Attachment of current bank account conditioned on furnishing bank guarantee for assessed tax amount; account release upon compliance.

Order addresses attachment of a petitioners current bank account and prescribes security limited to the assessed tax amount only. The court declined the respondents submission that a bank guarantee must also cover interest and penalty while adjudication remains pending, concluding that a guarantee for the tax arrears of Rs. 6,10,511 adequately secures revenue interests. The attachment of the specified account is set aside and will be lifted on the condition that the petitioner furnishes a bank guarantee equivalent to the assessed tax amount, thereby restoring access subject to that security.

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Issues:
Challenge to attachment of bank account under Article 226 of the Constitution.

Analysis:
The petitioner, a trading firm, sought to set aside the communication and order attaching their bank account with Axis Bank. The firm holds valid registration under the Central Goods and Services Tax Act and the Gujarat Goods and Services Tax Act. The respondent, Commissioner of State Tax, alleged that the firm wrongfully availed input tax credit from a firm engaged in bogus billing activities. The petitioner contended that powers under section 83 of the Act for provisional attachment must be exercised cautiously, especially when no demand was raised post-assessment, denying the petitioner a chance to present their case.

The respondents argued that despite ample time given, the petitioner failed to prove the genuineness of transactions, justifying the attachment to protect the government's interest. The petitioner, in response, claimed ignorance of the other firm's intentions and expressed readiness to provide a bank guarantee for the tax amount. The court noted the tax arrears, interest, and penalty, but found the demand for a bank guarantee covering interest and penalty premature, as the adjudicatory process was ongoing.

The court allowed the petition, setting aside the attachment on the condition that the petitioner furnishes a bank guarantee equivalent to the tax amount only. The judgment emphasized that this decision did not reflect on the underlying controversy subject to future adjudication. The ruling aimed to balance securing the tax amount with safeguarding the revenue's interests, allowing the petitioner to continue business operations while the matter undergoes further legal scrutiny.

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