Provisional attachment may be suspended when it cripples business, if revenue interests are secured by safeguards.

Provisional attachment of factory premises, stock and bank accounts was treated as capable of suspension where it would otherwise cripple an ongoing business before tax liabilities were crystallised. The Gujarat HC noted that the attachments rested on a prima facie case of bogus billing and potential tax and penalty exposure, but also that the petitioner carried on legitimate business, the stock was perishable, assessment proceedings were pending, and a substantial amount had already been deposited in the ledger account. Balancing these interests, the Court suspended the attachments subject to safeguards protecting the Revenue, including maintenance of stock and furnishing an unconditional bank guarantee.

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Issues: Whether the provisional attachment of the factory premises, stock and bank accounts should be suspended to enable the petitioner to carry on its business, subject to safeguards protecting the Revenue.

Analysis: The attachments were ordered at a prima facie stage on the basis of materials suggesting large scale bogus billing and substantial possible tax and penalty liability. At the same time, the petitioner was engaged in legitimate business, the attached stock was perishable, assessment proceedings were still pending, and a sum of Rs. 2 crores had already been deposited in the ledger account under section 49 of the Gujarat Goods and Services Tax Act, 2017. The Court balanced the competing interests and found that continued freezing of the bank accounts and attachment of the properties would effectively cripple the business before liabilities were crystallised. It therefore considered suspension of the attachments appropriate on conditions securing the Revenue's interest.

Conclusion: The provisional attachments were directed to stand suspended upon compliance with the specified conditions, including maintenance of stock and furnishing of an unconditional bank guarantee.

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