Gujarat High Court Clarifies Delegation of Provisional-Attachment Powers and DIN Non-Applicability to State GST Authorities

1. Introduction

M/s NRM Metals (India) Pvt. Ltd. and its director challenged a series of actions undertaken by State GST officers—namely, a search under section 67 of the Central/Gujarat Goods and Services Tax Acts (CGST/GGST), blocking of input-tax credit (ITC) and provisional attachment of bank accounts and sundry debtors under section 83. The petitioners invoked Article 226 of the Constitution, contending that:

All summons and orders were invalid because they lacked a Document Identification Number (DIN) mandated by CBIC Circular 37/2019.
Provisional-attachment orders issued by an Assistant Commissioner were ultra vires section 83 which, on its face, empowers only the Commissioner.
On merits, the department misunderstood “Bill-to/Ship-to” transactions and caused undue hardship.

The State defended the actions, asserting that (i) CBIC circulars do not bind State GST officers, (ii) the Commissioner, acting as a “proper officer” under section 2(91), had already assigned section 83 functions to Assistant Commissioners via an order dated 15-01-2018 issued under section 5(3), and (iii) investigation was ongoing so judicial interference would be premature.

2. Summary of the Judgment

DIN Issue: The Court held that CBIC Circular 37/2019 requiring DIN applies only to Central tax officers; in the absence of an analogous State circular, communications without DIN by State GST officers remain valid.
Delegation Issue: Relying on sections 2(91) and 5(3) GGST and the doctrine in Carltona, the Court upheld the 15-01-2018 order delegating provisional-attachment powers to Assistant/Deputy Commissioners. It declared that earlier contrary observations in Valerius Industries (para 35) were per incuriam.
Merits: As the petitioner had not yet filed objections against the satisfaction note underlying attachment, the Court declined to adjudicate factual disputes. Petitioners were relegated to approach the departmental authority, which must decide objections within two weeks.
All petitions were disposed of; interim relief refused.

3. Analysis

3.1 Precedents Cited and Discussed

CBIC Circular No. 37/2019 – mandated DIN for central officers. Court distinguished its applicability.
Notification 05-07-2017 – general delegation of Commissioner’s powers to Senior officers; cited by petitioners.
Order 15-01-2018 (State GST) – Commissioner assigned section 83 powers to “proper officers” (Deputy/Assistant Commissioners). Core of the State’s defence.
Valerius Industries v. Union of India (Guj HC 2019) – earlier bench doubted Commissioner’s ability to delegate section 83 powers; current bench labelled the relevant para as per incuriam.
Nathalal Maganlal Chauhan v. State Of Gujarat (2020 SCC OnLine Guj) – upheld intra-departmental delegation using the Carltona principle; relied upon heavily.
Carltona Ltd. v. Commissioners of Works [1943] 2 All ER 560 – foundation of implied delegation in administrative law, reaffirmed.

3.2 Court’s Legal Reasoning

Issue A: Absence of DIN on State GST Communications

The bench traced the origin and language of CBIC Circular 37/2019. It noted that:

The circular is addressed exclusively to Central Tax formations.
GST’s dual structure means Central and State tax administrations issue separate circulars/notifications.
No evidence of a corresponding State circular was shown to the Court; counsel candidly admitted none existed.

Therefore, lacking DIN did not ipso facto invalidate the summons or provisional-attachment orders issued by State officers.

Issue B: Competence of Assistant Commissioner to Order Provisional Attachment

Although section 83 uses the word “Commissioner”, the Court reasoned as follows:

Under section 2(91), a “proper officer” includes the Commissioner as well as “any officer to whom functions are assigned by the Commissioner.”
Section 5(3) explicitly authorises the Commissioner to delegate his functions to any other officer subordinate to him.
The Commissioner exercised that power on 15-01-2018, assigning section 83 functions to Assistant and Deputy Commissioners.
Administrative-law doctrine (Carltona) supports such internal delegation to ensure practical governance.
Earlier contrary dicta in Valerius Industries overlooked controlling Supreme Court authorities on delegation and were therefore labelled per incuriam; they no longer bind subsequent benches.

Consequently, the impugned attachment orders, although signed by an Assistant Commissioner, were intra vires.

Issue C: Prematurity & Alternate Remedy

Because section 83 orders are “provisional” and an objection mechanism exists, judicial review was deemed premature on merits. Petitioners were granted liberty to file objections; the tax officer must dispose them within two weeks—a pragmatic safeguard of natural justice.

3.3 Likely Impact of the Decision

Administrative Efficiency: Confirms the legality of decentralised decision-making within State GST, preventing procedural challenges from derailing ongoing investigations.
DIN Compliance Landscape: Creates a clear demarcation—State tax officers are not bound by CBIC’s DIN circular unless the State separately adopts it. Other High Courts or States may now face pressure either to issue analogous circulars or justify the absence thereof.
Precedential Value: Dilutes the persuasive strength of Valerius Industries; future litigants in Gujarat are unlikely to succeed on the argument that only the Commissioner can issue section 83 orders.
Taxpayer Strategy: Emphasises the importance of utilising statutory objection remedies before rushing to writ courts, lest petitions be dismissed as premature.

4. Complex Concepts Simplified

Document Identification Number (DIN): A unique computer-generated code printed on every CBIC communication to ensure traceability, authenticity and curb corruption. Not yet mandated for Gujarat State-GST officers.
Provisional Attachment (Section 83 GST): A temporary freeze on property or bank accounts imposed during investigation to safeguard potential revenue. It lasts throughout the pendency of proceedings or up to one year, whichever is earlier.
“Proper Officer” (Section 2(91)): Either the Commissioner himself or any subordinate officer whom the Commissioner authorises to perform specific functions.
Bill-to / Ship-to Model: Goods are billed to one entity but shipped to another. GST law treats the “bill-to” entity as the recipient for tax purposes while recognising possible “chain of supplies” during a single physical movement.
Carltona Principle: In administrative law, when a statute confers power on a Minister or head of department, it is presumed to be exercisable by authorised civil servants under the Minister’s control, unless the statute insists on personal exercise.
Per Incuriam: A judicial decision rendered in ignorance of a binding authority; subsequent courts may disregard it.

5. Conclusion

The Gujarat High Court’s ruling in NRM Metals cements two significant procedural clarifications in State GST administration:

Absence of DIN does not vitiate State GST communications unless the State itself mandates DIN.
Commissioner’s power to order provisional attachment can validly be exercised by subordinate officers when delegated under section 5(3), consistent with the definition of “proper officer” in section 2(91).

By reinforcing intra-departmental delegation and rejecting hyper-technical invalidation of tax-investigation documents, the Court prioritises administrative efficacy while preserving taxpayers’ right to object within the statutory framework. Future litigants must therefore:

Verify whether a State-specific DIN regime exists before challenging documents on that ground; and
Exhaust departmental objection mechanisms promptly to avoid dismissal of writ petitions as premature.

Taken together, the judgment enhances clarity on procedural powers under the GST regime, mitigating conflicting authority and offering a reliable guidepost for both tax administrators and assessees.