Tax Authorities Must Provide Compelling Justification for Bank Account Attachment Under CGST Provisions

HC examined the provisional attachment of a bank account under CGST Act, finding insufficient justification for the drastic measure. Despite partial tax payment and a tax shortfall of Rs. 1,21,70,500, the court set aside the attachment order, emphasizing that such actions require overwhelming reasons. The writ petition was allowed, highlighting judicial scrutiny of administrative tax enforcement actions.

---

---

Issues:
The legality and validity of the provisional attachment of the bank account under Section 83 of the Central Goods and Services Tax Act, 2017 without proper justification and reasons.

Summary:
The petitioner challenged the provisional attachment of their bank account, arguing that the order lacked a Document Identification Number (DIN) as required by a circular and that no proceedings under Section 74 of the CGST Act had been initiated. Additionally, the petitioner questioned the lack of reasons provided for the attachment, considering it a drastic measure. The court directed the respondent's counsel to provide explanations for these issues.

During the hearing, it was revealed that the total tax payable by the petitioner was assessed to be Rs. 2,20,62,916.00, with a shortfall of Rs. 1,21,70,500.00 after the petitioner's payment of Rs. 98,92,412.00.

The respondent's counsel argued that the absence of DIN in the attachment order was due to a technical issue and that the reason for the attachment was available in the file. However, the court found the reasons provided insufficient to justify the drastic measure of attaching the bank account, especially considering the partial payment made by the petitioner.

The court emphasized that attaching a bank account is a serious intrusion into a citizen's private affairs and should only be done with overwhelming justification. As the attachment was deemed unjustified and without jurisdiction, the court set aside the provisional attachment order, stating that it would not be fair to require the petitioner to seek an alternative remedy.

Ultimately, the writ petition was allowed, and no costs were imposed. Any pending miscellaneous applications were to be closed as a result of the judgment.

---