sub-section
(9) within a period of five years from the due date for
furnishing of annual return for the financial year to which
the tax not paid or short paid or input tax credit wrongly B
availed or utilised relates to or within five years from the
date of erroneous refund.
(11) Where any person served with an order issued under
sub-section (9) pays the tax along with interest payable
thereon under section 50 and a penalty equivalent to fifty C
per cent of such tax within thirty days of communication of
the order, all proceedings in respect of the said notice shall
be deemed to be concluded.
Explanation-1. - For the purposes of section 73 and this
section,- D
(i) the expression “all proceedings in respect of the said notice”
shall not include proceedings under section 132; and
(ii) where the notice under the same proceedings is issued to
the main person liable to pay tax and some other persons,
and such proceedings against the main person have been E
concluded under section 73 or section 74, the proceedings
against all the persons liable to pay penalty under sections
122, 125, 129 and 130 are deemed to be concluded.
Explanation-2. - For the purpose of this Act, the expression
“suppression” shall mean non-declaration of facts or F
information which a taxable person is required to declare in
the return, statement, report or any other document
furnished under this Act or the rules made thereunder, or
failure to furnish any information on being asked for, in
writing, by the proper officer.” G
45. Sub- Section (1) of Section 74 empowers the proper officer to
serve a notice on a person chargeable with tax where it appears that
(i) Any tax has not been paid;
(ii) Tax has been short paid;
H
448 SUPREME COURT REPORTS [2021] 3 S.C.R.

A (iii) Tax has been erroneously refunded; or
(iv) Input tax credit has been wrongly availed or utilized by reason
of fraud, willful statement or suppression of fact to evade
tax.
46. Sub-Section (1) enables the proper officer to issue a notice to
B show cause for the recovery of tax, interest payable under Section 50
and the penalty equivalent to the amount of tax specified in the notice.
Sub-Sections (2), (3) and (4) lay down procedural provisions which are
to be followed by the proper officer. Secondly, under sub-Section (5) of
Section 74, before the service of a notice under sub-Section (1), the
C person who is chargeable with tax may pay the tax together with interest
and a penalty equivalent to fifteen per cent of the tax on the basis of
their own ascertainment of the tax or as ascertained by the proper officer
and inform the proper officer of the payment having been made upon
receipt of the information. Sub-Section (6) stipulates that the proper
officer shall not serve any notice under sub-Section (1) in respect of the
D tax so paid or any penalty payable under the provisions of the Act or
the Rules.
47. On the other hand, when the proper officer is of the opinion
that the amount which has been paid under sub-Section (5) falls short of
the amount which is actually payable, a notice under sub-Section (1) is
E to issue for the amount which falls short of what is actually payable.
Sub-Section (8) contains a stipulation that where a person who is
chargeable with tax under sub-Section (1) pays the tax together with
interest and a penalty of twenty-five per cent of the tax within thirty
days of the issuance of the notice, all proceedings in respect of the
F notice shall be deemed to be concluded. Under sub-Section (9), the proper
officer after considering the representation of the person chargeable to
tax is authorized to determine the amount of tax, interest and penalty
due and to issue an order. A period of five years is stipulated by
sub-Section (10) for the issuance of an order in sub-Section (9).
Sub-Section (11) stipulates that upon service of an order under
G sub-Section (9), all proceedings in respect of the notice shall be deemed
to be concluded upon the person paying the tax with interest under Section
50 and a penalty equivalent to 50 per cent of the tax within thirty days of
the communication of an order. These provisions indicate how
sub-Sections (5), (8) and (11) operate at different stages of the process.
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 449
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

48. Now in this backdrop, it becomes necessary to emphasize A
that 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
B
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 noticed earlier.
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 C
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 formation of
D
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 E
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
F
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. G
49. 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
H
450 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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,
B
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
C the peril of arbitrary power. Each of these ingredients must be strictly
applied before a provisional attachment on the property of an assesses
can be levied. The Commissioner must be alive to the fact that such
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
D
of the opinion that a provisional attachment is necessary for the purpose
of protecting the interest of the government revenue.
50. 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
E 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, as interpreted above, would leave no manner of doubt
F 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. While dealing with a similar provision
contained in Section 4536 of the Gujarat Value Added Tax Act 2003 , one
of us (Hon’ble Mr Justice MR Shah) speaking for a Division Bench of
G
36
Section 45 (1) provides as follows:
“45. Provisional attachment. - (1) Where during the tendency of any proceedings of
assessment or reassessment of turnover escaping assessment, the Commissioner is of
the opinion that for the purpose of protecting the interest of the Government revenue,
it is necessary so to do, he may by order in writing attach provisionally any property
H belonging to the dealer in such manner as may be prescribed.”
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 451
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

the Gujarat High Court in Vishwanath Realtor v State of Gujarat37 A
observed:
“8.3. Section 45 of the VAT Act confers powers upon the
Commissioner to pass the order of provisional attachment of any
property belonging to the dealer during the pendency of any
proceedings of assessment or reassessment of turnover escaping B
assessment. However, the order of provisional attachment can
be passed by the Commissioner when the Commissioner is of the
opinion that for the purpose of protecting the interest of the
Government Revenue, it is necessary so to do. Therefore, before
passing the order of provisional attachment, there must be an
opinion formed by the Commissioner that for the purpose of C
protecting the interest of the Government Revenue during the
pendency of any proceedings of assessment or reassessment, it
is necessary to attach provisionally any property belonging to the
dealer. However, such satisfaction must be on some tangible
material on objective facts with the Commissioner. In a D
given case, on the basis of the past conduct of the dealer
and on the basis of some reliable information that the dealer
is likely to defeat the claim of the Revenue in case any
order is passed against the dealer under the VAT Act and/
or the dealer is likely to sale his properties and/or sale
and/or dispose of the properties and in case after the E
conclusion of the assessment/reassessment proceedings,
if there is any tax liability, the Revenue may not be in a
position to recover the amount thereafter, in such a case
only, however, on formation of subjective satisfaction/
opinion, the Commissioner may exercise the powers under F
Section 45 of the VAT Act.”
(emphasis supplied)
51. We adopt the test of the existence of “tangible material”. In
this context, reference may be made to the decision of this Court in the
Commissioner of Income Tax v Kelvinator of India Limited38. G
Mr Justice SH Kapadia (as the learned Chief Justice then was) while
considering the expression “reason to believe” in Section 147 of the
Income Tax Act 1961 that income chargeable to tax has escaped
37
Special Civil No. 7210 of 2015, decided on 29 April 2015
38
(2010) 2 SCC 723 H
452 SUPREME COURT REPORTS [2021] 3 S.C.R.

A assessment inter alia by the omission or failure of the assessee to disclose
fully and truly all material facts necessary for the assessment of that
year, held that the power to reopen an assessment must be conditioned
on the existence of “tangible material” and that “reasons must have a
live link with the formation of the belief”. This principle was followed
subsequently in a two judge Bench decision in Income Tax Officer,
B
Ward No. 162 (2) v Techspan India Private Limited 39. While
adverting to these decisions we have noticed that Section 83 of the
HPGST Act uses the expression “opinion” as distinguished from “reasons
to believe”. However for the reasons that we have indicated earlier we
are clearly of the view that the formation of the opinion must be based
C on tangible material which indicates a live link to the necessity to order a
provisional attachment to protect the interest of the government revenue.
52. Rule 159 prescribes modalities for effecting a provisional
attachment of property. Rule 159 provides thus :
“159. Publication of information in respect of persons in
D certain cases. - (1) If the Commissioner, or any other officer
authorised by him in this behalf, is of the opinion that it is necessary
or expedient in the public interest to publish the name of any person
and any other particulars relating to any proceedings or prosecution
under this Act in respect of such person, it may cause to be
E published such name and particulars in such manner as it thinks
fit.
(2) No publication under this section shall be made in relation to
any penalty imposed under this Act until the time for presenting
an appeal to the Appellate Authority under section 107 has expired
F without an appeal having been presented or the appeal, if
presented, has been disposed of.
Explanation. - In the case of firm, company or other association
of persons, the names of the partners of the firm, directors,
managing agents, secretaries and treasurers or managers of the
G company, or the members of the association, as the case may be,
may also be published if, in the opinion of the Commissioner, or
any other officer authorised by him in this behalf, circumstances
of the case justify it.”

39
H (2018) 6 SCC 685
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 453
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

53. Under sub-Rule (1) of Rule 159, an attachment of property by A
the Commissioner under Section 83 is effected by passing an order
mentioning the details of the property which is attached. The form in
which the order is to be made is prescribed in form GST DRC-22. This
form is extracted below:
B

C

D

E

F

G

H
454 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 54. Under sub-Rule (5) of Rule 159, the person whose property is
attached is allowed seven days’ time to file an objection that the property
attached “was or is not liable to attachment”. Sub-Rule (5) stipulates
that the Commissioner may “after affording an opportunity of being heard
to the person filing the objection” release the property by an order in
form GSTDRC-23. Similarly, under sub-Rule (6) upon being satisfied
B
that the property was or is no longer liable to be attached, the
Commissioner is empowered to release the property by issuing an order
inForm GST DRC- 23 for the releasing of the property under attachment.
The Form is extracted below :

C

D

E

F

G

55. A significant aspect of Rule 159(5) is that upon the levy of a
H provisional attachment, the person whose property is attached is
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 455
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

empowered to file an objection within seven days on the ground that the A
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
B
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.
56. The second significant aspect of sub-Rule (5) is the mandatory C
requirement of furnishing an opportunity of being heard to the person
whose property is attached. This is inconsonance with the principles of
natural justice and ensures that a fair procedure is observed. Sub-Rule
(5) provides for a post- provisional attachment right of:
(i) Submitting an objection to the attachment; D

(ii) An opportunity of being heard.
Sub- Rule (5) 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 E
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 the filing of an objection, the person whose property is attached
is entitled to an opportunity of being heard. It is not open to the
Commissioner, as has been stated in the present case, to hold the view
that the only safeguard under sub-Rule 5 is to submit an objection without F
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 G
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 H
456 SUPREME COURT REPORTS [2021] 3 S.C.R.

A purpose of business. The dual procedural safeguards 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
B 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-
C 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
D 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
E 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
F 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.
G Now, it is in this backdrop that we proceed to a determination of
whether the petition under Article 226 was maintainable and if it was,
whether Commissioner exercised the powers under Section 83 read with
Rule 159 in accordance with law.
57. The material facts for making this determination need to be
H recapitulated. On 3 October 2018, a memo was issued under Section 70
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 457
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

(incorrectly referring to the provisions of Section 74) by the Joint A
Commissioner of State Taxes and Excise directing the appellant to appear
on 9 October 2018 along with specific documents pertaining to the years
2017-18 and 2018-19. The notice stated that in the event that the appellant
failed to appear, the Commissioner would be constrained to issue a notice
to show cause under Section 74(1). On 9 October 2018, two partners of
B
the appellant attended the hearing. On 10 October 2018, a ‘detection
case’ under Section 74 of the HPGST Act and CGST Act read with
Section 20 of the IGST Act was initiated against a supplier of the
appellant, GM Powertech by a search and seizure operation conducted
under Section 67. On 15 October 2018, the partners of the appellant
attended the case hearing and provided certain documents which were C
required by the department. The partners of GM Powertech were
arrested under the provisions of Sections 69 and 132 of the HPGST Act
on 3 December 2018, on the allegation that they had made fraudulent
claims of ITC from fake/fictitious firms of Delhi and Kanpur. On 15
December 2018, the representatives of the appellant were directed to
D
remain present on 17 December 2018 for explaining the allegedly illegal
claim of ITC for 2017-18 and 2018-19. A representative of the appellant
attended the enquiry on 17 December 2018. On 9 January 2019, an
order of provisional attachment was issued under Section 83 by the Joint
Commissioner of State Taxes and Excise by which a payment of Rs 5
crores due to the appellant from M/s Fujikawa Power was attached on E
the ground that the appellant had availed of ITC of Rs 3.25 crores against
the purchase of goods valued at about Rs 21 crores from GM Powertech
for 2017-18 and 2018-19 and a case of GST fraud had been instituted
against the alleged supplier. On 19 January 2019, Form GST DRC-22
was issued to Fujikawa Power regarding the attachment of Rs 5 crores.
F
On 29 January 2019, the appellant made a representation under Rule
159(5) for unblocking the credit and releasing the amount which was
provisionally attached. On 30 January 2019, the order of provisional
attachment was withdrawn completely with immediate effect. On 9 April
2019 and 5 July 2019 a representative of the appellant attended the case
hearing. On 4 July 2020, an intimation was furnished to the appellant of G
the tax ascertained as payable under Section 74(5). According to the
intimation, the appellant received among other items, lead ingots from
GM Powertech during FY 2017-18 and 2018-19 and investigation had
revealed that ITC had been fraudulently availed of by the supplier on the
basis of the invoices of fake firms. The appellant had also availed of
H
458 SUPREME COURT REPORTS [2021] 3 S.C.R.

A ITC due to inward supplies from GM Powertech. On 3 and 5 August
2020, the appellant filed its submissions under Rule 142(2) (a) against
the proposed liability. On 6 October 2020, an order was passed under
Section 74(9) against GM Powertech confirming a demand of Rs 39.48
crores for 2017-18 and 2018-19. The proceedings concluded that GM
Powertech had
B
(i) No business establishment or property in Himachal Pradesh;
and
(ii) No security or surety.
58. On 21 October 2020, the Commissioner of State Taxes and
C Excise, Himachal Pradesh delegated, in pursuance of the provisions of
Section 5(3) the powers vested under Section 83(1) inter alia to the
Joint Commissioner of State Taxes and Excise. On 28 October 2020, a
fresh order was issued under Section 83 stating that proceedings were
initiated against the appellant under Section 74 since it was found to be
D involved in an ITC fraud of Rs 5.03 crores during 2017-18 and 2018-19.
Since a GST fraud case had been initiated against GM Powertech on
whom a demand had been raised, the ITC claimed by the appellant
against supplies effected by GM Powertech was held to be inadmissible
resulting in a provisional attachment of the payments due to the appellant
to the extent of Rs 5,03,82,554/-. A similar order was issued on 28 October
E 2020 under Section 83 to M/s Deepak International Limited. The appellant
submitted a detailed representation under Rule 159(5) to the Joint
Commissioner. The representation was rejected on 6 November 2020
without affording an opportunity of being heard. Thereafter, on 27
November 2020, a notice to show cause was issued to the appellant
F under Section 74(1) recording that the appellant had shown inward supplies
of lead ingots from GM Powertech and had claimed and utilized ITC on
that basis. However, all suppliers from whom GM Powertech had shown
inward supplies of goods were found to be fictitious, fake and non-existent.
The GST registration of GM Powertech had been cancelled and by an
order under Section 74(9), an additional demand of Rs 39.48 crores was
G confirmed. The appellant was called upon to show cause as to why
interest, tax and penalty should not be imposed.The appellant instituted
writ proceedings before the Himachal Pradesh High Court inter alia
for
(i) Challenging the delegation by the Commissioner on 21 October
H 2020;
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 459
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

(ii) The proceedings initiated under Section 83; and A
(iii) Revocation of the provisional attachment.
The writ petition was dismissed by the High Court on the ground
that the appellant had an alternative remedy available in law.
59. The sole ground which has weighed with the High Court in B
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”. In addition, the High Court has observed that the
writ petition filed by GM Powertech against whom similar allegations
have been leveled had been dismissed by relegating it to the pursuit of
an alternative remedy. The learned senior counsel appearing on behalf C
of the appellant submitted that GM Powertech 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 D
under the Act for challenging an order under Section 83.
60. Section 107 of the HPGST Act 2017 is incorporated in Chapter
XVIII which deals with appeals and revisions. Section 107(1) provides
as follows:
“107. Appeals to Appellate Authority.—(1) Any person aggrieved E
by any decision or order passed under this Act or the Central
Goods and Services Tax Act, 2017 (No.12 of 2017) by an
adjudicating authority may appeal to such Appellate Authority as
may be prescribed within three months from the date on which
the said decision or order is communicated to such person.” F
61. Sub-Section (1) of Section 107 makes it abundantly clear that
an appeal to the Appellate Authority is available against a decision or
order passed under the HPGST Act or CGST Act by an “adjudicating
authority”. Sub-Section (2) similarly provides that:
(2) The Commissioner may, on his own motion, or upon request G
from the Commissioner of central tax, call for and examine the
record of any proceeding in which an adjudicating authority has
passed any decision or order under this Act or the Central Goods
and Services Tax Act, 2017 (No.12 of 2017) for the purpose of
satisfying himself as to the legality or propriety of the said decision H
460 SUPREME COURT REPORTS [2021] 3 S.C.R.

A or order and may, by order, direct any officer subordinate to him
to apply to the Appellate Authority within six months from the
date of communication of the said decision or order for the
determination of such points arising out of the said decision or
order as may be specified by the Commissioner in his order.
B Sub-Section (2) confers a revisional power on the Commissioner
in regard to the legality or propriety of a decision or order passed by an
adjudicating authority. The expression ‘adjudicating authority’ is defined
by Section 2(4) in the following terms:

C “(4) “adjudicating authority” means any authority, appointed or
authorized to pass any order or decision under this Act, but does
not include the Commissioner, Revisional Authority, the Authority
for Advance Ruling, the Appellate Authority for Advance Ruling,
the Appellate Authority and the Appellate Tribunal;”

D 62. From the above definition, it is evident that the expression
‘adjudicating authority’ does not include among other authorities, the
Commissioner. In the present 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
E
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
F 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. The High Court was, therefore, clearly in error
in declining to entertain the writ proceedings.

63. The entire procedure which has been followed by the Joint
G Commissioner in the present 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
H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 461
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

Commissioner. In the counter affidavit which has been filed by the A
Commissioner it has been stated that:

“17. It is submitted that the petitioner duly participated in the
proceedings initialed u/Sec. 83 of the HPGST Act 2017 and also
filed its objections. Once the petitioner filed its objections and the
same were rejected on 06.11.2020 then the petitioner could not B
have turned back and challenged the initiation of proceedings u/
Sec. 83 or the HPGST Act, 2017, only because the proceedings
did not end up favoring of the Petitioner.

18. It is reiterated that the fresh order of attachment passed on C
28.10.2020 was not based on the same set or allegations.

19. It is further submitted that once the Petitioner had filed
objections, then any opportunity of hearing was the discretion of
the Ld. Commissioner.”
D
64. 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 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 E
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). There has, hence, been a fundamental breach of the
principles of natural justice. F

65. On 28 October 2020, the following order was recorded in the
file noting by the Joint Commissioner purporting to justify the levy of a
provisional attachment :

G

H
462 SUPREME COURT REPORTS [2021] 3 S.C.R.

A

B

C

D

E

F

G

H
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 463
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

A

B

C

D

E

F

G

H
464 SUPREME COURT REPORTS [2021] 3 S.C.R.

A

B

C

D

E
66. Ex facie, the above order passed by the Joint Commissioner
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
F the case of GM Powertech had been decided under Section 74 resulting
in an additional demand of Rs. 39 crores on account of a fraudulent
claim of ITC for FY 2017-18 and 2018-19. GM Powertech is alleged to
have passed on the ITC to various Registered Tax Persons40 situated in
Himachal Pradesh by issuing invoices inter alia to the appellant during
2018-19 for which a case under Section 74 had been initiated. The order
G
records that the appellant had claimed ITC of Rs 3.25 crores on the
strength of the invoices issued by GM Powertech. 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
40
H “RTP’’
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 465
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

case”, the Joint Commissioner concluded that it is necessary at this stage A
to safeguard the government revenue and since the appellant had sold
goods to Fujikawa 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
B
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.
67. 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 C
the present 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 D
before the case was listed, on 18 February 2021, an ex parte order was
passed by the Joint Commissioner under Section 74 (9) of the HPGST
Act confirming the demand of Rs 8,30,27,218 in the notice to show cause.
68. It is evident from the facts noted above that the order of
provisional attachment was passed before the proceedings against the
appellant were initiated under Section 74 of the HPGST Act. Section 83 E
of the Act requires that there must be pendency of proceedings under
the relevant provisions mentioned above against the taxable person whose
property is sought to be attached. We are unable to accept the contention
of the respondent that merely because proceedings were pending/
concluded against another taxable entity, that is GM Powertech, the F
powers of Sections 83 could also be attracted against the appellant. 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 GM Powertech, would not satisfy the requirements of Section G
83. Thus, the order of provisional attachment was ultra vires Section 83
of the Act.
69. On 1 March 2021, the appellant has filed an appeal under
Section 107 together with a deposit of Rs 32,15,488 representing ten per
cent of the tax due. Section 107(6) contains the following stipulation: H
466 SUPREME COURT REPORTS [2021] 3 S.C.R.

A “(6) No appeal shall be filed under sub-section (1), unless the
appellant has paid—
(a) in full, such part of the amount of tax, interest, fine, fee and
penalty arising from the impugned order, as is admitted by him;
and
B (b) a sum equal to ten per cent of the remaining amount of tax in
dispute arising from the said order, in relation to which the appeal
has been filed.”
Sub-Section (7) stipulates that :

C “(7) Where the appellant has paid the amount under sub-section
(6), the recovery proceedings for the balance amount shall be
deemed to be stayed.”
70. Clause (a) of sub-Section (6) provides that no appeal shall be
filed without the payment in full, of such part of the amount of tax,
D interest, fine, fee and penalty arising from the impugned order as is
admitted. In addition, under clause (b), ten per cent of the remaining
amount of tax in dispute arising from the order has to be paid in relation
to which the appeal has been filed. Upon the payment of the amount
under sub-Section (6) the recovery proceedings for the balance are
deemed to be stayed. Thus, in any event, the order of provisional
E attachment must cease to subsist. 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). As observed
hereinabove and under Section 83, the order of provisional attachment
F 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 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
G end.
71. 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
H of provisional attachment came to be issued by another Joint
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 467
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

Commissioner. Therefore, it was the contention of the petitioner before A
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
B
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 C
of provisional attachment.
E Summary of findings
72. For the above reasons, we hold and conclude that
(i) The Joint Commissioner while ordering a provisional D
attachment under section 83 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);
E
(ii) The writ petition before the High Court under Article 226
of the Constitution challenging the order of provisional
attachment was maintainable;
(iii) The High Court has erred in dismissing the writ petition on
the ground that it was not maintainable; F
(iv) 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;
G
(v) 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. Before ordering a provisional attachment the
H
468 SUPREME COURT REPORTS [2021] 3 S.C.R.

A 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.
B (vi) 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;
(vii) The formation of an opinion by the Commissioner under
C 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;
(viii) In the facts of the present case, there was a clear
D non-application of mind by the Joint Commissioner to the
provisions of Section 83, rendering the provisional
attachment illegal;
(ix) Under the provisions of Rule 159(5), the person whose
property is attached is entitled to dual procedural safeguards:
E (a) An entitlement to submit objections on the ground that
the property was or is not liable to attachment; and
(b) An opportunity of being heard;
There has been a breach of the mandatory requirement of
Rule 159(5) and the Commissioner was clearly
F
misconceived in law in coming into conclusion that he had
a discretion on whether or not to grant an opportunity of
being heard;
(x) The Commissioner is duty bound to deal with the objections
to the attachment by passing a reasoned order which must
G be communicated to the taxable person whose property is
attached;
(xi) 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
H end; and
M/S RADHA KRISHAN INDUSTRIES v. STATE OF HIMACHAL 469
PRADESH & ORS. [DR DHANANJAYA Y CHANDRACHUD, J.]

(xii) The appellant having filed an appeal against the order under A
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.
B
73. For the above reasons, we allow the appeal and set aside the
impugned judgment and order of the High Court dated 1 January 2021.
74. The writ petition filed by the appellant under Article 226 of the
Constitution shall stand allowed by setting aside the orders of provisional
attachment dated 28 October 2020. C
75. There shall be no order as to costs. Pending application(s), if
any, stand disposed of.

Nidhi Jain Appeal allowed.
D

E

F

G

H