Tax recovery attachment and locus standi: third-party bank accounts were protected while the disputed recovery basis was examined.

Recovery proceedings based on a disputed date of receipt of the original adjudication order could not justify continued attachment of an independent third party's bank accounts while that factual issue remained unresolved before the appellate authority. The Court quashed the attachment notice against the sister concerns' accounts, but left other recovery measures undisturbed to protect the Revenue. It also held that the petitioner had locus standi to challenge the notice because the attachment expressly stated that it was issued for recovery of the petitioner's tax dues, making the petitioner directly affected by the impugned action.

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Issues: (i) Whether the attachment of the bank accounts of the petitioner's sister concerns for recovery of the petitioner's tax dues was without jurisdiction and liable to be quashed; (ii) Whether the petitioner had locus standi to challenge the attachment notice issued to the bank on the footing that the attachment was for recovery of the petitioner's dues.

Issue (i): Whether the attachment of the bank accounts of the petitioner's sister concerns for recovery of the petitioner's tax dues was without jurisdiction and liable to be quashed.

Analysis: The validity of the recovery action depended on the disputed date on which the original adjudication order was received by the petitioner, since that question would determine whether the appeal and the consequential stay position were in time. Pending decision of that factual dispute by the appellate authority, continuing attachment of an independent third party's bank accounts would cause serious prejudice. The Court therefore held that such attachment should not continue, while leaving the other recovery measures undisturbed to protect the Revenue.

Conclusion: The attachment notice dated 22 March 2018 against the sister concerns' bank accounts was quashed and set aside.

Issue (ii): Whether the petitioner had locus standi to challenge the attachment notice issued to the bank on the footing that the attachment was for recovery of the petitioner's dues.

Analysis: The attachment notice itself recorded that it was issued for recovery of the petitioner's tax dues. Since the impugned action was founded on the petitioner's alleged non-payment of dues, the petitioner was directly affected and could maintain the petition. The objection that only the sister concerns could complain of the attachment was rejected as inconsistent with the basis of the notice.

Conclusion: The petitioner was held entitled to maintain the petition.

Final Conclusion: The writ petition succeeded only to the extent of relief against the attachment of the sister concerns' bank accounts, while the remaining recovery measures were left intact.

Ratio Decidendi: Where recovery action against a tax defaulter turns on a disputed factual question affecting the legality of the proceedings, the Court may grant limited interim or final relief against prejudicial third-party attachment, and a person against whom the recovery is expressly directed has locus to challenge that attachment.

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