Provisional attachment of bank accounts may be lifted when adequate security protects revenue despite pending assessment.

Provisional attachment of bank accounts under the Gujarat VAT regime is an extraordinary revenue-protection measure and must be used sparingly and reasonably during pending assessment or reassessment. Where there is admitted tax liability, non-filing of returns, and an assessment still pending, the power may be justified; however, the availability of unencumbered, marketable assets can support release of the attachment if adequate safeguards protect the revenue. On that basis, the bank accounts were directed to be unfrozen subject to an undertaking, preservation of identified flats, deposit of funds, and furnishing of a bank guarantee.

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Issues: Whether the provisional attachment of the petitioner's bank accounts under section 44 of the Gujarat Value Added Tax Act, 2003 should be lifted, and on what terms.

Analysis: Section 44 authorises provisional attachment during pending assessment or reassessment where it is necessary to protect government revenue. Such power is extraordinary in nature and must be exercised reasonably and sparingly. The record showed an admitted tax liability, non-filing of returns, and an assessment still pending. At the same time, the Court noted that several constructed flats remained unsold, unencumbered, and fully marketable, and that their value provided substantial security against the possible tax and penalty exposure. Balancing the revenue's interest with the petitioner's position, the Court found that unconditional release was not warranted, but continued freezing of the bank accounts was also unnecessary once adequate safeguards were put in place.

Conclusion: The provisional attachment was ordered to be lifted, subject to filing of an undertaking, preservation of the identified flats, deposit of Rs. 50 lakhs, and furnishing of a bank guarantee of Rs. 25 lakhs.

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