Kesari Nandan Mobile Vs Office of Assistant Commissioner of State Tax (Supreme Court of India)

The Supreme Court of India, in the case of Kesari Nandan Mobile vs. Office of Assistant Commissioner of State Tax, addressed the legality of a provisional attachment order under Section 83 of the Central Goods and Services Tax Act, 2017 (CGST Act). The appellant, Kesari Nandan Mobile, challenged a decision by the Gujarat High Court that upheld a second set of provisional attachment orders issued by the tax authority. These new orders were issued after the initial attachment, which was valid for one year, had lapsed. The tax authority, after the initial attachment orders from October 2023 had expired in October 2024, issued fresh orders in November and December 2024, effectively “renewing” the attachment of the appellant’s bank accounts.The appellant’s counsel, Mr. Dave, argued that the CGST Act does not have a provision for extending or renewing a provisional attachment order after the one-year period stipulated in Section 83(2) has expired. He contrasted this with the Central Excise Act, 1944 and the Customs Act, 1962, both of which explicitly allow for the extension of a provisional attachment, though for a limited period. He contended that the absence of a similar provision in the CGST Act indicates the legislature’s intent that such an attachment should have a limited lifespan. Mr. Dave also cited a prior Supreme Court order in RHC Global Exports Private Limited & ors. v. Union of India & ors. where a bank account attachment was lifted after a year. Additionally, he highlighted a differing opinion from the Kerala High Court in Additional Director General & anr. v. Ali K. & ors. which held that re-issuing an attachment order on the same property after the initial order has ceased is not the legislative intent of the CGST Act. The counsel also brought to the court’s attention that the tax authority failed to address the appellant’s representation against the initial attachment, as required by Rule 159(5) of the CGST Rules, and that the renewed orders were based on a similar, if not identical, satisfaction note.The respondent, represented by Ms. Priyanka, argued that the appellant was involved in a large-scale financial fraud and that the renewed attachment was necessary to protect government revenue and prevent the appellant from disposing of assets. She maintained that the CGST Act does not explicitly prohibit the renewal of a lapsed attachment order.The Supreme Court rejected the respondent’s arguments. The court referenced its own decision in Radha Krishan Industries v. State of Himachal Pradesh, which highlighted the draconian nature of Section 83 and the need for a strict and meticulous observance of its conditions. The court emphasized that the authority of a statutory body must be explicitly conferred by law and cannot be justified by arguing that the action is not prohibited. Citing precedents such as State of Odisha v. Satish Kumar Ishwardas Gajbhiye and Maniruddin Bepari v. Chairman of the Municipal Commissioners, the court affirmed that a statutory authority can only perform acts permitted by the statute. The court held that allowing a “renewal” of a provisional attachment order would render Section 83(2) of the CGST Act, which limits the attachment to one year, “otiose” and would be contrary to the legal maxim ut res magis valeat quam pereat (it is better for a thing to have effect than be made void). The court concluded that repeated issuance of attachment orders on the same grounds, without any change in circumstances, would be an abuse of the law. It noted that the GST Council itself, in its 53rd meeting, acknowledged the issue and proposed amendments to Rule 159 to align it with Section 83, indicating that the one-year limitation is the legislative intent. The court, therefore, ruled that the renewed provisional attachment orders were indefensible, setting aside the Gujarat High Court’s decision and the provisional attachment orders, allowing the appellant to operate its bank accounts.Judicial Precedents