Natural justice bars coercive attachment of bank and Demat accounts before disposal of show-cause notices.

Coercive attachment of bank and Demat accounts cannot be sustained before disposal of the underlying show-cause notices and without an effective opportunity of hearing. Where recovery notices for tax, interest and penalty are issued without final adjudication, and the action imposes serious civil consequences, natural justice and fair play require due process before enforcement. The High Court therefore interfered with the attachment and recovery notices at that stage, while leaving the show-cause notices open for lawful disposal in accordance with procedure.

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Issues: Whether the attachment of bank and Demat accounts and the recovery notices could be sustained when the underlying show-cause notices had not been disposed of and no effective opportunity of hearing was shown to have been granted.

Analysis: The impugned attachment and recovery action was founded on show-cause notices issued for recovery of tax, interest, and penalty. The record disclosed no final adjudication on those notices before drastic coercive steps were taken. Since the action visited the petitioners with serious civil consequences, compliance with natural justice and fair play was necessary before attachment could be enforced. The statutory framework relied upon also contemplated liability being fastened only in accordance with law and after giving the concerned person an opportunity to meet the case.

Conclusion: The attachment and related recovery notices could not be sustained at that stage and were liable to be interfered with in favour of the petitioners.

Final Conclusion: The petitions succeeded to the extent that the coercive attachment and recovery notices were set aside, while the show-cause notices were kept open for lawful disposal after following due process.

Ratio Decidendi: Coercive recovery action carrying serious civil consequences cannot be taken before disposal of the underlying show-cause notice and without compliance with the principles of natural justice.

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