CGST attachment under Section 81 requires a prior finding that transactions are sham before recovery action can proceed.

Section 81 of the CGST Act cannot be invoked to sustain attachment and auction of property purchased by third parties unless a competent authority under the Act or Rules first records a finding that the transactions are sham or void. The Court found that the provision contemplates voiding certain transactions with safeguards, but the Act provides no machinery to decide sham transactions at the recovery stage. Further proceedings under the attachment notice were stayed, and the petitioners were restrained from alienating the lands pending the order.

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Issues: Whether Section 81 of the Central Goods and Services Tax Act, 2017 could be invoked to sustain attachment and auction proceedings against property purchased by the petitioners, and whether interim protection ought to be granted pending consideration of the petitioners' challenge.

Analysis: The pleadings raised a dispute as to whether the petitioners' purchase deeds conferred title insulated from recovery action for the vendor's tax dues. The Court noted the revenue's reliance on Section 81 of the Central Goods and Services Tax Act, 2017 on the premise that the transactions were sham and void, but observed that the provision itself only contemplates declaration of certain transactions as void with safeguards, and that there was no machinery under the Act or Rules for deciding whether the transactions were sham. The Court formed a prima facie view that the provision could not be pressed into service unless a competent authority under the Act or Rules first recorded a finding on the nature of the transactions.

Outcome: Further proceedings pursuant to the attachment notice were stayed, and the petitioners were restrained from alienating the lands during the pendency of the order.

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