Attachment under MGST Act and director liability quashed for lack of show cause notice and denial of property rights.

Attachment of a bank account and residential property under the MGST Act was quashed because the attachment order lacked a prior show cause notice and hearing, violating the petitioner's right to property and equal protection. The court held the principal tax liability did not lie on the petitioner as he was not a registered person; therefore, liability under the statutory officer liability scheme requires a prior subjective satisfaction about directorship during the relevant period - a satisfaction not shown. For those reasons the attachment orders and notices were set aside and respondents were directed to withdraw the attachments and release the assets.

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Issues Involved:
1. Legality of the attachment order and notice issued by Respondent No. 3.
2. Petitioner's liability under Section 79 and Section 89 of the Maharashtra Goods and Service Tax Act, 2017 (MGST Act).
3. Violation of the petitioner's rights under Articles 14 and 300A of the Constitution.

Summary:

Issue 1: Legality of the attachment order and notice issued by Respondent No. 3

The petitioner sought a Writ of Certiorari u/s Article 226 of the Constitution to quash and set aside the Order of Attachment No. STO/MUM-BCP-C-005 (Kurla-701)/Recovery/Attachment/2018-19/2023-24/B-323 dated 11.01.2024 and the notice to IndusInd Bank for attaching the petitioner's current account. The petitioner argued that no show cause notice was issued, and he was not a director during the relevant period.

Issue 2: Petitioner's liability under Section 79 and Section 89 of the MGST Act

The petitioner contended that the impugned order was contrary to Section 79, read with Section 89, of the MGST Act, as he had ceased to be a director before the period in question. The court observed that the principal liability is not on the petitioner, who is not a registered person within the meaning of Section 79(1). The court emphasized that Section 89 requires subjective satisfaction by the concerned officer regarding the petitioner's directorship during the relevant period before fastening liability.

Issue 3: Violation of the petitioner's rights under Articles 14 and 300A of the Constitution

The court found substance in the petitioner's contention that the orders directly affected his right to property guaranteed under Articles 14 and 300A of the Constitution. The court noted that no show cause notice was issued, and the petitioner was not heard before the orders were passed, which was a breach of his constitutional rights.

Conclusion:

The court allowed the petition, quashing the impugned attachment orders and notices. The court directed the respondents to withdraw/cancel the attachment order and lift the attachment from the petitioner's flat and current account. The petition was allowed with no costs.

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