The Bombay High Court has referred to the decision of the Supreme Court in Radha Krishan Industries Vs. State of Himachal Pradesh [(2021)6-SCC-771], to clarify that before the Commissioner can levy a provisional attachment under Section 83 of the CGST Act, 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 Court held that the power to levy a provisional attachment is draconian in nature, and its exercise is conditioned by specific statutory language which indicates: first, the necessity of the 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; and fifth, the observance by the Commissioner of the provisions contained in the rules in regard to the manner of attachment.
The validity of the exercise of power depends on a strict and punctilious observance of the statutory preconditions by the Commissioner, and the formation of the opinion must bear a proximate and live nexus to the purpose of protecting the interest of the government revenue, rather than being left to an unguided subjective discretion, explained the Court.
Thus, the Court pointed out that an anticipatory attachment must strictly conform to the requirements, both substantive and procedural, embodied in the statute and the rules, and the Commissioner must act on the basis of tangible material on objective facts to form the opinion, implicating the doctrine of proportionality which mandates the existence of a proximate or live link between the need for the attachment and the purpose which it is intended to secure.
The Division Bench comprising Justice G. S. Kulkarni and Justice Aarti Sathe observed that there was absolute vagueness in the pre-intimation notice, which was issued on the very day the impugned attachment order was issued, thereby giving a complete go-by to the mandate and requirement of law, specifically Section 83 of the CGST Act, in regard to the coercive action of ordering attachment of the Petitioner’s bank accounts.
The Bench noted that the impugned actions were in violation of the law and an apparent abuse of the powers vested with the authorities under the provisions of the Act. When the power to take drastic action is conferred on the authorities, it is coupled with an onerous duty to adhere to the provisions of law and the procedure so established, and there cannot be a conscious departure from such mandatory requirements of law.
Thus, any action on the part of the officers who are supposed to act within the framework of law cannot be taken in a high-handed manner and/or for extraneous considerations, as it is the rule of law which is taken to ransom by such officials when they knowingly breach the law with impunity, added the Bench.
The Bench found it difficult to believe that officers vested with such draconian powers are not aware of how the same is required to be exercised as the law would mandate, and stated that such officers cannot be permitted to openly defeat the provisions of law and the law as declared by the Supreme Court.
Further, the Bench categorized the present case as quite gross, wherein the requirements of law were breached, and noted that the concerned officer did not bother to respond to the Petitioner’s representation which furnished correct legal information and provided an alternate security to avoid the drastic action of attachment.
Also, the Bench observed that the whole approach of the concerned officer was of unwarranted coercion by attaching the bank accounts without the issuance of a show cause notice, which continued to operate for three months, depriving the Petitioner of the valuable right guaranteed under Article 300A of the Constitution of India and putting the petitioner to a live death by bringing the business to a standstill.
Thus, the Bench set aside the impugned attachment orders and directed the Joint Commissioner of State Tax, Investigation-A to personally deposit an amount of Rs. 25,000/- as costs with the Secretary, Maharashtra State Legal Services Authority, High Court premises, Mumbai, within a period of two months. The Bench also granted liberty to the Respondents to issue a show cause notice to the Petitioner within a period of six weeks if there is tangible material against the Petitioner for recovery to be initiated.
However, pursuant to a praecipe moved for speaking to the minutes of the Judgment, the Bench passed an order on 10th April 2026 directing that the words ‘No costs’, be deleted from paragraph No. (iv) of the operative portion of the Judgment.
Briefly, the Petitioner filed a petition under Article 226 of the Constitution of India challenging the orders of attachment dated 23rd January 2026, which were intimations issued to the Petitioner’s bankers, Punjab National Bank and Saraswat Co-operative Bank Limited, attaching the bank accounts of the Petitioner. The provisional attachment of the bank accounts was initiated under Section 83 of the MGST/CGST Act, 2017, by the Joint Commissioner of State Tax, Investigation-A, to determine tax or any other amount due under Section 67(2) of the said Act.
On 23rd January 2026, the Petitioner was issued a pre-attachment communication in DRC-23; however, on the very same day, the impugned attachment notices to the Petitioner’s bankers came to be issued. The Petitioner contended that the pre-intimation did not disclose any opinion being formed or the period in regard to which tax was being demanded, arguing that provisional attachment without the formation of an opinion on the basis of tangible material is illegal.
On 30th January 2026, the Petitioner addressed a detailed objection responding to the impugned provisional attachment, offering alternate security, and pointing out the requirements of law as laid down by the Supreme Court in Radha Krishan Industries Vs. State of Himachal Pradesh [(2021)6-SCC-771]. The concerned officer did not respond to the representation, and the provisional attachment continued to operate for three months without the issuance of a show cause notice.
Case Relied On:
Radha Krishan Industries Vs. State of Himachal Pradesh, [(2021)6-SCC-771]
Appearances:
Advocates Ishaan V. Patkar, Vinit V. Raje, Sanskar R. Ahire, and Alaksha Legal, for the Petitioner
AGP Amar Mishra, for the Respondents
