Provisional attachment of bank accounts needs recorded satisfaction and objective material; redundant security cannot justify further restraint.

Provisional attachment of bank accounts under section 45 of the Gujarat Value Added Tax Act, 2003 requires the Commissioner to record a reasoned satisfaction based on objective material that such action is necessary to protect revenue. Where the order does not disclose that satisfaction, and the revenue interest is already secured by prior attachment of stock substantially covering the proposed demand, further attachment of bank accounts cannot stand. Reliance on section 44 for recovery of crystallized dues was also misplaced before assessment had been completed. The attachment orders were therefore set aside and the bank accounts directed to be released.

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Issues: Whether the provisional attachment of the petitioners' bank accounts under section 45 of the Gujarat Value Added Tax Act, 2003 was sustainable in the absence of recorded satisfaction based on objective material and despite the prior attachment of stock covering the proposed demand.

Analysis: Section 45 permits provisional attachment only when the Commissioner forms an opinion, on objective facts and tangible material, that such attachment is necessary to protect revenue during pending assessment or reassessment proceedings. The order impugned did not disclose the requisite satisfaction. The record also showed that stock worth an amount almost equivalent to the proposed demand had already been attached, yet the bank accounts were additionally attached without considering whether further security was needed. The order dated 17.10.2016 also referred to section 44, which concerns recovery of crystallized dues, although no assessment order had yet been passed. The action was therefore taken without proper application of mind to the governing statutory provisions and relevant facts.

Conclusion: The provisional attachment of the bank accounts was unsustainable and was liable to be quashed.

Final Conclusion: The petition was allowed and the impugned attachment orders, including the order extending attachment insofar as it related to the bank accounts, were set aside with directions to release the accounts.

Ratio Decidendi: Provisional attachment under section 45 of the Gujarat Value Added Tax Act, 2003 is valid only when the Commissioner records a reasoned satisfaction, founded on objective material, that such attachment is necessary to protect revenue; absent that satisfaction, and where the revenue interest is otherwise secured, the attachment cannot stand.

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