Last Updated on January 30, 2024 by Kanakkupillai
In the realm of goods and services tax (GST), section 83 of the CGST Act offers the commissioner the authority to provisionally connect any assets owned by means of a taxable individual or any man or woman referred to in section 122. This electricity is bestowed upon the commissioner while the worried taxable person fails to pay the mortgage quantity to the authorities.
a) The order of provisional attachment is exceeded after the initiation of court cases below Chapter XII (Sections 59 to 64), chapter XIV (Sections 67 to 72), or Bankruptcy XV (Sections 73 to 84).
b) The primary intention of the provisional attachment order is to guard the pursuits of the government’s revenue.
c) The provisional attachment order is valid for 365 days and expires after this era.
d) The order must be finalized in writing.
The Circumstances Essential for Provisional Attachment
There are various situations that require the temporary seizure of an individual’s assets:
a) Presenting invoices or bills without actually delivering goods or services, with the deceitful purpose of avoiding tax obligations.
b) Conducting the trade of goods or services, or both, without issuing proper invoices or bills, thereby violating the regulations set forth by the law.
c) Collecting tax payments but neglecting to transfer them to the government within a period of three months.
d) Fraudulently collecting refund amounts.
e) Illegitimately availing input tax credit by using invoices or bills mentioned in clause (b) or fraudulently availing input tax credit without any invoices or bills.
f) Making recipients pay input tax credit without paying the corresponding tax.
Types of Property that can be Attached
Provisional property attachment becomes necessary when there is no alternative to recover the pending revenue from the taxable person. The following types of property can be attached:
a) If the value of immovable property fails to cover the pending revenue, movable property can be attached.
b) When a taxable person fails to meet the pending revenue, any property they own can be attached to compensate for the revenue expense, as per Section 83 of the CGST Act.
c) If the taxable person attaches immovable property with a value equal to the revenue pending against them, the movable property, such as a bank account, will be released.
d) The provisional attachment process does not impact the business carried on by the taxable person.
Duration Period
The duration period of a provisional attachment order is one year from the date of the application’s submission, which is in the form of GST DRC-23. Any property belonging to persons mentioned in Section 122, subsection (1), can be provisionally attached if they engage in fraudulent activities such as:
- Issuing bills or invoices without actually supplying goods and services, intending to violate the act’s provisions.
- Providing goods and services without issuing invoices or bills contravenes the constitution’s provisions.
- Availing of the input tax credit through fraudulent means, such as providing false invoices or availing ITC without any invoices, violates the provisions mentioned in the GST Act.
- Passing on ITC to recipients without paying the corresponding amount.
Conclusion
Provisional attachment is a beneficial provision in the GST Act, enabling taxable persons to address pending expenses against them. While the pending revenue affects the government’s functioning, the act provides opportunities to safeguard certain properties during the provisional attachment process.
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Relevant FAQs:
1. What are the circumstances that warrant provisional attachment in GST?
- Provisional attachment in GST can occur in various circumstances, including:
- Supplying invoices or bills without actually providing goods or services to evade tax.
- Engaging in the supply of goods or services without issuing invoices or bills and contravening the provisions of the law.
- Failing to remit collected tax amounts to the government within three months.
- Fraudulently collecting refund amounts.
- Illegitimately availing input tax credit by using fraudulent invoices or bills or availing credit without any invoices or bills.
- Making recipients pay input tax credits without paying the corresponding tax.
2. What is the duration period for a provisional attachment order in GST?
A provisional attachment order in GST is valid for one year from the date of its passing. Once it is made in writing, this order can be finalized. The application for provisional attachment is submitted in the form of GST DRC-23.
3. Can a business be affected during the provisional attachment process in GST?
No, the provisional attachment process in GST does not impact the business carried on by the taxable person. The attachment is focused on specific properties to compensate for the pending revenue rather than disrupting the overall business operation.
