Court grants stay on provisional attachment orders of accounts under Section 86, citing lack of proper application of mind.

The court granted a stay of operation on the provisional attachment orders of seven accounts under Section 86 of the Central Goods and Service Tax Act. The court found that the impugned orders did not meet the conditions outlined in a Supreme Court decision regarding provisional attachments, indicating a lack of proper application of mind. Acknowledging the significant impact on the running establishment's bank accounts, the court was prima facie satisfied that the orders should be stayed. The petitioner was allowed to operate the bank accounts for eight weeks during the stay period.

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Issues:
Challenge to provisional attachment orders under Section 86 of CGST Act.

Analysis:
The petitioner challenged the provisional attachment orders of seven accounts under Section 86 of the Central Goods and Service Tax Act, 2017. The petitioner referred to a previous order where a bank guarantee was required but later modified to allow furnishing an undertaking not to alienate assets. The current orders were issued invoking powers under Section 83 of the CGST Act. The court noted that the conditions for a valid exercise of power must be strictly fulfilled. Reference was made to a Supreme Court decision outlining the conditions for ordering a provisional attachment, emphasizing the need to protect government revenue. The court found that the impugned orders did not fulfill the stipulations laid down in the judgment and indicated a lack of application of mind by the second respondent.

The court acknowledged the significant impact of provisional attachment on the bank accounts of a running establishment. The petitioner claimed to be a running establishment supported by annual audited reports. Considering the legal and factual circumstances, the court was prima facie satisfied that the impugned orders should be stayed. Consequently, a stay of operation was granted on the attachment orders for eight weeks. It was clarified that the petitioner could operate the bank accounts during this period.

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